A LEADING INDICATOR FOR PRODUCER GUIDANCE

EQT is the largest natural gas producer in the US.  They produce 5.1 Bcf/d of natural gas in addition to a significant amount of natural gas liquids.  Their production is in the Marcellus and Utica Basins in the Northeast.  They recently came out with their updated 2022 production guidance when they reported their earnings per share on October 27^th, 2022.  EQT reduced their production guidance for the 4^th quarter 2022, in addition to coming out with lower-than-expected production for the 3^rd quarter 2022.  There were signs however that EQT was likely to underperform on their production during the 3^rd quarter 2022 and would likely lower their production guidance for the 4^th quarter 2022 before they announced it publicly in their earnings release.
Hyperion keeps track of every company’s fracking crews and rigs by basin.  EQT’s fracking crews were tanking beginning in early August and went to zero and have not recovered since then.  EQT said in their earnings call that water constraints due to summer drought in the Northeast had affected their production.  Hyperion’s real time tracking of their fracking crews gave the early warning signal that EQT was probably going to underperform on their Q3 2022 production and reduce their Q4 2022 production guidance before they announced it in their earnings release.

EQT’s fracking guidance was to have 2 to 3 fracking crews in 2022.  However, beginning in August 2022, their fracking crew count went to zero and has stayed at level into October.  EQT said in their earnings call on October 28^th, that the water shortage issue has now been resolved, but that they still have other 3^rd party impact issues mainly from midstream delays.  EQT’s fracking crew count remains at zero.  Once their fracking crews pick back up to their 2 to 3 guidance range, then it implies that they have completely resolved their 3^rdparty impact issues.  Hyperion’s real time tracking of fracking crews will be able to catch the change in trend in fracking crews before it becomes public knowledge.

EQT’s rig count guidance has been in the range of 3 to 5 rigs.  So far, their rig count has been on track with their rig count guidance for 2022.

Summary

EQT’s downward revision for their Q4 2022 production guidance in addition to their Q3 2022 production miss was predictable before it was made public in their earnings press release.  The Hyperion tracking of fracking crews showed that they were falling significantly short on their fracking crews 2 ½ months before they released their Q3 2022 earnings report.  Hyperion’s real time tracking of fracking crews by company will be able to catch the change before it becomes public knowledge.