EQT Inks Landmark 10-Year Gas Supply Deals With Duke and Southern

EQT Corporation EQT, the second-largest U.S. natural gas producer, has finalized two significant long-term gas supply agreements with major southeastern utilities, Duke Energy Corporation DUK and The Southern Company SO. The deals, set to begin in 2027, will supply a combined 1.2 billion cubic feet per day (Bcf/d) of natural gas — 800 million cf/d to Duke and 400 million cf/d to Southern — over a period of 10 years.

Though EQT had previously disclosed it struck supply agreements with unnamed “investment-grade utilities,” sources have now confirmed the buyers to be North Carolina-based Duke Energy and Georgia-based Southern Company. The buyers did not make any public statement on the transactions, and EQT, too, has declined to provide further details on the same.

EQT Leverages Mountain Valley Pipeline, Enhances Price Realization

These supply contracts represent roughly 20% of EQT's current production and will utilize the company’s capacity on the Mountain Valley Pipeline (“MVP”), a key piece of infrastructure that EQT acquired through its July 2024 purchase of Equitrans Midstream. The MVP transports gas from West Virginia to Virginia, linking Appalachian production to higher-priced southeastern markets.

EQT will now divert 1.2 Bcf/d of gas from the lower-priced Tetco M-2 index, where 2024 spot prices averaged just $1.67/mmBtu, to the more lucrative Transco zone 4 and zone 5 South hubs. In contrast, Transco zone 5 South averaged $2.69/mmBtu and zone 4 averaged $2.41/mmBtu this year.

CEO Toby Rice previously described the deals as “two of the largest long-term physical supply deals ever executed in the North American natural gas market.” The shift is central to EQT’s strategy of directly selling to large end users — utilities, LNG exporters and data centers — instead of relying on volatile spot markets and financial hedges.

Duke, Southern Secure Supply for AI-Fueled Power Demand Boom

For Duke and Southern, the agreements ensure a secure fuel supply amid a generational shift in U.S. power generation. Both utilities are transitioning from coal to gas-fired plants to meet the explosive energy needs of data centers running artificial intelligence software.

Duke plans to add 5 gigawatts of new gas-fired generation by 2029. Both Duke Energy Carolinas and SO have reserved major capacity on Williams’ 1.6 Bcf/d Southeast Supply Enhancement expansion of the Transco pipeline — slated to enter service in fourth-quarter 2027 — which will funnel Appalachian gas into high-demand southeastern states.

EQT’s Direct Sales Strategy Poised to Boost Gas Price Realizations

The Duke and Southern deals are projected to materially improve EQT’s realized gas pricing. According to Rice, EQT’s corporate gas price differential is expected to narrow to 30¢/mmBtu (by 2028) from around 60¢/mmBtu in 2025.

Looking ahead, EQT is also in active talks with over a dozen proposed power projects within its Appalachian footprint, suggesting that further direct-sale agreements may follow as the U.S. energy landscape continues to evolve.

Zacks Rank & Key Pick

Currently, EQT, DUK and SO carry a Zacks Rank #3 (Hold) each.

Investors interested in the energy sector may look at a better-ranked stock like Subsea 7 S.A. SUBCY. Subsea 7 presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Subsea 7 helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore.

The Zacks Consensus Estimate for SUBCY’s 2025 EPS is pegged at $1.31. The company has a Value Score of A. 

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This article originally published on Zacks Investment Research (zacks.com).

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