EQT Corporation · NYSE:EQT
EQT — Investor Presentation (March 2017)
32 slides from EQT's investor presentation, Mar 27, 2017
Slide 1: Updates
Updates Marcellus type curve update to 2.4 Bcfe / 1,000 ft. (14% Increase) 2017 Marcellus lateral lengths increased to 8,000 ft from 7,000 ft Service cost inflation of 15% added into economics 2017 sales volume guidance increased to 835-855 Bcfe 2
Slide 2: EQT Profile
EQT Profile Largest Appalachian 4th gas producer and largest U.S. gas producer* Market Cap $ 10.4 B Net Marcellus Acres 810,000 Core Marcellus Locations 3,500 2016 Proved Reserves 13.5 Tcfe 2016 Total Resource Potential 97 Tcfe As of 02/28/2017; market cap and enterprise value excludes debt at EQT M
Slide 3: Key Investment Highlights
Key Investment Highlights Sustainable growth while delivering returns through full cycle Focus on development of Marcellus 12% projected production sales volume growth in 2017 2017 drilling sets up projected growth of 15-20% for 2018-2020+ Industry leading cost structure Consolidation improves retur
Slide 4: Inventory
Inventory Extensive undeveloped inventory 810,000 total net Marcellus acres 475,000 core net Marcellus acres 3,500 core Marcellus locations* OH 83% of core Marcellus acres are undeveloped 2,700 undeveloped core locations* 44% wet gas locations 56% dry gas locations PA 85,000 core net Upper Devonian
Slide 5: Marcellus Inventory
Marcellus Inventory 2016/2017 acquisitions increased core by 67% Core Marcellus Undeveloped vs. Developed 600,000 500,000 400,000 300,000 200,000 100,000 0 2013 2014 2015 2016 2017 Recent Acquisition Activity $6,470 600,000 undeveloped acres 500,000 400,000 300,000 200,000 100,000 0 YE 2015 2016 Acq
Slide 6: Improving Economics – Marcellus
Improving Economics – Marcellus Longer laterals and more wells per pad reduce cost per foot 12,000 12.0 10,000 10.0 8,000 8.0 6,000 6.0 4,000 4.0 2,000 2.0 - 0.0 2013 2014 2015 2016 Lateral length 2017E Wells per pad 2018E Target Includes Upper Devonian; wells per pad benefits to consolidation are b
Slide 7: Improving Economics – Marcellus
Improving Economics – Marcellus Drilling and completion costs per foot consistently decreasing $1,600 $1,200 $800 $400 $-2013 2014 2015 2016 2017E 8 Assumes 8,000 foot lateral for 2017; includes 2017 increase of $75K per well for larger frac jobs and $40K per well of completion cost inflation (15%)
Slide 8: Improving Economics – Marcellus
Improving Economics – Marcellus Larger frac jobs increase recoveries per foot 3.0 2.5 2.0 1.5 1.0 0.5 - 2013 2015 2017E 9 EUR (Bcfe / 1,000 ft) 2013 2015 2017E Change Stage length ft 190 170 200 5% Proppant (lb / ft) 1,350 1,550 2,250 67% Water (bbl / ft) 35 39 41 17% EUR / 1000’ 1.9 2.1 2.4 26%
Slide 9: Improving Economics – Marcellus
Improving Economics – Marcellus Lower drilling and completion cost per foot + higher productivity, drive lower cost per Mcfe $0.80 $0.60 $0.40 $0.20 $-2013 2014 2015 2016 2017E 10 Drilling & Completions Cost ($ / Mcfe)
Slide 10: Improving Economics – Marcellus
Improving Economics – Marcellus Lower cost per Mcfe, longer laterals, and increasing EURs increase returns 140% 120% 101% 100% 80% 60% 40% 25% 21% 20% 0% 5 Well Pad 5,500' Lateral 6 Well Pad 6,000' Lateral 8 Well Pad 8,000' Lateral Target 10 Well Pad 10,000' Lateral 11 ATAX returns – wellhead price
Slide 11: Marcellus Capacity
Marcellus Capacity Firm capacity for >90% of produced volumes Diversified portfolio Improving prices 90% sold to premium 700,000 800,000 markets in 2019 12 *Assumed NYMEX and realized price NYMEX* $3.00 $3.00 $3.00 Basis $(0.26) $(0.24) ($0.10) Realized price* $2.74 $2.76 $2.90 Gulf Coast Pipe Proje
Slide 12: 2017 Capital and Development Plan
2017 Capital and Development Plan Focus on core Marcellus development OH 2017 capital investments of $1.5 B* $1.3 B for well development 207 wells in 2017 Average laterals of 8,000 ft Funding with operating cash cash-on-hand** PA flow of $1.3 billion, plus Focus on Marcellus Co-develop Upper Devonia
Slide 13: Proven and Sustainable Growth
Proven and Sustainable Growth 15-20% growth 2018 through 2020+ 1,600 1,400 1,200 1,000 800 600 400 200 - 2013 2014 2015 2016 2017P 2018F 2019F 2020F 14 26% CAGR for years 2013-2016; 18% CAGR 2017P-2020F Bcfe
Slide 14: Utica Upside Possibility
Utica Upside Possibility Improve EUR to 3.0 – 3.5 Bcfe per 1,000 feet in 2017 500,000 EQT net acres 3,000 locations 6 wells online 6 – 8 wells in 2017 30 Tcfe total resource potential* Goal EUR of 3.0-3.5 Bcfe per match Marcellus returns $12-$14 MM cost per well** 1,000 feet to *As of 12/31/2016 **T
Slide 15: Balance Sheet Strength
Balance Sheet Strength Strength in the numbers Benefits of investment grade Strong liquidity Supports consolidation strategy Assures operational flexibility through Minimizes counterparty letter of credit requirements $1.5 billion undrawn revolver $774 million cash* cycles $750 million undrawn revol
Slide 16: Benefits from Midstream Ownership
