Eqt Corporation · NYSE:EQT
Eqt — Q3 2022 Earnings Presentation
46 slides from Eqt's earnings presentation, Oct 27, 2022
Slide 1: Investor Presentation Third Quarter 2022
Investor Presentation Third Quarter 2022 October 26, 2022 10/26/2 1 1 022
Slide 2: Cautionary Statements
Cautionary Statements EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Cameron Horwitz – Managing Director, Investor Relations & Strategy – 412.395.2555 The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC,
Slide 3: Performing for All Stakeholders
Performing for All Stakeholders Strong FCF generation, announced accretive acquisition & accelerated shareholder returns Q3 2022 RESULTS RECENT HIGHLIGHTS Production 488 Bcfe › Announced $5.2 B bolt-on acquisition of Tug Hill and Average Realized Price $3.41 per Mcfe XcL Midstream, implying a long-t
Slide 4: The Premier Appalachian Natural Gas Producer
The Premier Appalachian Natural Gas Producer Combination of scale, premier assets, and responsible development PURE-PLAY APPALACHIAN PRODUCER EQT AT A GLANCE (NYSE: EQT) $14.5 B #1 NE PA MARCELLUS ~1.0 Bcf/d Market Cap(1) ~180k core net acres Producer of natural gas OH UTICA ~0.5 Bcfe/d $4.7 B in th
Slide 5: Strategic Bolt-On Acquisition Strengthens EQT's Business
Strategic Bolt-On Acquisition Strengthens EQT’s Business Adding low-risk, high-quality assets offsetting existing acreage with improved free cash flow durability SW APPALACHIA ACREAGE POSITION ACQUISITION MAKES EQT’S FREE CASH FLOW EVEN MORE RESILIENT › Announced $5.2 B bolt-on acquisition of Tug Hi
Slide 6: Strong Execution, Accretive Acquisitions and Shareholder Returns
Strong Execution, Accretive Acquisitions and Shareholder Returns EQT’s addition to S&P 500 reflects culmination of multi-year plan execution EQT S&P 500 S&P 500 - Energy A STRONGER, MORE SUSTAINABLE EQT 350% September 2022 EQT Announces Acquisition of Tug Hill & XcL Midstream SINCE MANAGEMENT JOINED
Slide 7: Abundant Appalachian Natural Gas Sets Foundation for Zero-Carbon Energy
Abundant Appalachian Natural Gas Sets Foundation for Zero-Carbon Energy EQT collaborating with leading companies to establish clean hydrogen hub in Appalachia › ARCH2 expected to be a foundational component of America’s transition towards decarbonization › Hydrogen hub brings together 40+ participat
Slide 8: Near-Term Acceleration of Free Cash Flow
Near-Term Acceleration of Free Cash Flow Differentiated growth in free cash flow generation and free cash flow yield FCF GENERATION(1,2) & FCF YIELD(1,2) $4,000 30% ~25% Coming Into Focus 25% Projected rapid FCF $3,000 generation growth 2022E 2023E 20% FCF ($MM) FCF Yield ~13% ~25% $2,000 ~13% 15% P
Slide 9: Delivering On Capital Return Strategy
Delivering On Capital Return Strategy Fast pace toward debt reduction, plenty of remaining firepower for additional share repurchases INCREASED ’22-’23 DEBT REDUCTION TARGET DOUBLED SHARE REPURCHASE AUTHORIZATION $ MM $ MM Debt Reduction Previous Target: Target: Share Repurchase Previous Authorizati
Slide 10: Capital Returns Keeping Pace with Free Cash Flow
Capital Returns Keeping Pace with Free Cash Flow Approximately $1.5 B returned to shareholders year-to-date RETURNING CAPITAL TO SHAREHOLDERS(1) $ MM STRONG FREE CASH FLOW Senior Note Repurchases Convertible Note Principal Retired Convertible Note Premium Share Repurchases GENERATION AND CASH INFLOW
Slide 11: Consistent Productivity Improvements Driven by Combo Development
Consistent Productivity Improvements Driven by Combo Development Strong well performance helps counterbalance third-party impacts TRACK RECORD OF CONTINUED PRODUCTIVITY IMPROVEMENTS(1) IMPROVING WELL MMcf/ft PRODUCTIVITY EQT 2019 EQT 2020 EQT 2021 Appalachia Avg. 2021 700 › Since taking over operati
Slide 12: High-Quality Inventory Underpins Sustainable Capital Returns
High-Quality Inventory Underpins Sustainable Capital Returns Transparent look at core inventory shows every core location breaks even at <$3 gas HIGH-QUALITY INVENTORY: ~1,800 CORE NET LOCATIONS Inventory Depth: PV-10(1) breakeven price by well $/MMBtu A Closer Look Differentiated Inventory Base: Hi
