What happened

Shares of EQT Corporation (EQT 1.63%) tumbled more than 10% by 10:45 a.m. EDT on Thursday. Weighing on the natural gas stock was its second-quarter report.  

So what

EQT posted a surprise loss for the second quarter. The natural gas producer reported a loss of $936 million, or $3.35 per share, missing analysts' expectations by $3.39 per share. The culprit was a $1.3 billion loss on its commodity price hedges due to higher prices during the quarter. Adjusting for that impact, EQT posted a profit of $0.07 per share, which was $0.03 per share ahead of the consensus estimate. 

Two people wearing hard hats and safety vests inside of an energy facility.

Image source: Getty Images.

EQT sold 421 billion cubic feet of natural gas equivalent during the quarter, which was in line with its guidance. Total operating costs were also in line with guidance, while capital expenditures totaled $246 million, which was $19 million below the low end of its projections. As a result, EQT generated $155 million of free cash flow during the period. 

The company also noted that it closed its $2.9 billion acquisition of Alta Resources Development last week. Alta will add 300,000 net acres in the Northeast Marcellus, where it's currently producing 1 billion cubic feet of natural gas equivalent per day. EQT expects Alta will generate $150 million to $170 million in free cash flow this year. 

Now what

Higher commodity prices hurt EQT in the quarter because they forced the company to record a huge loss on its hedging contracts. However, they should benefit the company in the future, as it should generate more free cash flow, especially now that it has completed its deal for Alta. EQT believes that deal will enable it to create more value for investors in the coming years.