Benefits from Midstream Ownership EQT owns 90% interest in EQT GP Holdings, LP (NYSE: EQGP) Significant cash flow growth from EQGP ownership Midstream cash flows to double over next three years 2017 EQT distribution equates to $0.24 / Mcfe Publicly traded security highlights EQT shareholders EQGP ow
Slide 17: Benefits from Midstream Ownership
Benefits from Midstream Ownership accelerating Cash flows to EQT from EQGP $500 $400 $300 $200 $100 $-2014 2015 2016 2017F 2018F 2019F 2020F 18 20% EQM distribution growth in 2017; and EQM long-term forecast 15-20% for 2018-2020 $MM EQGP price per unit Value of EQGP units held by EQT ($B) Value per
Slide 18: EQT Midstream Partners, LP
EQT Midstream Partners, LP (NYSE: EQM) Appalachian Hub – connecting supply to demand markets Marcellus Gathering 1.8 Bcf per day firm capacity 600 MMcf per day high pressure header pipeline for Range Resources expected Q2 2017 in-service 10-year fixed-fee contracts Equitrans Transmission & Storage 4
Slide 19: EQT Midstream Partners, LP
EQT Midstream Partners, LP (NYSE: EQM) Mountain Valley Pipeline connects supply hub to southeast power generation markets JV with NextEra, ConEd, WGL, RGC Resources 45.5% EQM ownership interest EQM to construct and operate pipeline $3.0 B - $3.5 B total project cost ~$1.5 billion EQM investment Q4 2
Slide 20: Why EQT?
Why EQT? 4th Largest natural gas producer 15-20% sales volume growth Accelerating midstream cash in Appalachian Basin; 2018 through 2020+ flows largest in U.S.* Basin consolidation drives best-in-class economics Regional pipeline hub with access to premium markets Continue to improve returns Longer
Slide 21: Cautionary Statements
Cautionary Statements EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Pat Kane - Chief Investor Relations Officer (412) 553-7833 The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only prove
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Operating Cash Flow Attributable to EQT Adjusted operating cash flow attributable to EQT is a non-GAAP supplemental financial measure that is presented as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration a
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures EQT Midstream Partners Adjusted EBITDA EQT Midstream Partners adjusted EBITDA means EQM’s net income plus EQM’s net interest expense, depreciation and amortization expense, income tax expense (if applicable), preferred interest payments received post-conversion, and non-c
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Total Production EBITDA Total production EBITDA is defined as earnings before interest, taxes, depreciation and amortization expense adjusted for non-cash derivative gains and losses. Total production EBITDA is not a financial measure calculated in accordance with GAAP. T
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Total Production EBITDA Total production EBITDA is defined as earings before interest, taxes, depreciation and amortization expense adjusted for non-cash derivative gains and losses. Total production EBITDA is not a financial measure calculated in accordance with GAAP. To
Slide 26: Co-development Improves returns per acre
Co-development Improves returns per acre Fracs Grow Toward Low Pressure Co-development Benefits of co-development of Marcellus and Upper Devonian Co-development increases value per acre by 36% Shared infrastructure improves IRR per well Upper Devonian: use-it or lose-it investment D&C Costs Are Low
Slide 27: Risk Management
Risk Management Hedge position as of March 21, 2017 400 $3.50 $3.44 350 $3.40 300 $3.30 250 $3.20 200 $3.10 150 $3.00 100 $2.90 50 $2.80 - $2.70 2017 2018 Average Hedge Price 2019 NYMEX Price Hedged Volume • The Company also sold calendar 2017 and 2018 calls for approximately 32 and 16 Bcf at a stri
Slide 28: Liquids
Liquids Volume growth and Marcellus impact Marcellus Liquids Price Impact Liquids Volume Growth (1200 Btu Gas) 16,000 $6.00 14,000 $5.00 12,000 10,000 $4.00 8,000 $0.14 $3.00 6,000 $2.00 4,000 $1.00 2,000 $0.00 - Not Processed Processed 2012 2013 2014 2015 2016 2017F Pricing is as of 3/21/2017 and i
Slide 29: Marcellus Capacity Pricing details
Marcellus Capacity Pricing details 30 Market Mix 2017E 2018E 2019E TETCO M2 10% 25% 10% TETCO M3 35% 29% 21% TCO 5% 4% 3% Midwest 30% 26% 19% NYMEX 20% 16% 12% Southeast 0% 0% 35% Basis 2017E 2018E 2019E TETCO M2 $(0.60) $(0.46) $(0.56) TETCO M3 $(0.20) $0.09 $0.01 TCO $(0.21) $(0.29) $(0.37) Midwes
Slide 30: 2017 Guidance
2017 Guidance Q1 2017 2017 PRODUCTION Total Production Sales Volume (Bcfe) Liquids Sales Volume, excluding Ethane (Mbbls) Ethane Sales Volume (Mbbls) Total Liquids Sales Volume (Mbbls) Unit Cost ($/Mcfe) Gathering to EQT Gathering Transmission to EQT Transmission Third-party gathering and transmissi
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+ + + .. + + + + + + ... + + ... + + + ... + + + + + + + + + + + + + Where energy meets innovation. + + + + +
Slide 32: EQT
EQT Where energy