Eqt Corporation · NYSE:EQT
Eqt — Proxy Contest (July 2019)
30 slides from Eqt's proxy contest presentation, Jul 1, 2019
Slide 1: Executive Summary
Executive Summary 1 is higher than 90% of comparable E&P companies 2 3 Toby Rice’s 4 2 The Facts Regarding Free Cash Flow EQT’s free cash flow delivered under the new EQT plan already outperforms 25 of 27 comparable E&P companies and projected free cash flow in 2019 Rice’s claim of $500 MM of increm
Slide 2: The Facts Regarding Free Cash Flow
The Facts Regarding FreeCashFlow
Slide 3: EQT's Free Cash Flow Already Outperforms 25 of 27 Comparable Companies
1 EQT’s Free Cash Flow Already Outperforms 25 of 27 Comparable Companies We expect to deliver $300-400 MM of adjusted free cash flow(1) in 2019E, $3.0 B or more through 2023 Q4’18 and Q1’19 Cumulative Free Cash Flow ($ MM) for E&P Companies with EV of ~$2 B to ~$15 B Comparable E&P Median: $(110) (1
Slide 4: Based on Standardized Metrics, EQT's Unit Costs and Drilling Efficiencies Lead Peers
Based on Standardized Metrics, EQT’s Unit Costs and Drilling Efficiencies 1 Lead Peers, Enabling Leading Free Cash Flow Generation Lease Operating Expense ($/Mcfe) – TTM Selling, General & Administrative Expense ($/Mcfe) – TTM Peer Mean (excl Peer 5): $0.14 .23 RICE (1) Peer 5 (2) EQT (3) RICE (1) E
Slide 5: The Toby Rice Group's $735/Ft. D&C Well Cost Claim Is Rooted in Fallacies
The Toby Rice Group’s $735 / Ft. D&C Well Cost Claim Is Rooted in Fallacies 1 an appropriate comparison of costs directly associated with operational execution $ 60 are 20% higher, and diesel costs are 40% higher than Rice claims (1)Peers do not consistently include these costs in per foot metrics.
Slide 6: Lower $/Foot Cost Metrics Do Not Directly Translate to Free Cash Flow
1 In Reality, Lower $ / Foot Cost Metrics Do Not Directly Translate to Free Cash Flow Focusing only on D&C costs fails to capture the full story of well economics and operating efficiency : $875 $ 930 $ 874 $ 875 $ 860 661 Note: Peers include AR, CNX, COG, RRC, and SWN (1)Free cash flow for all peer
Slide 7: Independent Analysis by Wood Mackenzie Sets the Historical Record Straight
Independent Analysis by Industry Specialist Wood Mackenzie Sets the 1 Historical Record Straight Energy standalone wells(1) outperformed design outperforms all previous Rice Energy or lower-cost than Rice Energy on total D&C(2) development planning than Rice Energy in 2017 planning Source: Wood Mack
Slide 8: The Toby Rice Group Would Put Shareholders at Risk Without a Real Plan
The TobyRiceGroupWouldPutShareholders at RiskWithoutaReal Plan
Slide 9: Wholesale Replacement of Board and Management Would Put Shareholder Value at Risk
Wholesale Replacement of EQT’s Board and Management Team Would Put Material Shareholder Value at Risk 2 The new EQT team has already undertaken a significant transformation EQT has a refreshed, fit-for-purpose Board including a new Operating and Capital Efficiency Committee composed of seasoned oper
Slide 10: Toby Rice Group Has Not Articulated an Actual Plan to Improve EQT
Toby Rice Group Has Not Articulated an Actual Plan to Improve EQT 2 The Toby Rice Group ’s ide as igno res current market conditions and lack specificity $500 MM in incremental free cash flow goal is based on flawed assumptions and ignores current market conditions Claims “Evolution Committee” will
Slide 11: Independent Research Analysts Recognize EQT's Actionable Free Cash Flow Story
Independent Research Analysts Recognize EQT’s Actionable Free Cash Flow Story 2 and Strong Operational Momentum digit production growth while maintaining low leverage remains underappreciated by guidance, lowering 2019 capex guidance by $25 mm, and increasing the 2Q19 FCF estimate have given them in
Slide 12: Toby Rice's Ambitions Would Introduce Key Governance Issues
TobyRice’s AmbitionsWould IntroduceKeyGovernance IssuesThatShould ConcernShareholders
Slide 13: EQT Is Not a Family Business
EQT Is Not a Family Business Family with 3.1% stake would have overwhelming influence over EQT’s direction 3 Electing Toby Rice would put two brothers in control of the EQT Board Having two brothers on the Board, with one as CEO, from a family that owns 3.1% of shares is dangerous governance Electin
Slide 14: Toby Rice's Conduct as an Executive Renders Him Unfit to Lead a Public Company
3 Toby Rice‘s Conduct as an Executive Renders Him Unfit to Lead a Public Company Conflicts of interest, prior removal as CEO of Rice Energy, demonstrate Toby is not qualified to be CEO second, less qualified family member would reduce Board independence corporate governance nominees were chosen by t
