Why I Just Bought More of This Top Natural Gas Stock

Wood Mackenzie, a leading research and consulting firm, estimates that U.S. natural gas demand will increase by 22 billion cubic feet per day (Bcfd) by 2030, up from less than 110 Bcfd in 2024. Meanwhile, others are even more bullish on gas demand due to the emergence of power-hungry AI data centers.

This growth driver was one of the many reasons I recently bought even more shares of top natural gas stock EQT (NYSE: EQT). Here's why I think it could be a big winner in the coming gas boom.

A low-cost leader

EQT is unique in the natural gas industry. It's the only large-scale vertically integrated U.S. gas producer, which gives it a strategic advantage. It has a leading upstream natural gas production business and operates critical midstream infrastructure to support it (EQT bought Equitrans Midstream in 2024 to create an integrated gas leader). Over 90% of the gas volumes it produces flow through its integrated system, saving it money. EQT's combination of scale -- it's one of the country's largest gas producers -- and vertically integrated midstream assets enables it to produce gas at a low cost of only $2 per MMBtu (gas is currently over $3 per MMBtu).

As a result, EQT has become a free cash flow machine. It has produced a cumulative $2.3 billion in free cash flow over the last 12 months. It's using that money to repay debt, repurchase shares, and pay a growing dividend (EQT recently hiked its payout by 5%).

EQT controls over 1 million undeveloped core net acres of low-cost natural gas resources, which is enough to last it for the next 30 years. That will enable it to prudently grow its production in the future as demand increases and generate significant free cash flow. EQT can produce a cumulative $10 billion to more than $25 billion in free cash flow through 2029 at an average gas price between $2.75 and $5.00 per MMBtu.

Multiple upside catalysts

EQT has been working hard to maximize the value of its production. It's seeking to expand its MVP pipeline with the MVP Southgate and MVP Boost projects, which could enter commercial service in 2028 and 2029, respectively. It also signed deals to supply gas to several new power plant projects, which it's supporting by investing in building the associated midstream infrastructure. Additionally, EQT has signed several agreements to export liquefied natural gas (LNG) from terminals when they come online in the early part of the next decade.

Meanwhile, the company has been strengthening its balance sheet, which will give it even more financial flexibility in the future. EQT could use its growing free cash flow to increase shareholder returns or make another acquisition to further enhance its scale and integration. Last year, it acquired Olympus's upstream and midstream assets for $1.8 billion.

The best-positioned gas producer

EQT's combination of scale and vertical integration puts it in a strong position to capitalize on growing gas demand. Its low-cost operations should enable it to produce significant free cash flow, even at lower prices. Meanwhile, it has multiple additional upside catalysts. These factors are driving me to continue boosting my position in this top gas stock.

Matt DiLallo has positions in EQT. The Motley Fool has positions in and recommends EQT. The Motley Fool has a disclosure policy.