Moody's cuts outlook for EQT on credit risk

NEW YORK (AP) — Moody's Investors Service said Friday it reduced the outlook for energy company EQT Corp. to "Negative" from "Stable," saying its exploration and production operations increase credit risks.

Moody's also affirmed its "Baa1" senior unsecured rating and "P-2" short-term ratings for Pittsburgh-based EQT.

The ratings agency also affirmed its "Baa3" senior secured rating for EQT's sponsored structured vehicle, Appalachian NPI LLC, but cut its outlook to "Negative" from "Stable."

A message seeking comment was left with EQT.

"While EQT has demonstrated very good results in its (exploration and production) operations, this strategy raises EQT's overall risk profile for the current 'Baa1' rating, particularly as the company maintains an aggressive capital spending program in support of this strategy that could result in weaker credit metrics over the near term," said Ken Austin, Moody's vice president.

Moody's said EQT's capital spending plans have been outpacing cash flow and will continue this year.

The ratings agency said it would consider a "Stable" outlook if EQT issues enough equity to reduce capital risk and leverage from a funding gap expected in its capital program this year. Or the ratings agency would consider a "Stable" outlook if EQT's regulated business grow sufficiently to reduce its reliance on the exploration and production business for operating income.

About $1.2 billion in debt is affected by the outlook revision.

Shares fell 19 cents, to $28.28 in afternoon trading.