Slide 15: Glass Lewis Recognizes EQT's Transformation While ISS Is Reacting to a Prior Board
Glass Lewis Recognizes EQT’s Transformation While ISS Is Reacting to a Prior Board and Management Team – Not the Actions of the Refreshed Board
Slide 16: Glass Lewis Recognizes EQT's Transformation
Glass Lewis Recognizes EQT’s Transformation 4 representing 75% of the management nominees New management and the Board have identified significant cost savings ($175 MM) and delivered shareholders Recommendation on what the new team has already delivered and the Board’s fitness-for-purpose 18 Note:
Slide 17: ISS Issued a Flawed and Incomplete Report
ISS Issued a Flawed and Incomplete Report 4 19 Note: Permission to use quotes neither sought nor obtained Incomplete Report Failing to Account for Vital Facts Uses performance periods from the Toby Rice Group’s ‘analytics’ but does not objectively evaluate EQT management’s 3 consecutive positive qua
Slide 18: Key Mistakes and Oversights Made in the ISS Analysis
Key Mistakes and Oversights Made in the ISS Analysis 4 ISS Representation of EQT Share Price Miscalculates stock performance — Fails to account for EQT’s spin-off of the midstream business, leading to a misrepresentation of actual performance Selectively uses TSR to support TRG claims — Measures 1,
Slide 19: Choose EQT's Highly Qualified Slate by Voting FOR all EQT Nominees on the GOLD Card
Choose EQT’s HighlyQualified Slate byVotingFOR all EQTNominees onthe GOLD Universal ProxyCard
Slide 20: Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT's Momentum
Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT’s Momentum. Vote FOR all EQT Nominees on the GOLD Universal Proxy Card 1 is higher than 90% of comparable E&P companies 2 3 Toby Rice’s 4 22 The Facts Regarding Free Cash Flow EQT’s free cash flow delivered under the ne
Slide 21: Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT's Momentum
Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT’s Momentum. Vote FOR all EQT Nominees on the GOLD Universal Proxy Card EQT’s free cash flow delivered under the new EQT plan already outperforms 25 of 27 comparable E&P companies and projected free cash flow in 2019 The
Slide 22: 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 23: Non-GAAP Financial Measure: Adjusted Free Cash Flow
Non-GAAP Financial Measure Adjusted Free Cash Flow As used in this presentation, adjusted free cash flow is defined as the Company’s net cash provided by operating activities less changes in other assets and liabilities, less EBITDA attributable to discontinued operations (a non-GAAP supplemental fi
Slide 24: Reconciliation of Adjusted Free Cash Flow
Non-GAAP Financial Measure Reconciliation of Adjusted Free Cash Flow The table below reconciles adjusted free cash flow with net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated C
Slide 25: EBITDA Attributable to Discontinued Operations
Non-GAAP Financial Measure EBTIDA Attributable to Discontinued Operations EBITDA attributable to discontinued operations is a non-GAAP supplemental financial measure defined as income from discontinued operations, net of tax plus interest expense, income tax expense, depreciation, amortization of in
Slide 26: Non-GAAP Financial Measure: 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 the Company’s management to evaluate period-to-period comparisons of earnings trends. Adjusted SG&A per unit is defined a
Slide 27: Important Information
Important Information EQT Corporation (the “Company”) filed a definitive proxy statement and associated GOLD universal proxy card with the Securities and Exchange Commission (the “SEC”) on May 22, 2019 in connection with the solicitation of proxies for the Company’s 2019 Annual Meeting of Shareholde
Slide 28: Shareholder communications website update
EQ,T HOME OURNOMINEES OURTECHNOLOGY NEWSANDFILINCS PRESENTAnONS NON-GAAPDtSCLOSURES MAIUNGUST .. EQT Supplemental Investor Presentation EQT Investor Presentation Ql2019 Earnings Presentation DOWNLOAD DOWNLOAD DOWNLOAD • • • • On July 1, 2019, the Company made the following changes to its shareholder
Slide 29: Shareholder communications website news and downloads
EQ,T HOME OUR NOMINEES OURTECHNOLOGY NEWSANDFILINCS PRESENTAnONS NON-GAAPDtSCLOSURES MAIUNGUST .. Leading Independent Proxy Advisory Firm Glass Lewis Recommends EQT Shareholders Vote "FOR'" Alll2 EQT Director Nominees EQT Strongly Disagrees with ISS Recommendation EQT Video Showcases Innovative Tech
Slide 30: EQT's Progress in Delivering Enhanced Shareholder Value
€QqT = EQT'S PROGRESS IN DELIVERING ENHANCED SHAREHOLDER VALUE