Slide 13: Investment Grade Ratings Reduce Cost of Capital and Maximize Flexibility
Investment Grade Ratings Reduce Cost of Capital and Maximize Flexibility Leverage(1) trending towards ~1.0x by year-end at strip, long-term leverage(1) target of 1.0–1.5x at $2.75 gas $1.0 B OF NEW SENIOR NOTES ISSUED EQT SENIOR NOTES MATURITIES(3) ~$830 MM of principal retired year-to-date › $500 M
Slide 14: Balance Sheet Improvement Driving Down Cost of Capital
Balance Sheet Improvement Driving Down Cost of Capital Swift return to Investment Grade ratings leads to tighter credit spreads EQT CREDIT SPREADS(1) Basis Points 1,600 Downgraded 1,400 to High Yield by All 3 Agencies 1,200 1,000 ~415 bps spread ~220 bps spread Priced $350 MM Priced $1.0 B 800 of Se
Slide 15: "All of the Above" Shareholder Return Framework
“All of the Above” Shareholder Return Framework Balanced framework focused on optimizing long-term risk-adjusted value creation CAPITAL ALLOCATION FRAMEWORK DECEMBER JULY SEPTEMBER PRIORITIES & PRINCIPLES FRAMEWORK FRAMEWORK FRAMEWORK (2022-2023) (2022-2023) (2022-2023) $4.0 B IN ABSOLUTE DEBT REDUC
Slide 16: EQT Presents a Differentiated Energy Investment Opportunity
EQT Presents a Differentiated Energy Investment Opportunity Expanding track record of performance and continuing our rate of change story DO IT RIGHT… …THEN DO IT BETTER EQT Strength Detail Stat Upside and Benefits Modern operating model, data-driven Disciplined approach to allocating PROVEN → Reduc
Slide 17: Creating Long-Term, Sustainable Value
Creating Long-Term, Sustainable Value Simple value proposition 1 Efficient capital program to produce ~2 Tcfe “ Our story is simple: we have evolved our business to align with the core tenants of a sustainable shale era. That means running an Hedging strategy that provides downside protection effici
Slide 18: Appendix
=e | tee z : ds : Pr kk i fi Wong? noglese. te = ees = (= \e « = a. - 1 pera oo 1c es,
Slide 19: Clear Visibility Towards Achieving Net Zero Goal by 2025
Clear Visibility Towards Achieving Net Zero Goal by 2025 Proven path to reach emissions targets, not relying on future technological advancements SETTING THE STAGE KEY INITIATIVES WHERE EQT IS HEADED Baseline Emissions and Taking on Combustion Emissions, Net Zero by 2025(2) Progress to Date Pneumati
Slide 20: EQT Is Changing the World That We Touch
EQT Is Changing the World That We Touch Our operational presence within local communities makes a tremendous impact VALUES IN ACTION AMERICAN SHALE: A NEW HOPE 456,000 video views TRUST | TEAMWORK | HEART | EVOLUTION Digital Wildcatters 40,000 hours of watch time › 1% Pledge: Employees asked to dona
Slide 21: American Public Voicing Clear Support for U.S. Natural Gas
American Public Voicing Clear Support for U.S. Natural Gas Prioritizing affordable energy while helping the world address climate goals Bipartisan Support to Increase U.S. Natural Gas Production Support Increased Production Oppose Increased Production 70%+ of Voters Support Additional Gas Production
Slide 22: Gas Gathering Rates Contractually Declining Over Time
Gas Gathering Rates Contractually Declining Over Time De-risked near-term fee-relief with exercise of cash option; long-term gathering rate declines intact CORPORATE GATHERING RATES(1) $/Mcfe POSITIVE GAS GATHERING $0.75 Drives differentiated free RATE OUTLOOK cash flow growth, even without producti
Slide 23: Continuing the Evolution
Continuing the Evolution After being voted in by shareholders in 2019, management has been delivering on promises Premier Asset Base and Efficient Operations Free Cash Flow Generation CHECKED ALL Balance Sheet Strength BOXES IN SUSTAINABLE Emissions Reductions SHALE ERA Returning Capital July 2020 2
Slide 24: Leveraging Large-Scale Operations on a Large-Scale Asset Base
Leveraging Large-Scale Operations on a Large-Scale Asset Base Highly predictable & repeatable operations through combo-development EQT COMBO-DEVELOPMENT EXAMPLE REQUIREMENTS REAL RESULTS >80% >15 2.0 Tcfe Combo-development Years of core net Consistent 4-5 rig program and • Contiguous asset base • ~8
