EQT Corporation EQT, a leading U.S.-based producer of natural gas, has witnessed a notable improvement of 33.2% in its share price over the past year. The stock has outperformed the broader Oils-Energy sector, which declined 7.8% within the same time frame.
EQT has also outperformed its peers, Range Resources Corporation RRC and Antero Resources Corporation AR, within the same sub-industry. Shares of Antero Resources and Range Resources have risen 12% and 3.3%, respectively, during the same time frame. As such, the stock’s strong performance raises the question as to whether this is the right time to buy or hold it. EQT currently carries a Zacks Rank #3 (Hold).
One-Year Price Chart
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EQT is primarily involved in the exploration and production of natural gas, with a significant focus on the highly productive Appalachian Basin in the United States. The company has several untapped oil and natural gas drilling locations in the core Appalachian Basin, which presents a robust production outlook. Now, let us dive into the key factors that influence the strong performance of this stock.
Positive Factors Boosting EQT’s Performance
Rising Demand for Natural Gas: EQT, being a pure-play natural gas producer, is set to benefit from the rising demand for natural gas as a clean burning fuel. Burning natural gas results in fewer emissions, and due to this property, the demand for the commodity is rising in the United States. The rapid development of gas-fired power plants and data centers in the Appalachian region is expected to boost demand.
The U.S. Energy Information Administration (“EIA”) projected that the demand for natural gas in the country is expected to increase 4% to 116 billion cubic feet per day (Bcf/d) this year. This projection indicates a steady increase in the demand for natgas, which, in turn, is expected to benefit EQT.
During its first quarter 2025 earnings release, EQT raised its full-year production guidance for the year by 25 Bcfe, reflecting its confidence in the increasing demand for the commodity.
Increase in Natural Gas Prices: Natural gas prices have shown a notable increase in 2025 compared to the prior year levels. As per the data from the U.S. EIA, Henry Hub spot natural gas prices rose to $4.15 per million British thermal units (Btu) in the first quarter of 2025 from $2.13 in the corresponding period of 2024. The Henry Hub spot price is expected to average $4.12 per million Btu in 2025, implying a significant year-over-year increase. Healthy natural gas prices are expected to support earnings growth and an increase in free cash flow generation for EQT.
Strategic Acquisitions Drive Operational Synergies: EQT has recently announced a bolt-on acquisition of Olympus Energy’s upstream and midstream assets for $1.8 billion. The assets acquired by EQT include a contiguous 90,000 net acres in Southwest Appalachia, adjacent to EQT’s existing acreage position.
Furthermore, the assets are vertically integrated and have a net production of about 500 million cubic feet per day. These assets are situated in close proximity to numerous proposed power generation projects in the region, offering significant long-term upside for EQT.
Additionally, the company continues to realize synergies from its acquisition of Equitrans Midstream. To date, EQT has achieved approximately $360 million in annual savings, surpassing its previous forecast by $85 million. EQT stated that it has captured 85% synergies from the Equitrans transaction. With its current initiatives, the company believes that it can realize incremental benefits beyond its initial expectations. These strategic acquisitions and ongoing synergies are expected to significantly strengthen EQT’s operational and financial position by reducing costs and enhancing future growth prospects.
Headwinds to Consider
Hedging Strategy: EQT plans to keep its natural gas production (for 2026 and beyond) entirely unhedged. Oil and natural gas prices are highly volatile, and hedging enables producers to lock in prices beforehand, thereby ensuring revenue stability in the event of price downturns. While EQT’s decision to keep its production unhedged may benefit the company in the event of rising natural gas prices, it also increases its exposure to price declines, which could impact its cash flows and financial stability.
Diversification Risk: The company’s position as a pure-play natural gas producer in the Appalachian Basin exposes it to the risk of region-specific delays and disruptions in well production. Furthermore, the company’s reliance on developing power plants and data centers within the Appalachian Basin poses uncertainties, as these projects remain in the very early stages of development. If the development of these projects faces delays, EQT may not be able to grow its midstream and upstream businesses as expected.
Increasing Prominence of Renewables Poses Long-Term Risks: The growing prominence of renewable energy projects like solar and wind power for the generation of electricity (as an alternative to traditional fossil fuels) poses risks for exploration and production players like EQT. The global shift toward renewable energy sources to reduce greenhouse gas emissions and promote sustainability is gaining momentum. The broader energy transition may limit the use of traditional fossil fuels, thereby pressuring EQT’s volume growth in the long run.
Final Thoughts
EQT benefits from the rising demand for natural gas as a clean burning fuel, healthy natural gas prices and strategic acquisitions that boost growth and result in operational synergies. However, its hedging strategy and regional concentration pose risks to its financial performance. Furthermore, the increasing shift toward renewables also raises concerns. Given the potential challenges and positive demand outlook, investors should hold this stock for now.
Peer Performance
Range Resources and Antero Resources also carry a Zacks Rank #3 each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
During its first-quarter earnings release, Range Resources released its annual production guidance for 2025 of 2.2 Bcfe per day. Additionally, the company mentioned that by 2027, it intends to grow daily production to 2.6 Bcfe. Its production forecast is supported by its low-cost drilling inventory in the core Appalachian Basin.
Antero Resources is one of the leading natural gas and natural gas liquids (NGL) producers in the United States. The company boasts over 20 years of premium, low-cost inventory in the Appalachian Basin, primarily located in West Virginia and Ohio. Antero Resources is expected to benefit from the rise in natural gas demand owing to the development of data centers and new natural-gas-fired power plants in the Appalachian Basin.
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