Eqt Corporation · NYSE:EQT
Eqt — Proxy Contest (March 2019)
35 slides from Eqt's proxy contest presentation, Mar 25, 2019
Slide 1: EQT Has Transformed Into the Leading U.S. Pure Play Natural Gas Producer
EQT Has Transformed Into the Leading U.S. Pure Play Natural Gas Producer New company, new leadership, new focus Cumulative Adjusted Free Appalachian E&P Company Strength (1)Non-GAAP financial measure, see appendix for definition (2)Based on EQT market cap as of 03/15/2019 2 2019 and Beyond World Cla
Slide 2: Measurable and Transparent Progress in Executing Our Plan
Measurable and Transparent Progress in Executing Our Plan Action Item Measure Timeline Q4 2018 Q1 2019 2019 and included in current guidance) In Process 2019 – 2020 (1)Non-GAAP financial measure, see appendix for definition (2)ETRN share price as of 03/15/2019 3 Board Enhancements Added four new ind
Slide 3: Focused on Delivering Results and Sustainable Free Cash Flow
Focused on Delivering Results and Sustainable Free Cash Flow Flow(1) Adjusted Free Cash Annual cost savings identified Driving Down Costs of Adjusted of Adjusted Free Cash Initiative in 2019 Next Five Years 4 (1)Non-GAAP financial measure, see appendix for definition Delivering Results Q4 2018Q1 201
Slide 4: Announced Industry Veteran Chief Operating Officer
Announced Industry Veteran Chief Operating Officer Career driving strong results at leading shale-focused upstream energy companies Experience operating scale shale assets efficiently Led best-in-class operation at Continental Resources Operational and leadership experience in Appalachia Understands
Slide 5: Management and Board Aligned to Deliver Efficiencies and Free Cash Flow
Management and Board Aligned to Deliver Efficiencies and Free Cash Flow Focused on driving cost reductions and free cash flow from our world-class asset base Senior Management focused on cost reductions, development efficiencies, and accountability Board of Directors Enhanced daily operational track
Slide 6: World-Class Asset Base
World-Class Asset Base Large-scale position in the core of the Appalachian Basin EQT Acreage Overlays the SW Marcellus Core Market Cap(1) $ 4.9 B Utica Cumulative Production Heat Map SW Marcellus Cumulative Production Heat Map Ownership Interest in ETRN(3) $ 1.0 B Core Marcellus Undeveloped Location
Slide 7: 2019 Plan Supports Near-Term Free Cash Flow
2019 Plan Supports Near-Term Free Cash Flow cash flow in 2019(1) Approximately $300-$400 MM of adjusted free Net Development Activity (Turned in Line) Sales Volumes (Bcfe) 1,470 – 1,510 Adjusted Operating Cash Flow ($B)(1) $ 2.2 – 2.3 Adjusted Free Cash Flow ($B)(1) $ 0.3 – 0.4 Tophole Rigs 2 – 4 Fr
Slide 8: Detailed Enhanced 2019 Development and Capital Plan
Detailed Enhanced 2019 Development and Capital Plan transparency, accountability and results 160 140 120 100 80 60 40 20 - 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 PA Marcellus WV Marcellus OH Utica Total Program Spud Well Count TIL Well Count Spud Avg. Lateral Length T
Slide 9: 2019 Operational Efficiencies
2019 Operational Efficiencies Strong 4Q18 and 1Q19 operational performance underscores this team’s ability to achieve and surpass targets 10 Q1 2019 drilling and completion operations on-time and on-budget Completion Operations – Highlights ~35% improvement YTD in stages / crew / month ~300% reducti
Slide 10: 5-Year Financial and Operating Plan
5-Year Financial and Operating Plan B(1) Generates cumulative adjusted free cash flow of ~$2.9 160 15,000 140 14,000 120 100 13,000 12,000 80 11,000 60 40 10,000 9,000 20 0 8,000 2019 2020 2021 2022 2023 TIL Avg. Lateral Length Spud Well Count TIL Well Count Spud Avg. Lateral Length “Target 10%” Adj
Slide 11: Compelling Free Cash Flow Story
Compelling Free Cash Flow Story cash flow(1) Early 2019 cost reductions positively impact 5-Year cumulative adjusted free Adjusted Free Cash Flow(1) and Adjusted Free Cash Flow Yield(1,2) 2019-2023 Cumulative Adjusted FCF Yield(1,2) 60 % - 70 % EQT 7 % Adj. FCF Yield(1,2) Peer Median(3,4) (1)% Conse
Slide 12: Target 10% Initiative
