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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Related Issuers
Rating Action:

Moody's assigns Ba3 rating to EQT's proposed $300 million unsecured notes

30 Oct 2020

$300 million of new unsecured notes rated

New York, October 30, 2020 -- Moody's Investors Service, ("Moody's") assigned a Ba3 rating to EQT Corporation's (EQT) proposed new $300 million senior unsecured notes due 2029. The proceeds of the notes will be used to partially fund EQT's acquisition of Chevron Corporation's (Chevron, Aa2 stable) Appalachia assets. EQT will acquire approximately 335,000 net Marcellus acreage with 450 MMcfe per day of production from Chevron for a purchase price of $735 million. The transaction is expected to close in November 2020.

All other ratings for the company, including its Ba3 Corporate Family Rating (CFR), remain unchanged. The outlook remains positive.

Assignments:

..Issuer: EQT Corporation

....Senior Unsecured Notes, Assigned Ba3 (LGD4)

RATINGS RATIONALE

Moody's views the Chevron transaction as a credit positive event and the new $300 million issuance will not weaken EQT's credit metrics. Additionally, EQT has concurrently launched a tender offer for up to $150 million combined aggregate principal of its 2021 and 2022 notes. Together these two transactions are largely leverage neutral.

EQT's senior unsecured notes including the proposed $300 million unsecured notes due 2029 are rated Ba3, the same as the company's CFR, because all of the company's long-term debt, which includes a $2.5 billion revolving credit facility (unrated), is unsecured. However, should the company's revolving credit facility become a secured facility the unsecured notes ratings could be downgraded.

EQT's positive ratings outlook reflects the potential for the company to be upgraded through further debt reduction in 2021 from significant free cash flow generation and by achieving additional operating cost optimization to improve its capital efficiency.

EQT's Ba3 CFR reflects the significant improvement in the company's access to the capital markets since the second quarter of 2020. The 2021 natural gas pricing outlook and the macro fundamentals have strengthened, giving EQT an opportunity to generate free cash flow and further reduce debt through 2021. The company has reduced debt by about $800 million since year-end 2019, and has strengthened its commodity hedge book for 2021 adding some certainty to 2021 cash flow. Moreover, the restrained capital spending in 2020 allowed the company to generate significant free cash flow. We expect the company to exercise similar restraint on 2021 capital spending and prioritize debt reduction over reserves and production growth.

EQT is constrained by its weak capital efficiency as measured by its Leveraged Full Cycle Ratio (LFCR). EQT's weak LFCR is also partly caused by the negative reserves revision the company experienced due to its strategic shift to combo development . Moody's expects the LFCR to improve through the more capital efficient drilling strategy and natural gas pricing improvement. Debt reduction will also aid the company's cash margin as interest expense will be lowered. The execution risk involved in these measures constrains EQT's ratings. EQT is supported by its size and scale, high quality acreage position and the acquisition of Chevron Corporation's (Chevron, Aa2 stable) assets increases EQT's size and scale.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING

EQT's ratings could be upgraded if RCF/debt is sustained above 30% and the leveraged full cycle ratio (LFCR) approaches 1.5x. The company must also execute on its debt reduction targets.

EQT's ratings could be downgraded if the company fails to meaningfully reduce debt or if the Retained Cash Flow (RCF) to debt ratio falls below 20%. The ratings could also be downgraded if the company is unable to refinance or repay its near-term maturities.

EQT Corporation is an independent exploration and production (E&P) company focused in the Appalachian Basin.

The principal methodology used in this rating was Independent Exploration and Production Industry published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1056808. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Sreedhar Kona
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Steven Wood
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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