Eqt Corporation · NYSE:EQT
Eqt — Investor Presentation (October 2018)
24 slides from Eqt's investor presentation, Oct 29, 2018
Slide 1: Key Investment Highlights
Key Investment Highlights Premier Natural Gas Asset Base 680,000 core net Marcellus acres / ~2,400 undeveloped locations Contiguous acreage position allows longer laterals Leading U.S. natural gas producer >4.0 Bcfe per day Path to Sustainable Free Cash Flow Free cash flow forecast of $200 MM in 201
Slide 2: Separation Timeline
Separation Timeline Distribution of ETRN from EQT will occur at 11:59 PM on November 12, 2018 Each EQT share will receive 0.8 shares of Equitrans Midstream Corporation (NYSE: ETRN) “When-issued” trading from October 31, 2018 to November 12, 2018, under the ticker “ETRN WI” “Regular way” trading will
Slide 3: EQT Production Valuation
EQT Production Valuation EQT Production is currently valued at ~3.8x EV / EBITDAX 4 (1)EQGP and EQM go ex-distribution on 11/1/2018; EQT expects to collect these distributions (2)Based on EQGP and EQM market prices of $16.56 and $47.50 as of 10/25/18, respectively; ETRN will own 276 million EQGP uni
Slide 4: Equitrans Valuation
Equitrans Valuation 5 Market value implies 2019 Yield of ~8-9% (1)Prices as of 10/25/2018 (2)Implied share price based on mid-point of expected dividend range 2019 Yield Implied Share Price (2) EQGP 276.0 $16.56 $4.6 8.0% $23 EQM 15.4 $47.50 $0.7 7.0% $26 ETRN Market Implied Value $5.3 6.0% $30 5.0%
Slide 5: EQT Separation
EQT Separation 6 EQT separation highlights sum-of-the-parts discount to intrinsic value (1)Current EQT Value per Share is equal to Post-Separation EQT Value per Share plus ETRN value distributed per EQT share (2)Based on EQGP and EQM market prices of $16.56 and $47.50 as of 10/25/18, respectively (3
Slide 6: EQT Profile
(1)As of 10/25/18 (2)Enterprise value is calculated by utilizing EQT share price as of 10/25/18 and excludes net debt of EQM (3)Acres and locations as of 9/30/18 EQT Profile 7 Well-positioned to improve overall well economics and deliver stronger returns Market Cap(1) $ 9.0 B Enterprise Value(2) $ 1
Slide 7: Renewed Focus of Upstream Business
Renewed Focus of Upstream Business Sustainable free cash flow Capital allocation decisions weighed against market conditions Capital efficiency and cash flow generation drive investment decisions 8 Capital discipline drives value for the EQT shareholder Strong balance sheet Maintaining growth Return
Slide 8: Steady 5-Year Outlook
Steady 5-Year Outlook 9 Base case – mid-single digit average annual growth Capital Expenditures Free Cash Flows(2) (1)Amount of capital required to keep volume flat at 1.46 Tcfe per year (2)Free cash flow forecast assumes NYMEX Henry Hub Strip at 10/15/18 for 2019, and $2.85 NYMEX thereafter $2.1 B
Slide 9: Impact of Volume Curtailment
Impact of Volume Curtailment 10 System, operational, and wellhead constraints delay production volumes System constraints Flow limitations on downstream gathering and transmission systems Maintenance outages Back-off of lower pressure existing volumes due to new, higher pressure volumes Fuel & LUF G
Slide 10: Benefits of Manufacturing Mode Tied Directly to Capital Efficiency
2013 2017 2018 2019 2016 2015 2014 2023 Benefits of Manufacturing Mode Tied Directly to Capital Efficiency Volatility in activity reduces consistency, which results in inefficient capital development Minor delays in infrastructure stresses short-term volume growth Incentivizes uneconomic decisions t
Slide 11: Manufacturing Approach to Development
Manufacturing Approach to Development Set operational goals Targeted reduction in cost per well over 5 years Measurable increase in well productivity over 5 years Execute the plan Real-time operation centers for all operations Drilling, completions and production already seeing improvements Focus on
Slide 12: Firm Transportation Portfolio
