Title: Friday POW! — EQT Corporation (EQT): Cooking With Gas (the unhedged LNG-shock call option) Show: Haymaker — Friday POW! (Pick of the Week) Author: David Hay — The Haymaker Team Date: 2026-03-20 URL: https://haymaker.substack.com/p/friday-pow-f77 Length: written post (PAID), no timestamps Note: Full article body, lightly cleaned (highlights bullets and section labels kept; image captions noted inline). The bottom "Buy List" and "Holds/Trims" lists render as images; only the text footnote is captured ("Cost figures corrected for both UBER and CRH. We regret the errors."). --- Cooking With Gas (like 2.4 billion cubic feet of it) POW! Highlights - Q4 2025 adjusted EPS of $0.90 vs. $0.73 estimate — a 22.7% beat; full-year net income of $2.04 billion vs. $231 million in 2024 - Full-year 2025 free cash flow (FCF) of $2.5 billion; 2026 FCF guided at $3.3 billion at strip pricing (this year's guide results in roughly an 8% FCF yield) - Net debt reduced from $9.1 billion to $7.7 billion in 2025; targeting ~$4.7 billion by year-end 2026 - Sales volume 2,382 Billion Cubic Feet (BCF) in 2025, up 7% year-over-year — above guidance high-end - Entirely unhedged for 2026 and beyond, providing full upside exposure to rising natural gas prices - Analyst consensus: median price target $65, range $46-80; strong buy consensus from 34 analysts - Iran War / Qatar LNG force majeure = structural demand shock arriving at exactly the right moment EQT Corporation (EQT) EQT Corporation, America's largest natural gas producer by volume and the only large-scale, vertically integrated natural gas company in the United States, finds itself at one of the more compelling inflection points we've seen in the energy sector in years. The company operates entirely in the Appalachian Basin (Marcellus and Utica shales) across Pennsylvania, West Virginia, and Ohio, and has spent the better part of three years executing one of the cleanest balance-sheet transformations in the E&P space. Now, with the Hormuz crisis removing 20% of global oil supply from the market, Qatar declaring force majeure on LNG contracts, and the world scrambling for reliable natural gas supply, EQT is positioned at the intersection of every structural tailwind in energy. The Street is starting to notice: shares hit a 52-week high of $65.12 this week on strong earnings (the price was about half that at its lowest in 2024). The bull case is straightforward but powerful: a low-cost, high-volume Appalachian gas producer with a rapidly deleveraging balance sheet, unhedged 2026 production, and a demand backdrop that has gone from constructive to urgent in 13 days. Strong Financial Performance and Earnings Momentum EQT just delivered one of its cleanest quarters on record. Q4 2025 adjusted EPS of $0.90 beat the $0.73 consensus by 22.7%. Revenue came in at $2.39 billion against a $2.1 billion estimate, a 13.8% beat. Full-year net income soared to $2.04 billion from just $231 million in 2024. Free cash flow attributable to EQT for the full year hit $2.5 billion, significantly above both internal and consensus estimates. The operational metrics were equally impressive. Q4 sales volume of 609 BCF came in above the high end of guidance, driven by strong well performance and system pressure optimization. Capital expenditures of $655 million came in 4% below the midpoint of guidance. Total per-unit operating costs landed toward the low end of guidance. This is a company that is consistently beating on both the top and bottom line while simultaneously spending less than expected to produce more than expected. Simply put, that's a combination that drives sustained free cash flow (FCF) outperformance. For 2026, management has guided to approximately $3.3 billion of FCF attributable to EQT at recent strip pricing. That guidance was set before Qatar declared force majeure (i.e., an inability to meet its contractual delivery commitments due to factors outside of its control) and before the Hormuz closure pushed global LNG prices sharply higher. With EQT entirely unhedged for 2026, every incremental dollar in realized natural gas price falls directly to free cash flow. The company is a pure, unlevered call option on the current gas price environment, and that environment just got significantly more constructive. The Growth Story: Demand Tailwinds Are Structural, Not Cyclical Before the Iran War, we thought EQT's demand thesis was already compelling. U.S. LNG exports were running at approximately 14.9 billion cubic feet per day in 2025, with the EIA projecting a rise to 16.3 billion cubic feet per day in 2026. New LNG terminals (Plaquemines, Corpus Christi Stage 3, and others) are coming online and pulling incremental volumes of Appalachian gas toward Gulf Coast export facilities. The data center and AI infrastructure buildout, which requires dispatchable power that wind and solar cannot reliably provide, is driving an accelerating demand for natural gas. EQT has been signing in-basin demand contracts with utilities and data center operators at terms that validate the demand thesis. The Iran conflict has crystallized a lesson that European and Asian energy ministers were only beginning to absorb: geographic concentration in energy supply is a strategic vulnerability. Qatar's force majeure removed a substantial volume of LNG supply from the market on no notice, and Europe and Asia are now competing for replacement volumes. The diversification trade toward U.S. LNG specifically, and Appalachian Basin gas as the feedstock for that LNG, was already underway. It has now become urgent. EQT, as the largest and lowest-cost producer in the basin, is the primary beneficiary of that urgency. Valuation: Deleveraging Unlocks the Multiple The valuation case for EQT is straightforward but requires understanding the balance sheet trajectory. At the end of 2025, net debt stood at $7.7 billion, down from $9.1 billion at the start of the year and from $13+ billion at the time of the Equitrans (a large pipeline operator in Appalachia) acquisition. Management has committed to exiting 2026 with approximately $4.7 billion in net debt, representing a reduction of roughly $3 billion in a single year. At the elevated gas prices we're now seeing, that trajectory accelerates. This deleveraging matters for valuation in a specific way. EQT's EBITDA margin is running at approximately 67%. As debt comes off the balance sheet, the equity's