Eqt Corporation · NYSE:EQT
Eqt — Investor Presentation (March 2020)
38 slides from Eqt's investor presentation, Mar 23, 2020
Slide 1: Analyst Presentation
ANALYST PRESENTATION March 23, 2020
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Andrew Breese – Director, Investor Relations – 412.395.2555 The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only prov
Slide 3: Company Highlights
COMPANY HIGHLIGHTS FOURTH QUARTER 2019 HIGHLIGHTS: • Achieved sales volumes of 373 Bcfe or 4.06 Bcfe/d, at the high-end of guidance • Total operating revenues of $1.0 billion, received average realized price of $2.54 per Mcfe • Capital expenditures of $355 million; well costs of $800 per foot in the
Slide 4: EQT Corporate Overview
EQT CORPORATE OVERVIEW DOMINANT POSITION IN THE CORE OF THE APPALACHIAN BASIN C U M U L AT I V E P R O D U C T I O N H E AT M AP S : ASSET PROFILE UTICA Core Net Marcellus Acres(1) 630,000 Acres SOUTHW EST MARCELLUS Core Net OH Utica Acres (1) 60,000 Acres (1,2) Core Net Undeveloped Marcellus Locati
Slide 5: Why Invest in EQT?
WHY INVEST IN EQT? UNIQUELY POSITIONED TO DELIVER SHAREHOLDER VALUE • Deepest Inventory of Tier I drilling locations in the lowest cost natural 1 World Class Asset Base gas basin in the U.S. (15+ years) • Only Appalachian company with multi-year core “combo inventory” • Lowering well cost and overhe
Slide 6: Corporate Strategy
CORPORATE STRATEGY BUILDING A LONG-TERM, DURABLE AND SUSTAINABLE BUSINESS STRENGTHEN THE MAXIMIZE SHAREHOLDER VALUE BE THE LOW COST OPERATOR BALANCE SHEET THROUGH CAPITAL ALLOCATION ✓ On-track for peer-leading well costs • Achieve and maintain investment grade • $148 MM of adjusted free cash flow in
Slide 7: Successful Win-Win Agreement Reached with EQM
SUCCESSFUL WIN-WIN AGREEMENT REACHED WITH EQM SHORT-TERM RELIEF AND LONG-TERM SUSTAINABILITY EFFECTIVE APRIL 1, 2020 EFFECTIVE UPON MVP IN-SERVICE EQT EQM EQT EQM ✓ Enhances flexibility to execute combo ✓ MVC of 3.0 Bcf/d ✓ $535 MM in rate relief through 2023 (2) ✓ 3-year potential upside based on d
Slide 8: Impact of Gas Gathering Agreement
IMPACT OF GAS GATHERING AGREEMENT SIGNIFICANT SHORT-TERM FEE RELIEF & LONG-TERM LOW COST FEE STRUCTURE CORPORATE GATHERING RATES ($/MCFE)(1,2) MINIMUM VOLUME COMMITMENT FOR EQM GGA MVC Agreement Status Quo PRESENT SHORT-TERM LONG-TERM 4,500 RELIEF SUSTAINABILITY 4,000 $0.75 $535 MM in fee relief ove
Slide 9: Operational Efficiencies: Drilling
OPERATIONAL EFFICIENCIES: DRILLING 16% DECREASE IN HORIZONTAL DRILLING DAYS PER 1,000 FT. TOPHOLE DAYS PER 1,000 FT. HORIZONTAL DRILLING SPEED HORIZONTAL DAYS PER 1,000 FT. 2.25 (FT/HR) 1.00 160 2.00 140 0.90 1.75 120 1.50 100 0.80 1.25 80 1.00 0.70 0.75 60 0.50 40 0.60 0.25 20 0.00 0 0.50 1Q19 2Q19
Slide 10: Operational Efficiencies: Base Production Maintenance
OPERATIONAL EFFICENCIES: BASE PRODUCTION MAINTENANCE ENHANCEMENT OF BASE VOLUMES DROVE A $50 MM REDUCTION IN 2020 CAPEX (1) TOTAL GROSS OPERATED DAILY VOLUMES (BCF/D) Wedge Base Production uptime improved by 10% resulting in a shallower base decline New Management 2019 2020 1. Compared to prior 2020
Slide 11: Leveraging New Technology to Continue Efficiency Gains
