US-based EQT to return capital to shareholders
US energy company EQT said December 13 that it could return capital to its shareholders while still pursuing a reduction in overall emissions.
The board of directors at EQT approved a $1bn share repurchase program and opted to reinstate an annual cash dividend of $0.50/share starting in the first quarter of 2022.
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EQT reported total sales volume for the three-month period ending September 30 increased 35% from the same period last year. Adjusted earnings per share increased only by a quarter percent, though adjusted net income of $43mn was an improvement over the $38mn loss reported in Q3 2020.
Free cash flow, meanwhile, increased 110% from third quarter 2020 to reach $99mn. EQT reported that it now expects a substantial increase in free cash flow for next year, to about $1.9bn. That levels off to around $1.6bn from 2023 through 2026, assuming a US natural gas price of $3.00/mn Btu.
Henry Hub, the US benchmark for the price of natural gas, was trading near $3.75/mn Btu on December 14.
“We have entered the next phase of the sustainable shale era – one that values free cash flow generation, balance sheet strength, emissions reduction and returning capital to shareholders,” CEO Toby Rice said.
Like many oil and gas companies, EQT has committed to lowering its Scope 1 and Scope 2 emissions, envisioning a net-zero future.
The expected increase in cash flow, meanwhile, comes at a time when energy companies are accused of capitalising on higher commodity prices to the detriment of consumers. Consumer inflation for energy items is near 50% over the 12-month period ending in November, compared with 6.8% for “all items,” the federal government reported December 10.
US senator Elizabeth Warren, a Democrat representing Massachusetts, sent a letter to 11 different oil and gas companies last month demanding answers on the steady rise in commodity prices. She attributed the spike in part to “corporate greed and profiteering.”
Rice in response said he disagrees with the notion that commodity prices are related directly to corporate finances.