-- Appalachian-focused US oil and gas producer EQT (EQT) is strategically growing its midstream capacity for 2027 and beyond and looks well-placed to benefit from market shifts amid conflict in the Middle East that has upended energy markets, RBC Capital Markets said in a research note on Sunday.
RBC analysts said that although current projects total 2-3 billion cubic feet equivalent per day, management expects discussions with counterparties to lead to a production hike to between 8 and 10 billion cubic feet per day.
Critically, RBC notes that EQT was an early mover versus peers to secure LNG offtake that can now deliver major value in the context of the Iran conflict.
The company outperformed in Q1 leveraging the advantages of its integrated business model.
Production in the first quarter was above guidance, coinciding with a peak in winter pricing, with operating expenses and capital outgoings below guidance.
EQT has shown that it has an ability to identify problems across the midstream quickly, enabling its commercial team to arbitrage pricing.
The company's LNG offtake strategy unsettled some investors when it was announced last year, amid fears of a gas flut, but that has become irrelevant due to conflict in the Middle East. Its offtake contracts start in 2030 and destination contracts likely come close to that timeframe, RBC said.
RBC has a 'sector perform' rating on EQT and a price target of $69 versus a recent share price around $58.91.