Goldman Sachs Group, Inc.: Maintains "Buy" rating on EQT Corporation (EQT.US); Range Resources acquisition is strategically significant

Goldman Sachs Group, Inc. noted in its latest research report that despite the weak natural gas pricing environment in the Appalachian region, EQT Corporation (EQT.US) still demonstrated strong free cash flow resilience in the third quarter of fiscal year 2026. Based on the currently attractive risk-reward ratio, Goldman Sachs Group, Inc. maintained its "Buy" rating on EQT Corporation and a price target of US$62. In addition, Goldman Sachs Group, Inc. believes that EQT's acquisition of Range Resources (RRC.US) is strategically significant, and the combined company will create a natural gas giant with an enterprise value exceeding US$50 billion. Q3 results: production curbed but free cash flow far exceeded expectations Against the backdrop of weak natural gas pricing in the Appalachian region, EQT curtailed approximately 230 million cubic feet per day of production in Q3, resulting in total quarterly production of 6.34 billion cubic feet per day. This was below the market consensus expectation of 6.61 billion cubic feet per day and also at the low end of the company's guidance. Despite the production miss, EQT's free cash flow (FCF) for the quarter reached US$397 million, significantly above Goldman Sachs Group, Inc.'s estimate of US$308 million and the market consensus of US$277 million. M&A transaction: creating a giant with enterprise value exceeding US$50 billion The market's focus this week was on EQT's pending acquisition of Range Resources (RRC.US). According to the announcement, this is an all-stock transaction, and the combined enterprise value (EV) will exceed US$50 billion. Range Resources shareholders will receive 0.987 shares of EQT stock for each share, and will hold approximately 27% of the combined company after the transaction is completed. Goldman Sachs Group, Inc. views the transaction as strategically significant: Lower breakeven point: the combined business will have more than 30 years of inventory, with an unlevered free cash flow breakeven point falling below US$2.00 per million British thermal units. Synergies: management expects to generate US$325 million of base synergies annually (mainly from corporate and operating cost efficiencies), and over the long term, more than US$300 million of incremental synergies through infrastructure optimization, improved marketing margins, and premium supply agreements. Increased capacity: the combined capacity is approximately 17 billion cubic feet per day, providing the company with differentiated capability to pursue demand-linked growth in the Appalachian region. Goldman Sachs Group, Inc. holds a constructive view on EQT's ability to execute these synergies and noted that EQT's share price has been flat since the transaction was announced on October 23, whereas historical acquirers in the industry typically declined after announcing large transactions. Commercial expansion accelerating: LNG, gas storage, and pipeline projects advancing across the board While advancing the M&A, EQT also made multiple progress in commercial expansion in LNG, gas storage, and midstream pipelines: LNG supply: signed a 10-year agreement with Lithuania's Ignitis Group to supply one LNG cargo per year starting in 2027. Gas storage capacity: successfully secured 11 billion cubic feet (11 Bcf) of storage capacity along the Gulf Coast. Pipeline project: launched an open season for the "POWER pipeline," which will directly connect to the emerging demand hub Group, Inc. Class A in Clarington, Ohio. EQT expects demand growth potential of more than 5 billion cubic feet per day in the region. In addition, due to stronger global LNG pricing, EQT raised the expected contribution to 2028 FCF from its previously announced 0.5 MTPA LNG bridging agreement from approximately US$45 million to approximately US$175 million. Management also raised its estimate (not risk-adjusted) of potential Appalachian demand and pipeline export projects from approximately 20 billion cubic feet per day to nearly 25 billion cubic feet per day.