Slide 25: Our Modern Operating Model Has Driven a Step-Change in Asset Performance
Our Modern Operating Model Has Driven a Step-Change in Asset Performance We are now realizing the full impact of productivity improvements from our operational overhaul Operational Overhaul: ~98% ~40% Increased EURs Implementation of best practices and process Production uptime & Improvement in + Lo
Slide 26: The Marcellus Is the Most Capital Efficient Gas Play
The Marcellus Is the Most Capital Efficient Gas Play EQT's capital efficiency expected to continue to improve over time, with only 5 rigs needed to hold production flat in 2022 THE MARCELLUS ADVANTAGE EQT BASE DECLINE RATE EXIT-TO-EXIT RATE DECLINE › Lowest capital intensity natural gas asset in the
Slide 27: Ample Liquidity Drives Capital Allocation Flexibility
Ample Liquidity Drives Capital Allocation Flexibility Return to investment grade offers improved liquidity LIQUIDITY(1) $2.5 B ~$2.6 B Unsecured Revolver Liquidity(1) › Recently renewed revolving › Fitch and S&P Credit Rating credit facility matures June upgrades set the stage for 28, 2027, with abi
Slide 28: Hedging Strategy Provides Compelling Risk-Adjusted Upside
Hedging Strategy Provides Compelling Risk-Adjusted Upside Hedge position as of October 21, 2022 2022 2023 2023 2023 2023 2024 UPDATED HEDGING STRATEGY 4Q(1) 1Q 2Q 3Q 4Q FY Hedged Volume (MMDth) 290 300 353 356 283 17 › Implementing a hedge strategy that Hedged Volume (MMDth/d) 3.2 3.3 3.9 3.9 3.1 -
Slide 29: Hedge Book Offers Risk Adjusted Upside
Hedge Book Offers Risk Adjusted Upside Repositioning from swaps to collars protects the floor with asymmetric exposure to the upside Cap Makeup Shifts Average Ceiling Prices Asymmetric Skew to Towards Calls Positively Impacted the Upside 100% Swaps Calls Average Cap Price Downside Upside Average Flo
Slide 30: Advantaged Market Intelligence & Diversified End Markets
Advantaged Market Intelligence & Diversified End Markets Access to diverse markets provides flexibility and opportunity Market Mix - Price Points(1) 2022E(2) 2023E Provides Operational and Cash Flow Local 38% 36% We hedge Flexibility Covered(5) 91% local basis › Diversity of delivery markets provide
Slide 31: Appalachian Basin Prices Continue to Trade Higher
Appalachian Basin Prices Continue to Trade Higher Local pricing is highly correlated to Henry Hub NYMEX v M2 PRICING $/MMBtu $10.00 NYMEX M2 $9.00 › Average forward M2 curve is 75-80% of $8.00 NYMEX(1) $7.00 › Local pricing increased from ~$3/MMBtu to $6.00 >$5/MMBtu despite widening basis $5.00 › I
Slide 32: New Pipeline Capacity Needed for Appalachia to Respond to High Prices
New Pipeline Capacity Needed for Appalachia to Respond to High Prices World’s largest gas field pipeline constrained; EQT’s plan would unleash 35+ Bcf/d of incremental Appalachian supply Pre-2008 2008-2020 2021+ Pre-Shale Marcellus/Utica Discovery + Growth Pipeline Opposition Limits Appalachian Outl
Slide 33: The Call for Clean Energy Is a Call on EQT
The Call for Clean Energy Is a Call on EQT The call on low-emissions natural gas provides exciting upside opportunity EQT NATURAL GAS NATURAL GAS MACRO TAILWINDS PRICE UPSIDE • Capital discipline, limited infrastructure flattening supply growth › Hedging program designed to • Growing appreciation of
Slide 34: 2021 ESG Report Highlights Meaningful Rate of Change Story
2021 ESG Report Highlights Meaningful Rate of Change Story Significant declines across absolute emissions, GHG emissions intensity and methane emissions intensity PRODUCTION SEGMENT SCOPE 1 & 2 PRODUCTION SEGMENT SCOPE 1 ENVIRONMENTAL GHG EMISSIONS (NET)(1) GHG EMISSIONS INTENSITY(1) › Announced net
Slide 35: Unleashing U.S. LNG: The Largest Green Initiative on the Planet
Unleashing U.S. LNG: The Largest Green Initiative on the Planet EQT stands ready to deliver supply to growing LNG markets and play a significant role in lowering global emissions The Demand The Result • There is ~175 Bcf/d of coal-to-gas switching demand • By 2030, unleashed U.S. LNG scenario estima