LEVERAGING NEW TECHNOLOGY TO CONTINUE EFFICIENCY GAINS EVOLVING OUR OPERATIONS TO DRIVE DOW N COSTS ELECTRIC FLEET HYBRID DRILLING RIGS BENEFITS OF ELECTRIC FRAC FLEETS BENEFITS OF HYBRID DRILLING RIGS • High automation capacity, improving cycle times and efficiencies • Reduces fuel consumption and
Slide 12: Benefits of Combo Development Built into Current Schedule
BENEFITS OF COMBO DEVELOPMENT BUILT INTO CURRENT SCHEDULE DEVELOPING MULTIPLE W ELLS AND PADS SIMULTANEOUSLY Washington County, PA Washington County, PA Wetzel County, WV • 13 wells, 185k lateral feet • 14 wells, 175k lateral feet • 25 wells, 315k lateral feet • Avg. Lateral >14k feet • Avg. Lateral
Slide 13: Expected Pace of Well Cost Reductions
EXPECTED PACE OF WELL COST REDUCTIONS REDUCING W ELL COSTS 25% FASTER THAN INITIAL EXPECTATIONS Successful completion of 100-day plan Execution stage underway • Enhanced front line leaders pushing • Large scale projects hit schedule • Bring in Evolution Leaders field performance • Technology fully i
Slide 14: Combo Development Impact to Proved Undeveloped Reserves
COMBO DEVELOPMENT IMPACT TO PROVED UNDEVELOPED RESERVES MAXIMIZING VALUE CREATION, NOT RESERVES BOOKING The shift to a combo development strategy resulted in a downward revision to proved undeveloped reserves as a result of: • Losing previously booked proved undeveloped reserves that are now outside
Slide 15: 2020E Capital Expenditures Budget
2020E CAPITAL EXPENDITURES BUDGET REDUCED BY $225 MM SINCE ORIGINAL GUIDANCE RESERVE DEVELOPMENT 2020E CAPITAL EXPENDITURES ($B) $815 - $875 MM $1.6 • PA Marcellus: ~$645 MM • OH Utica: ~$130 MM $1.4 $1.30 - $1.40 • WV Marcellus: ~$70 MM $1.25 - $1.35 $1.15 - $1.25 LAND $1.2 $1.075 - $1.175 $140 - $
Slide 16: Meaningful Reduction in Well Costs Being Realized
MEANINGFUL REDUCTION IN WELL COSTS BEING REALIZED DELIVERING W ELL COST RESULTS PA MARCELLUS WELL COSTS(1) $970 $850 $800 $745 $730 $/ft. Legacy 3Q19(2) 4Q19(2) FY 2020E 2H 2020E (FY 2019E) 1. Excludes capitalized overhead (captured in Gross G&A) and other CAPEX (captured in Land and Other CAPEX). I
Slide 17: 2020E Detailed Guidance
2020E DETAILED GUIDANCE PRODUCTION 2020E FINANCIAL GUIDANCE(1) Total Sales Volumes (Bcfe) 1,450 - 1,500 Btu uplift (MMbtu/Mcf) 1.045 - 1.055 Gas 95% Average Differential ($/Mcf) $(0.40) - $(0.20) Liquids 5% Adjusted EBITDA(2,3) ($MM) 1,475 - 1,575 Adjusted Operating Cash Flow(2,3,4) ($MM) 1,325 - 1,
Slide 18: Commitment to Reduce Debt by ~30%
COMMITMENT TO REDUCE DEBT BY ~30% MULTIPLE LEVERS TO PULL IN ADDITION TO FREE CASH FLOW GENERATION LEVER DETAILS STATUS VALUE • 4Q19 adjusted free cash flow(1): $148 MM $148 MM FREE CASH FLOW • 2020E adjusted free cash flow(1): $225 - $325 MM • 50% exchanged with ETRN for $52 MM cash and incremental
Slide 19: Debt and Capitalization Summary
DEBT AND CAPITALIZATION SUMMARY CURRENT POSITION – AS OF MARCH 13, 2020 $B 12/31/19 3/13/20 • $5.1 B in total long-term debt Cash & Cash Equivalents $0.0 $0.0 • $4.2 B in Notes/Bonds • $0.8 B Unsecured Term Loan Current Portion of Debt $0.0 $0.0 • $2.5 B unsecured revolving credit facility Note Paya
Slide 20: Actively Managing Liquidity Amidst Recent Downgrades
