EQT Flags $100 Million Derivative Gain for Third Quarter
The natural gas producer said it expects $70 million of net cash settlements, including $68 million on NYMEX hedges, for the three months ended September 30, 2026.
EQT Corporation (EQT) said it expects to report a total gain on derivatives of $100 million for the three months ended September 30, 2026, and net cash settlements received on derivatives of $70 million, including $68 million on NYMEX natural gas hedge positions and $2 million on basis and liquids hedges.
The natural gas producer said there were no premiums paid or received for derivatives that settled during the period. The dollar amounts in the Current Report on Form 8-K are preliminary and subject to change, with final figures to be reported in its Quarterly Report on Form 10-Q for the period ended September 30, 2026, or in the corresponding earnings release.
The hedge settlement sits against a second quarter in which production and costs moved in the same direction as the company’s 2026 plan. Sales volume was 634 Bcfe, above the high end of guidance, after 618 Bcfe in the first quarter, also above the high end of guidance. The company attributed the second-quarter beat to strong well performance, system pressure optimization and lower-than-expected price-related curtailments.
Capital expenditures were $666 million in the second quarter, 9% below the low end of guidance, after $608 million in the first quarter, 4% below the low end of guidance. EQT said both periods benefited from operational efficiency gains and lower-than-expected infrastructure spending.
Total per-unit operating costs were $1.03 per Mcfe in the second quarter, at the low end of guidance, versus $1.09 per Mcfe in the first quarter. The company said the second-quarter level was driven by lower-than-expected SG&A, transmission and LOE expenses.
Cash generation was more modest in the second quarter. Net cash provided by operating activities was $1,048 million, and free cash flow attributable to EQT was $330 million, compared with $3,055 million of operating cash flow and a record $1,832 million of free cash flow attributable to EQT in the first quarter.
The balance sheet continued to tighten. Total debt was $5.7 billion at the end of the second quarter and net debt was $5.5 billion, inclusive of $101 million of working capital usage during the quarter. Subsequent to quarter-end, EQT repaid $115 million of 2026 debentures.
After the second quarter, the company raised 2026 production guidance by about 90 Bcfe, citing better-than-expected benefits from compression investments improving both existing and new wells and shallowing decline rates, and reduced full-year capital spending guidance by $25 million.
EQT also signed a 10-year definitive agreement with Competitive Power Ventures to supply 325,000 Dth/d of natural gas to the CPV Shay Energy Center in Doddridge County, WV, with pricing linked to PJM power prices. It signed a 5-year offtake with a large Asian integrated energy company for 0.5 million tonnes per annum of LNG from Gulf Coast facilities beginning in 2028, a deal expected to increase 2028 free cash flow by about $45 million at recent strip pricing. It closed a $77 million acquisition of Blackline Midstream, two propane storage and distribution terminals in New England.
Operations in the second quarter included drilling the longest lateral in the history of shale development at more than 29,000 feet while staying 100% in zone, and setting a new basin-wide 24-hour drilling record and a new EQT 48-hour drilling record. EQT secured key regulatory approvals for MVP Southgate and elected to accelerate $85 million of capital contributions to complete construction by year-end 2026.
The first-quarter release had already framed the year around low-cost production and deleveraging, with net income attributable to EQT of $1,487 million, diluted EPS of $2.36, and an upgrade to BBB at Fitch after the quarter.
For the three months ended September 30, 2026, the preliminary $100 million derivative gain and $70 million of net cash settlements are the figures EQT expects to report, with the NYMEX natural gas hedges accounting for $68 million of those settlements.