Forget LNG Exporters: EQT Is the Natural Gas Stock I'd Buy Today

I'd buy EQT Corp (NYSE: EQT) over a liquefied natural gas (LNG) exporter right now, as it provides export exposure and upside to the AI power megatrend. The gas producer offers greater upside potential because it isn't fully capping its ability to capitalize on higher prices, unlike many other LNG stocks.

Here's why I think it's the top natural gas stock to buy.

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What's the difference between a gas producer and an LNG exporter?

LNG exporters build and operate massive liquefaction and export terminals to turn natural gas into a liquid for transport on specialized gas-carrying ships. These facilities are costly to build and take years to complete. For example, leading U.S. LNG export terminal developer Cheniere Energy (NYSE: LNG) has already invested $50 billion to develop two LNG export terminals along the U.S. Gulf Coast. It took the company four years to build the first two liquefaction trains at its Sabine Pass LNG facility and three years to begin production at its Corpus Christi Liquefaction facility. It's continuing to invest capital to expand both facilities to support growing global LNG demand.

LNG terminal operators typically sell most of their volumes under long-term contracts, locking in pricing. For example, Cheniere expects to produce 53 to 54 million tonnes of LNG this year, with 46 to 47 million tonnes locked in under long-term contracts. LNG developers generally pre-sell the bulk of their planned capacity before starting construction because it provides the revenue predictability needed to finance these large projects.

Meanwhile, natural gas producers extract gas from the ground and sell it at the prevailing market price. Many gas producers aim to secure access to premium gas markets (U.S. Gulf Coast or global) by reserving capacity on large-scale gas transmission pipelines or at LNG export terminals.

Does EQT benefit from LNG exports without investing in terminals?

EQT is the country's only large-scale, integrated natural gas producer. It owns significant midstream infrastructure, including an interest in the large-scale Mountain Valley Pipeline. That pipeline transports gas to premium markets along the East Coast, where it can connect to pipelines shipping gas to the Gulf Coast, the home to most of the country's LNG export capacity.

While EQT hasn't invested directly in an LNG export terminal, it has signed capacity deals for several LNG export projects. It most recently signed a 5-year offtake agreement with a large Asian integrated energy company for 0.5 million tons of LNG per year sourced from several Gulf Coast LNG facilities starting in 2028. That deal alone should boost its 2028 free cash flow by $45 million, based on recent gas prices. From 2030 onward, EQT expects international pricing exposure for 10% to 15% of its volumes based on its current LNG contracts.

What are the different risk factors facing EQT and LNG exporters?

One of EQT's biggest risk factors is natural gas price volatility. Changes in supply and demand can meaningfully impact gas prices, affecting EQT's profitability. For example, its 2026 cash-flow breakeven level is around $2 per MMBtu. The company offsets some of this volatility by hedging a portion of its volume, which can cap its upside while providing a pricing floor. However, thanks to its integration and low-cost business model, EQT has peer-leading free cash flow durability. At $2.75 per MMBtu, EQT would generate about $10 billion in cumulative free cash flow through 2030, whereas many of its peers are near or below their breakeven point at that price.

The long-term contracts underpinning most LNG export terminals help insulate them from price volatility. However, these companies still face risks, including permitting, construction, and financing risk. Permitting and market issues led to a series of delays and setbacks for Energy Transfer (NYSE: ET) as it tried to develop Lake Charles LNG. Energy Transfer ultimately decided to suspend further development of that project earlier this year because its growing backlog of gas pipeline projects offered superior risk/return profiles. The company had spent at least $350 million on developing the project and secured significant offtake deals, including a 20-year, 1 million tonnes per year agreement with EQT.

Why EQT is the best natural gas stock to buy

LNG operators offer lower-risk exposure to growing global gas demand, as long-term contracts lock in project economics. EQT has more upside exposure to that market and the overall growth in gas demand. It has also signed deals to supply gas to power producers, capitalizing on AI-driven electricity demand (it recently signed a 10-year deal to supply gas to a power project in West Virginia at a meaningful uplift to local pricing). I think EQT's combination of a lower risk profile compared to other U.S. gas producers and its exposure to both the LNG and AI power markets makes it the best natural gas stock to buy.

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