EQT Corp. (EQT) on Thursday provided certain preliminary first quarter 2020 operational and financial highlights, along with an update on its outlook and deleveraging plan. The company said it has experienced limited operational impacts as a result of the COVID-19 pandemic.
For the first quarter, EQT reported preliminary sales volumes of 380 Bcfe to 385 Bcfe, exceeding the high-end of the guidance range of 360 Bcfe to 370 Bcfe.
In October 2019, EQT announced a deleveraging plan to reduce debt by about 30 percent, or approximately $1.5 billion by mid-2020 through asset monetizations and increased free cash flow.
The company noted that its deleveraging plan contemplated generating targeted proceeds from monetizations of select, non-core exploration and production assets, core mineral assets and the company’s retained equity interest in Equitrans Midstream.
EQT said it is in advanced talks to divest certain non-strategic assets principally located in central Pennsylvania for an anticipated sales price of about $125 million.
Given current market conditions and EQT’s expectation that natural gas prices may improve further starting in the latter half of 2020, the company intends to more selectively explore non-core asset sales and opportunistically assess monetizing its remaining equity interest in Equitrans Midstream Corporation in a strategic manner instead of attempting to fully achieve its deleveraging plan by mid-2020.
EQT expects the combination of the anticipated proceeds from these asset sales, anticipated income tax refunds of approximately $390 million, in part accelerated by the CARES Act, and improved realized free cash flow amounts from accelerated well cost reductions will be sufficient to enable the company to repay or refinance its debt maturing in 2021 by the end of 2020.
EQT noted that the impact of recent world developments in 2020 on natural gas prices and its business are unpredictable. There is no assurance that natural gas prices will remain at recently elevated prices or that any positive impact from the oil price war will outweigh the negative impact from reduced demand for natural gas due to COVID-19 or other factors.
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