Just one quarter after EQT’s July acquisition of Equitrans Midstream, the natural gas behemoth is reaping the benefits of integrating such a big deal.

Equitrans' assets, bought in an all-stock transaction valued at approximately $5.4 billion, include the Mountain Valley Pipeline and more than $425 million of annual synergies to lower EQT’s long-term free cash flow breakeven price, EQT said when the deal closed.

“This combination has created a differentiated business model among the energy landscape, one that has leading inventory duration at the absolute low end of the North American natural gas cost curve,” Toby Rice, president and CEO, said during EQT’s Oct. 30 earnings call.

EQT and Equitrans split into separate companies in 2018. When EQT bought the company back, Equitrans had more than 2,000 miles of pipeline, much of it already connected with EQT’s producing acreage.

As a result, EQT has far more ability to adjust the amount of natural gas it ships on the line, allowing it to react quickly to market prices, which gives the company an advantage when the natural gas market has been volatile, said EQT CFO Jeremy Knop.

"We have been turning [volumes] on and off, up to a Bcf a day, on a near daily basis in response to where pricing is,” Knop said.

The company had higher overall sales than in the second quarter, even though EQT and many other natural gas producers curtailed or flattened production during much of the third quarter due to low commodity prices and full inventories.

EQT managed to surpass production expectations with 581 Bcfe of natural gas compared to a market forecast of 537 Bcfe, according to an analysis by TPH&Co. Second quarter sales came in at 508 Bcfe.

TP&H rated EQT’s quarter as positive, thanks to its output, as well as its most recent deal with Equinor.

On Oct. 29, the day before the company’s third-quarter earnings meeting, EQT executives announced the $1.25 billion sale of its non-operated natural gas assets in Pennsylvania to Equinor. It was the second deal of the year between EQT and the Norwegian company, which is looking to strengthen its international natural gas portfolio.

EQT will use proceeds from the sale to pay down debt related to the Equitrans acquisition.

“We had not expected any asset sale announcements alongside results this quarter, and we’re pleasantly surprised to see the remainder of the non-op heading out the door,” said Jake Roberts, TP&H analyst.

EQT announced third-quarter revenue of $1.28 billion and an adjusted EBITDA of $832 million.

Rice said the company is seeing a bullish gas market thanks to growing demand for LNG and especially data center development, many of which will be built in the mid-Atlantic, close to EQT’s acreage.

The boom in demand is likely to result in more price volatility, and EQT’s vertical integration with Equitrans will give the company more flexibility to withstand the fluctuations ahead, Rice said

"We're going to be in a more highly volatile world going forward,” Rice said. “And the question that people need to ask is, how are these businesses going to perform in this more volatile world where you're going to have lower lows and higher highs?" he said.

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