Target 10% Initiative Tracking progress and line-of-sight to further cost savings Cost Reduction Initiatives Progress on Target 10% Initiative Jan 2019: $100 MM identified and implemented (included in base plan) Feb 2019: $50 MM of annual cost savings under Target 10% Initiative identified (included
Slide 13: Delivering Development Efficiencies and Optimization
Delivering Development Efficiencies and Optimization Increasing lateral lengths and optimizing spacing generates higher single-well returns Increasing lateral well spacing optimizes reservoir development Higher well costs resulting from larger completion jobs Cost increases offset by enhanced EURs(2
Slide 14: The Evolution of Well Spacing and Asset Development
The Evolution of Well Spacing and Asset Development Empirical data and deterministic modeling drive design modifications Statistical analysis identified meaningful performance relationships between well interactions Performed rigorous hydraulic fracturing & reservoir modeling and analysis Calibrated
Slide 15: Test Results Support Development Strategy
Test Results Support Development Strategy Wider spacing and larger fracs optimize development Performance plots show pressure normalized rate/ft vs cumulative production/ft; Offsets include all operated Marcellus wells within 3 miles of the surface location of the test well(s) Test wells utilized >2
Slide 16: Technology Platform Driving Performance Efficiencies
Technology Platform Driving Performance Efficiencies Transforming the way we operate to drive efficiencies and maximize asset value Functions Benefits optimization operations simultaneously 17 Real-Time Operations Center 24/7 monitoring of Provides consistency and operational activitiesoperational e
Slide 17: Technology Platform Driving Performance Efficiencies
Technology Platform Driving Performance Efficiencies make better, faster decisions Using data, science and analytics to Functions Benefits logistics scheduling assets down costs forecasting edge of Appalachia development by region, tier, operator, and formation progression 18 Water Scheduling and Op
Slide 18: Financial Strength
Financial Strength Flexibility to further reduce leverage and return capital to shareholders Leverage – EQT vs. Marcellus Peers(1,4) Monetization of ETRN stake Can reduce leverage(1) from 2.2x to 1.7x 3.2x 2.2x 2.2x Investment grade ratings Flexibility in volatile commodity price environments Peer 1
Slide 19: Environmental, Health and Safety
Environmental, Health and Safety “The right thing to do” social responsibility and exemplary (1)See appendix for more details 20 In the Community EQT and the EQT Foundation — a separate 501(c)(3) organization — support our communities through local giving, sponsorship, and philanthropic efforts. In
Slide 20: Strong Fundamentals In Place to Deliver Exceptional Value to Shareholders
Strong Fundamentals In Place to Deliver Exceptional Value to Shareholders World-class asset base, sustainable free cash flow and financial strength 1.5x – 2.0x target leverage (Net Debt / Adjusted EBITDA) (1)Non-GAAP financial measure, see appendix for definition (2)ETRN share price as of 03/15/2019
Slide 21: Strong Fundamentals In Place to Deliver Exceptional Value to Shareholders
Strong Fundamentals In Place to Deliver Exceptional Value to Shareholders World-class asset base, sustainable free cash flow and financial strength Leading U.S. natural gas producer at >4.0 Bcfe per day World-Class Asset Base 15-20 years drilling inventory in the core of the Marcellus Contiguous acr
Slide 22: EQT as a Leading Environmental Steward
EQT as a Leading Environmental Steward Long-term, sustainable environmental practices aligned with investors and stakeholders 23 Environmental Collaborations As a One Future member, EQT exceeded the methane intensity sector level target of 0.28% with a rate of 0.15% (methane emissions per gross prod
Slide 23: 2019 Guidance
2019 Guidance flow(1) ~$300-$400 MM of adjusted free cash Based on NYMEX natural gas price as of 01/31/2019 of $2.93 (1)Non-GAAP financial measure, see appendix for definitions 24 Q1 2019 Full-Year 2019 Production Total production sales volume (Bcfe) Liquids sales volume, excluding ethane (Mbbls) Et