Firm Transportation Portfolio 13 Assets to directly capture 85% of U.S. natural gas demand growth Pricing at premium markets offsets majority of transmission costs Without firm takeaway capacity, local market would be overwhelmed 490,000 Dth/d 1,290,000 Dth/d 1,370,000 Dth/d 933,000 Dth/d EQT Prices
Slide 13: Financial Strength: Investment grade balance sheet
($B) As of 9/30/18 Senior notes (principal value) $ 4.6 Credit facility borrowings 0.5 Cash 0.0 Net debt (total debt minus cash) $ 5.1 Financial Strength Investment grade at all three agencies: S&P (BBB), Moody’s (Baa3), and Fitch (BBB-) Reduced borrowing costs Assures operational flexibility throug
Slide 14: Key Investment Highlights
Key Investment Highlights Premier Natural Gas Asset Base 680,000 core net Marcellus acres / ~2,400 undeveloped locations Contiguous acreage position allows longer laterals Leading U.S. natural gas producer >4.0 Bcfe per day Path to Sustainable Free Cash Flow Free cash flow forecast of $200 MM in 201
Slide 15: Key Investment Highlights
Key Investment Highlights = Premier Natural Gas Asset Base = 680,000 core net Marcellus acres / ~2,400 undeveloped locations = Contiguous acreage position allows longer laterals * Leading U.S. natural gas producer >4.0 Befe per day = Path to Sustainable Free Cash Flow = Free cash flow forecast of $2
Slide 16: 2018 Guidance
2018 Guidance 17 Based on current NYMEX natural gas prices of $2.97 Adjusted operating cash flow does not include costs or tax impacts of the separation PRODUCTION Q4 2018 Ful l - Year 2018 Total production sales volume (Bcfe) 3 65 – 3 85 1,460 – 1,4 8 0 Liquids sales volume, excluding ethane (Mbbls
Slide 17: Risk Management: Hedge Position
Risk Management 18 Hedge Position as of October 23, 2018 (a)October – December 2018 The Company sold calendar year 2018, 2019, and 2020 calls for approximately 28, 145, and 127 Bcf, at strike prices of $3.45, $3.41, and $3.46 per Mcf, respectively. The Company purchased calendar year 2018, 2019, and
Slide 18: Liquids Volume Growth and Marcellus Impact
Liquids 19 Volume growth and Marcellus impact Includes natural gas liquids, ethane, and oil Liquids Volume Growth Marcellus Liquids Price Impact (1200 Btu Gas) Pricing is as of 10/22/2018 and is the one-year forward NYMEX at $2.98 and Mount Belvieu for Ethane $0.38, Propane $0.88, Iso-Butane $1.02,
Slide 19: 2018 Capital and Development Plan
2018 Capital and Development Plan 2018 capital investments of $2.7 B (1) $2.5 B for well development 20 (1)Excludes EQT Midstream Partners capital expenditures (2)21 net EQT Acreage Marcellus Core Ohio Core Upper Devonian Core Spuds Average Length (ft) PA Marcellus 109 13,000 WV Marcellus 11 6,300 T
Slide 20: Cautionary Statements
Cautionary Statements 21 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 th
Slide 21: Non-GAAP Financial Measure
Non-GAAP Financial Measure As used in this presentation, free cash flow is defined as EQT’s net cash provided by operating activities plus changes in other assets and liabilities less capital expenditures pro forma for the announced separation and other midstream transactions. Free cash flow is a no
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted operating cash flow attributable to EQT and adjusted operating cash flow attributable to EQT Production are non-GAAP supplemental financial measures that are presented as indicators of an oil and gas exploration and production company’s ability to internally fund
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures As used in this presentation, Ohio retained midstream earnings before interest, taxes, depreciation and amortization (EBITDA) means the earnings before interest, taxes and depreciation of EQT’s Ohio retained midstream assets. EBITDA is a non-GAAP supplemental financial me
Slide 24: Non-GAAP Financial Measures: Ohio Retained Midstream EBITDA
Non-GAAP Financial Measures Ohio Retained Midstream EBITDA Q) As used in this presentation, Ohio retained midstream earnings before interest, taxes, depreciation and amortization (EBITDA) means the earnings before interest, taxes and depreciation of EQT's Ohio retained midstream assets. EBITDAis a n