EQT

EQT just drilled the longest well in the entire history of shale, stretching more than 29,000 feet, and set a new basin drilling speed record along the way. That efficiency pushed production to 634 billion cubic feet, above the high end of their own forecast, while spending 666 million dollars on projects, 9 percent below the low end of guidance. They also raised full-year production guidance by about 90 billion cubic feet while cutting planned spending by 25 million dollars.

EQT signed a 10-year deal to supply 325,000 units of gas per day to a new 2-gigawatt power plant in West Virginia, priced off regional power rates instead of cheap local gas prices. They also locked in a 5-year overseas shipping deal expected to add about 45 million dollars of yearly free cash by 2028. Debt fell to 5.7 billion dollars from 7.8 billion at the end of last year.

EQT's average selling price slipped to 2.65 dollars per unit from 2.81 a year ago, and that squeezed profits hard. Net income attributable to EQT fell to 211 million dollars from 784 million, with earnings per share dropping to 34 cents from 1.30 dollars. When gas prices fall, even record drilling cannot fully make up the difference.

Growing this fast is not cheap. Capital spending rose to 666 million dollars this quarter from 554 million a year ago, and the company plans another 710 to 820 million dollars next quarter. Free cash flow attributable to EQT was 330 million dollars, healthy but a fraction of what it earns in strong price environments. Weak gas prices plus heavy spending is a combination worth watching.