claim on that free cash flow grows. The market is only beginning to re-rate EQT for what it will look like at $4-5 billion of net debt. And, we think that company is a capital-light, cash-generative royalty on Appalachian gas production with a growing dividend and a management team that has demonstrated consistent operational outperformance. At the current price of approximately $65.12, EQT trades at roughly 12-13x forward free cash flow on the 2026 guidance figure of $3.3 billion, and that figure was set at lower strip prices. Analysts' consensus has a median target of $65 with a range running to $80 on a $5/Mcf, or MMBtu (million British Thermal Units), gas scenario. As you can see below, despite EQT's recent share price rally, the P/E remains very undemanding; it trades well below the valuations of most slower-growing utilities which lack its gas-production kicker. [Image: Five-Year Price-to-Sales and P/E Ratios for EQT — Bloomberg | MMBtus are very loosely equivalent to a gallon of gasoline] Technicals The technical picture is clean and the setup is constructive. EQT hit a 52-week high of $67.12 this week on the Q4 earnings release, a gap up of approximately 2.7% on heavy volume of 3.9 million shares. The stock has been building a base since the mid-2025 lows around $46, and the pattern of higher lows and higher highs is intact. The move through $60 on the earnings print broke above a short-term resistance level that had contained several prior rally attempts. The more meaningful upside range expansion occurred approximately a year ago when it moved into the low $50s. [Image: Five-Year Price Chart of EQT (with overhead resistance line drawn in) — Bloomberg] The much longer-term chart is even more compelling, in our view. This reveals that the surge into the low $50s took out resistance all the way back to 2015. Further, the recent move has eclipsed the 2014 peak which had been an all-time high (ATH). Consequently, EQT has broken out above all prior resistance levels. As regular Haymaker readers are aware, this is an extremely bullish development, particularly when combined with a modest valuation, accelerating earnings, a dramatically improved balance sheet and an exceedingly favorable outlook for the U.S. natural gas industry. [Image: Twelve-Year Price Chart of EQT (with overhead resistance lines displayed) — Bloomberg] Unsurprisingly, given the escalating conflict in the Persian Gulf, the broader energy sector is the strongest sector in the market right now. The XLE has hit 15 record intraday highs in 2026 and broke out of a multi-decade trading range in January. Natural gas-exposed names are participating in that leadership. EQT, as the largest pure-play gas producer in the index, has the most leverage to continued sector outperformance. It's pleasing, as well, to see our previously endorsed names, such as Range Resources (RRC) and Devon Energy (DVN), also generating multi-year upside range expansions. Despite their strong recent performance, both remain well below their respective ATHs. They, too, trade at thrifty P/Es. As readers should be well aware, U.S. and Canadian natural gas producers have been among our strongest, and most persistent, recommendations. The risk to the technical setup for all energy-related equities is a rapid resolution of the Hormuz conflict that reverses the LNG supply shock. A ceasefire and Hormuz reopening would take some of the urgency out of the demand thesis, though we would argue the structural LNG demand story and the data center power demand story remain intact regardless of geopolitical resolution. Near-term support sits in the $58-60 range; a sustained break below $55 would call for a reassessment. Also, due to its recent run-up, it might make sense to buy a smaller initial position in EQT; however, given the myriad attributes of this story we wouldn't be too cute. In other words, we'd suggest using even a minor retracement to add to this one. Arguing the Other Side The bear case on EQT is not complicated: gas prices come back down. The Hormuz conflict resolves in weeks, Qatar lifts force majeure, spot LNG prices normalize, Henry Hub retreats toward $3, and EQT's unhedged 2026 book becomes a vulnerability rather than an asset. The balance sheet, while improving rapidly, still carries $7.7 billion in net debt — in a prolonged low-price environment the deleveraging trajectory slows, equity multiple compression can be swift. Moreover, Appalachian permitting and legal risks on infrastructure projects like the Mountain Valley Pipeline (MVP), of which it gained ownership through its Equitrans acquisition, adds execution uncertainty on top. (The environmental lobby vehemently fought the MVP's approval.) We take the bear case seriously, particularly the gas-price sensitivity. But we should also mention that EQT generated $879 million of free cash flow in 2023 when Henry Hub averaged just $2.74 for the year. At current prices, well above that, the downside protection is meaningful. And the demand environment — LNG exports, data centers, electrification — represents a structural floor under gas prices that did not exist in prior cycles. The Bottom Line What are we really buying here? The largest Appalachian gas producer at a fraction of what it will be worth when the balance sheet is clean? A pure call option on the most significant LNG demand shock in a generation? A management team that has beaten earnings and operational guidance in each of the last four quarters? We'd like to think we're getting all of the above. EQT has spent three years building the engine by integrating Equitrans, driving unit cost leadership, paying down debt, and signing demand contracts. The Iran War and Qatar force majeure have just handed them the fuel (pun intended). The deleveraging alone is a multi-year re-rating story; the unhedged 2026 book in a $4+ gas environment is a free cash flow story the consensus has not fully priced; and the structural LNG demand picture — compelling before February 28 and urgent after it — is a decade-long tailwind for the best-positioned producer in the best-positioned basin in the country. When a company of this quality gets handed the macro environment it was built for, we are buyers… and are prepared to add to this position on weakness. The Haymaker Team [Portfolio footnote, from image-only lists: "Note: Cost figures corrected for both UBER and CRH. We regret the errors."]