My Top Natural Gas Stock Pick for 2027 and Beyond: EQT Corporation
Key Points
EQT is the country's only large-scale, vertically integrated natural gas producer.
It also has an investment-grade balance sheet.
The company can generate more durable cash flows than its peers, with significant upside from growing gas demand.
EQT (NYSE: EQT) is my pick for the best natural gas stock to buy for 2027 and beyond. It's the only large-scale, vertically integrated natural gas producer in the U.S., enabling it to combine low-cost production with owned midstream infrastructure, a critical competitive advantage. It can produce durable cash flows at lower prices, with significant upside to higher prices, a profile its rivals can't match.
Here's more about why I think EQT is the top natural gas stock to buy.
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What makes a natural gas stock the best?
A top natural gas stock typically combines four crucial features:
- A low-cost resource base.
- Control over, or access to, infrastructure to deliver its gas to premium markets.
- A durable balance sheet that can withstand lower prices.
- Exposure to growing demand.
EQT checks every box. It's the country's lowest-cost producer thanks to its premier resource position in the Appalachian basin and vertically integrated operations. The company has extensive owned midstream infrastructure, including gathering and transmission pipelines, processing assets, and storage capacity. EQT has an investment-grade balance sheet, with steadily falling debt. Finally, the gas giant has exposure to several structural mega-trends driving gas demand, including liquefied natural gas (LNG) exports and AI power.
What makes EQT stand out from other natural gas producers?
The biggest thing that sets EQT apart from other natural gas producers is its vertically integrated business model. The company became the only vertically integrated gas producer in 2024 when it completed its transformational acquisition of Equitrans Midstream (recombining with a company it previously spun off in 2018). Its infrastructure features about 1,250 miles of natural gas transmission pipelines, including an interest in the Mountain Valley Pipeline (MVP) system, which transports gas from northwestern West Virginia to southern Virginia. EQT's ownership in transmission pipelines provides it with direct access to premium markets.
EQT's integration puts it in a stronger strategic position to capitalize on growth trends. For example, it recently signed a premium power supply deal with Competitive Power Ventures to deliver 325,000 Dth/d of gas to the CPV Shay Energy Center in West Virginia at PJM-linked pricing, substantially higher than in-basin pricing. Meanwhile, it has signed several LNG offtake agreements for various Gulf Coast LNG export facilities at higher prices than the current market level. Its integration also provides it with unique investment opportunities. EQT recently bought Blackline Midstream, which consists of two propane storage and distribution terminals in New England, at a strong 20% free cash flow yield.
How does EQT compare to other natural gas producers?
EQT faces significant competition in the natural gas sector. It's not the biggest player in the industry, as Expand Energy (NASDAQ: EXE) is America's largest gas producer. The company, created by the merger of Chesapeake Energy and Southwestern Energy, operates in the Appalachian basin and Haynesville. Expand is also about to become an integrated natural gas company after completing its acquisition of Twin Eagle, a leading gas marketer. However, Expand only owns transmission pipeline rights, not interests in gas pipelines.
Meanwhile, other large U.S. energy producers are either more oil-focused (e.g., BP and ConocoPhillips) or lack the scale, vertical integration, and financial strength of EQT (e.g., Range Resources and Antero Resources). EQT's combination of low-cost resources, integration, and balance sheet strength gives it peer-leading free cash flow durability. For example, it can produce $10 billion in cumulative free cash flow from 2026 to 2030 at $2.75 per MMBtu, a level that's closer to breakeven for several peers.
What are the risks of buying EQT stock?
EQT's vertical integration and balance sheet strength make it one of the lowest-risk natural gas stocks. However, it does face risks. Gas price volatility is one of the biggest. If gas tumbles below an average of $2 per MMBtu, EQT wouldn't generate any free cash flow this year.
The company also faces permitting risk for key infrastructure. For example, it has faced delays in building and expanding MVP. It also signed an LNG deal with Energy Transfer for its proposed Lake Charles LNG terminal, which the midstream giant has since suspended developing due to permitting delays.
EQT is the top natural gas stock
If you're looking for a natural gas producer heading into 2027, EQT's combination of integration, low costs, balance sheet strength, and visible growth drivers makes it the top choice. It should produce durable, growing free cash flow over the next few years, driven by power and LNG contracts rather than higher prices. The company's combination of resiliency at lower prices and upside to higher prices makes it the best natural gas producer to buy.
Matt DiLallo has positions in ConocoPhillips, EQT, and Energy Transfer. The Motley Fool has positions in and recommends EQT. The Motley Fool recommends BP and ConocoPhillips. The Motley Fool has a disclosure policy.