Slide 24: Firm Transportation Portfolio
Firm Transportation Portfolio Provides access, stability and opportunity Diversity of delivered markets provides significant commercial optionality Portfolio offers price stability by accessing highly liquid markets Assets directly access markets which represent ~85% of expected U.S. natural gas dem
Slide 25: Risk Management
Risk Management NYMEX Hedge position as of March 15, 2019 Volume (MMDth) Average Price ($/dth) 562 2.91 565 2.82 298 2.78 136 2.75 61 2.74 $ $ $ $ $ Volume (MMDth) Average Short Strike Price ($/dth) 260 3.13 171 3.16 37 3.25 22 3.20 7 3.18 $ $ $ $ $ Volume (MMDth) Average Long Strike Price ($/dth) 0
Slide 26: Unit Cost Comparison – FY 2018
Unit Cost Comparison – FY 2018(1) Peer-leading unit costs for LOE, G&A Lease Operating Expense ($/Mcfe)(2) Selling, General & Administrative ($/Mcfe) Peer Mean (excl Peer 5): $0.15 Peer Mean: $0.18 .93 EQT (3) EQT Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 (1)Peers include
Slide 27: Cautionary Statements
Cautionary Statements EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Blake McLean – Senior Vice President, Investor Relations and Strategy – 412.395.3561 The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the S
Slide 28: Non-GAAP Financial Measure: Adjusted EBITDA
Non-GAAP Financial Measure Adjusted EBITDA As used in this presentation, adjusted EBITDA is defined as net income from continuing operations, plus interest expense, income tax expense, depreciation and depletion, amortization of intangible assets, long-lived asset and goodwill impairments, lease imp
Slide 29: Reconciliation of Adjusted EBITDA
Non-GAAP Financial Measure Reconciliation of Adjusted EBITDA The table below reconciles adjusted EBITDA with net (loss) income from continuing operations, the most comparable financial measure as calculated in accordance with GAAP, as reported 10-K for the year ended December 31, 2018. in EQT’s Stat
Slide 30: Adjusted Operating Cash Flow and Adjusted Free Cash Flow
Non-GAAP Financial Measure Adjusted Operating Cash Flow and Adjusted Free Cash Flow As used in this presentation, adjusted operating cash flow is defined as EQT’s net cash provided by operating activities less changes in other assets and liabilities, less EBITDA attributable to discontinued operatio
Slide 31: Reconciliation of Adjusted Operating Cash Flow and Adjusted Free Cash Flow
Non-GAAP Financial Measure Reconciliation of Adjusted Operating Cash Flow and Adjusted Free Cash Flow The table below reconciles adjusted operating cash flow and adjusted free cash flow with net cash provided by operating activities, the most comparable financial measure calculated in accordance wit
Slide 32: EBITDA Attributable to Discontinued Operations
Non-GAAP Financial Measure EBITDA Attributable to Discontinued Operations As used in this presentation, EBITDA attributable to discontinued operations is a non-GAAP supplemental financial measure defined as net income from discontinued operations, plus interest expense, income tax expense, depreciat
Slide 33: Adjusted SG&A per Unit
Non-GAAP Financial Measure Adjusted SG&A per Unit Adjusted SG&A per unit is a non-GAAP supplemental financial measure that is presented because it is an important measure used by EQT’s management to evaluate period-to-period comparisons of earnings trends. Adjusted SG&A per unit is defined as SG&A l
Slide 34: Important Information
Important Information EQT Corporation (the Company) intends to file a proxy statement and associated GOLD proxy card with the Securities and Exchange Commission (the SEC) in connection with the solicitation of proxies for the Company’s 2019 Annual Meeting of Shareholders (the 2019 Annual Meeting). D
Slide 35: Important Information
Important information EQT Corporation the Company) intends to fle @ proxy statement and associated GOLD prony card with the Securities and Exchange Commission (the SEC) in connection with the solicitation of proxies for the Company's 2019 Annual Meeting of Shareholders (the 2019 Annual Meeting). Det