Before the market opened this morning, Equitable Resources (NYSE:EQT) announced a capital expenditure budget of $1 billion for 2009. This amount is down from Equitable’s expected capex of $1.4 billion this year. The company plans to finance the spending from cash flow and existing credit lines.
When the company reported its third quarter results, it said it wouldnot have to go to the capital markets to fund a 2009 capex budget ofabout $1 billion. It appears to have made good on that statement.
The company also expects to increase natural gas sales by 15% in 2009.That amounts to about 97 billion cubic feet equivalent. The bigquestion, of course, is how much they can sell the gas for. Equitableholds swaps on about 30% of its production at $5.91 per thousand cubicfeet, and collars on about a fourth at a low of $7.34 and a high of$13.68. Unless the market turns around completely, these hedges shouldpay off for the company.
Equitable shares closed at $30.09 yesterday, about 60% below the 52-week high.
Paul Ausick
December 4, 2008
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