Moody's downgrades EQT

Moody's Investors Service said it downgraded EQT Corp.'s senior unsecured regular bond/debentures to Baa3 from Baa2, senior unsecured medium-term note program to Baa3 from Baa2, commercial-paper rating to prime-3 from prime-2, senior unsecured shelf rating to Baa3 from Baa2, subordinated shelf rating to Ba1 from Baa3, junior subordinated shelf rating to Ba2 from Ba1 and preferred shelf rating to Ba3 from Ba2.

The outlook is stable.

The downgrade concludes a review that began in December 2012 following news that the company entered into an agreement to sell its local distribution company subsidiary Equitable Gas and for high leverage and challenging natural gas fundamentals in its exploration and production business, Moody's said.

The downgrades reflects EQT's natural gas concentration and much smaller production and reserve scale than its Baa2 peers, the agency said.

The declining materiality of the company's local distribution business to its overall risk profile already limits its benefit to EQT's credit ratings, Moody's said.

The ratings also consider the company's growing production, high quality acreage position in the Marcellus shale and very low cost structure that allows it to generate competitive investment returns in a weak natural gas price environment, the agency said.

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