EQT Corp. showcased a strong third quarter in 2025, marked by impressive financial and operational achievements. The company generated substantial free cash flow, exceeding previous expectations, and successfully integrated the Olympus acquisition, which led to notable operational efficiencies and cost reductions. EQT also advanced several strategic initiatives, including the expansion of the MVP Boost pipeline, securing long-term LNG offtake agreements, and increasing its base dividend. The management team highlighted a strategic shift towards demand-driven natural gas markets, anticipating a constructive outlook for 2026. This performance underscores EQT's commitment to capital discipline, shareholder returns, and sustainable growth within a dynamic energy landscape.
In the third quarter of 2025, EQT Corp. delivered an exceptional performance, generating $484 million in free cash flow, even after accounting for $21 million in one-time costs related to the Olympus transaction. Over the past four quarters, the company's cumulative free cash flow reached an impressive $2.3 billion, sustained by an average natural gas price of $3.25 per million BTU. This highlights EQT's robust, low-cost, and integrated business model. Production volumes were near the upper end of guidance, benefiting from strong well productivity and optimized compression projects, despite deliberate curtailments due to market pricing. The company's corporate differential outperformed expectations, closing $0.12 tighter than the guidance midpoint, even as local basis widened post-guidance. Operational costs were lower than anticipated, leading to a record-low total cash cost per unit, attributed to advancements in water infrastructure and midstream optimization. Capital expenditures were approximately $70 million below the midpoint of guidance, reflecting enhanced upstream efficiencies and midstream performance.
EQT's operational teams set new company and basin records, including the highest monthly pumping hours, the fastest quarterly completion pace, and the most lateral footage drilled and completed within a 24-hour period. The acquisition of Olympus Energy, closed on July 1, saw full integration of all upstream and midstream operations within just 34 days, marking the quickest transition in EQT's history. This rapid integration led to significant operational improvements, such as drilling two Deep Utica wells nearly 30% faster than Olympus's historical average, resulting in an estimated $2 million per-well cost savings. These Deep Utica assets, initially valued at zero in the acquisition, offer substantial long-term upside. Moreover, Olympus's production will feed the Homer City data center project, showcasing how acquired assets can unlock sustainable growth within EQT's platform.
The company made substantial progress in its growth project pipeline, particularly with in-basin power projects and opportunities to provide natural gas supply for new load growth in Appalachia. The MVP Boost expansion project experienced an overwhelmingly oversubscribed open season, leading to a 20% capacity increase to over 600,000 dekatherms per day. This additional capacity is fully supported by 20-year capacity reservation fee contracts with leading Southeastern utilities, highlighting strong customer commitment. Management anticipates a three-times adjusted EBITDA build multiple for this expansion, emphasizing its economic attractiveness. Post-Boost, MVP's mainline capacity will reach 2.6 Bcf per day, more than 1 Bcf per day above current flows, with downstream expansions expected in 2027 and 2028. This additional takeaway capacity, coinciding with increased in-basin power demand, is projected to improve Appalachian pricing, a trend already reflected in tightening M2 basis futures for 2029 and 2030.
EQT's financial strategy focuses on maintaining a robust balance sheet, targeting a maximum total debt of $5 billion. The company expects $19 billion in cumulative free cash flow over the next five years, providing ample capacity for strategic growth projects, further deleveraging, increasing the base dividend, and opportunistic share buybacks. The base dividend was recently raised by 5% to $0.66 per share annually, demonstrating an 8% compound annual growth rate since 2022 and reflecting confidence in the business's sustainability and low free cash flow breakeven price. EQT also finalized LNG offtake agreements with Sempra's Port Arthur, NextDecade's Rio Grande, and Commonwealth LNG, with commencement in 2030 and 2031. These agreements strategically position EQT to benefit from international markets post the anticipated global oversupply period of 2027-2029, offering direct connectivity and greater flexibility than traditional netback deals.
The natural gas market is poised for a critical inflection point, with surging LNG demand and slowing associated gas supply growth. The U.S. is expected to see over 4 Bcf per day of incremental LNG demand by year-end 2025, and an additional 2.5 to 3 Bcf by year-end 2026 from new projects. Forecasts for a colder winter, driven by a shift to La Niña, could further tighten inventories and accelerate demand. Supply-side trends indicate flat associated gas volumes through 2026, with rig reductions and capital discipline in major oil basins leading to lower associated gas growth. These factors suggest a tighter supply picture into 2026 and 2027, supporting a more durable recovery in U.S. gas prices. EQT remains vigilant regarding medium-term risks, such as new Permian pipelines and potential LNG oversupply later in the decade, which could create temporary market shifts. Updated guidance forecasts minimal cash taxes in 2025, saving approximately $100 million, and stable production volumes in 2026, reinforcing EQT's ability to fund growth and shareholder returns.