Slide 36: LNG Macro: Material Global Natural Gas Demand Growth
LNG Macro: Material Global Natural Gas Demand Growth Non-North American demand set to increase by ~90 Bcf/d in less than 30 years NON-NORTH AMERICAN NATURAL GAS DEMAND FORECAST Bcf/d 400 STRENGHTENING 350 INTERNATIONAL MARKET OUTLOOK 300 250 ~4 - 5 Bcf/d › 1.5 - 2.5% average annual growth 200 of gas
Slide 37: Natural Gas Is the Fastest, Most Effective Way to Lower Emissions
Natural Gas Is the Fastest, Most Effective Way to Lower Emissions Since 2005, EQT has facilitated emissions reductions roughly equal to that of the entire solar industry 1 EQT represented approximately 10% of natural gas production growth from 2005 to 2019 2 Incremental natural gas production relati
Slide 38: Demonstrating Environmental Commitment and Leadership
Demonstrating Environmental Commitment and Leadership Our initiatives are impactful, recognized by key environmental stakeholders, and available for industry adoption INITIATIVE: PNEUMATIC VALVE REPLACEMENT EQT PUBLICATION(1) • EQT: Full-scale replacement of >8,000 natural gas driven pneumatic devic
Slide 39: 2022 Guidance
2022 Guidance Production 4Q22E FY22E Total sale volumes (Bcfe) 450 - 475 1,925 - 1,975 Liquids sales volume, excluding ethane (MBbls) 2,610 - 2,710 10,500 - 10,750 Ethane sales volume (MBbls) 1,565 - 1,665 6,100 - 6,200 Total liquids sales volume (MBbls) 4,175 - 4,375 16,600 - 16,950 Btu uplift (MMB
Slide 40: Well Activity Details
Well Activity Details 3Q22 actuals, 4Q22 and FY22 estimates Wells Drilled (Spud) SWPA Marcellus NEPA Marcellus WV Marcellus OH Utica 3Q22A 4Q22E FY22E 3Q22A 4Q22E FY22E 3Q22A 4Q22E FY22E 3Q22A 4Q22E FY22E Net wells 12 3-5 39 - 47 10 4-6 20 - 24 0.2 9 - 12 9 - 11 - - 1-2 Net avg. lateral (1k ft.) 13
Slide 41: Non-GAAP Financial Measure
Non-GAAP Financial Measure Adjusted EBITDA Adjusted EBITDA is defined as net income (loss), excluding interest expense, income tax expense (benefit), depreciation and depletion, gain on sale/exchange of long-lived assets, impairments, the revenue impact of changes in the fair value of derivative ins
Slide 42: Non-GAAP Financial Measure: Reconciliation of Adjusted EBITDA
Non-GAAP Financial Measure Reconciliation of Adjusted EBITDA The table below reconciles adjusted EBITDA with net income (loss), the most comparable financial measure as calculated in accordance with GAAP, as reported in the Statements of Condensed Consolidated Operations to be included in the Compan
Slide 43: Non-GAAP Financial Measure: Reconciliation of LTM Adjusted EBITDA
Non-GAAP Financial Measure Reconciliation of LTM Adjusted EBITDA The table below reconciles adjusted EBITDA with net income (loss), the most comparable financial measure as calculated in accordance with GAAP, as reported in the Statements of Condensed Consolidated Operations included in the Company’
Slide 44: Non-GAAP Financial Measure: Free Cash Flow
Non-GAAP Financial Measure Adjusted Operating Cash Flow, Free Cash Flow, Free Cash Flow Yield and Free Cash Flow Per Share Adjusted operating cash flow is defined as net cash provided by operating activities less changes in other assets and liabilities. Free cash flow is defined as adjusted operatin
Slide 45: Non-GAAP Financial Measure: Net Debt and Leverage
Non-GAAP Financial Measure Net Debt and Leverage Net debt is defined as total debt less cash and cash equivalents. Total debt includes the Company's current portion of debt, credit facility borrowings, senior notes and note payable to EQM Midstream Partners, LP. Leverage is defined as net debt divid
Slide 46: Non-GAAP Financial Measure: PV-10
Non-GAAP Financial Measure PV-10 PV-10 is derived from the standardized measure of discounted future net cash flows (the Standardized Measure), which is the most directly comparable financial measure computed using U.S. GAAP. PV-10 differs from Standardized Measure because it does not include the ef