ACTIVELY MANAGING LIQUIDITY AMIDST RECENT DOWNGRADES AMPLE LIQUIDITY TO COVER MIDSTREAM LETTERS OF CREDIT (“LC”) • Current liquidity is $1.8 B(1) LIQUIDITY ($B) • $2.5 B unsecured revolver: • Largely undrawn as of 3/13/20 $2.5 • Remains unsecured through July 2022 maturity $0.7 • Not subject to semi
Slide 21: Firm Transportation Portfolio
FIRM TRANSPORTATION PORTFOLIO PROVIDES ACCESS, STABILITY AND OPPORTUNITY Current Gross Throughput • Diversity of delivered markets provides significant commercial optionality ~5,000,000 dth/d • Portfolio offers price stability by accessing highly liquid markets Midwest EQT 933,000 Dth/d • Assets dir
Slide 22: Commitment to ESG Transparency
COMMITMENT TO ESG TRANSPARENCY EQT LEADS IN ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) DISCLOSURE Bloomberg ESG Disclosure: scores above 40 demonstrate good transparency; scores 50-70 demonstrate excellent transparency CURRENT OVERALL ESG DISCLOSURE SCORES* 60.0 In peer set EQT is: 56.0 52.7 • #1 in o
Slide 23: Appendix
APPENDIX
Slide 24: Fourth Quarter and Full-Year 2019 Results
FOURTH QUARTER AND FULL-YEAR 2019 RESULTS OPERATIONAL AND FINANCIAL RESULTS 4Q 2019 2019 CAPITAL EXPENDITURES ($mm) 4Q 2019 2019 Marcellus Bcfe 310 1,270 Reserve development $ 222 $ 1,377 Ohio Utica Bcfe 62 232 Land and lease $ 43 $ 195 Other Bcfe 2 6 Capitalized overhead $ 18 $ 77 Total Sales Volum
Slide 25: Risk Management
RISK MANAGEMENT AS OF FEBRUARY 25, 2020 • Philosophy: 2020(1) 2021 2022 2023 2024 Swaps • Risk mitigation tool to de-risk cash flow and manage leverage Volume (MMDth) 1,093 155 3 2 2 Average Price ($/dth) $2.75 $2.43 $2.72 $2.67 $2.67 • Directionally more aggressive hedgers than prior management tea
Slide 26: Experienced, Diverse Board to Oversee EQT's Transformation
EXPERIENCED, DIVERSE BOARD TO OVERSEE EQT’S TRANSFORMATION DIRECTOR PRINCIPAL EXPERIENCE UNIQUE CONTRIBUTIONS ▪ Expertise in public company governance in the context of the energy industry LYDIA BEEBE Former Corp Secretary, Chevron ▪ Commitment to shareholder engagement and transparency Former SVP,
Slide 27: Environmental, Health and Safety
ENVIRONMENTAL, HEALTH AND SAFETY E N V IR ON M E N TA L S TE WAR D S H IP S AFE TY I N TH E C O M M U N I TY • For the past three years EQT has recycled • Employees participated in >7,000 • EQT and the EQT Foundation — a over 87% of the wastewater we generated hours of safety training in 2019 separa
Slide 28: EQT as a Leading Environmental Steward
EQT AS A LEADING ENVIRONMENTAL STEWARD MORE THAN A LICENSE TO OPERATE B O AR D & M AN AG E M E N T E N V I R O N M E N TAL M E T H AN E E M I S S I O N S WAT E R M AN AG E M E N T OVERSIGHT C O L L AB O R AT I O N S I N I T I AT I V E S • Strong water sourcing and • As a ONE Future Coalition • Condu
Slide 29: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE ADJUSTED NET (LOSS) INCOME FROM CONTINUING OPERATIONS Adjusted net (loss) income from continuing operations is a non-GAAP supplemental financial measures that is presented because it is an important measures used by the Company's management to evaluate period-to-period com
Slide 30: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF ADJUSTED NET (LOSS) INCOME FROM CONTINUING OPERATIONS The table below reconciles adjusted net (loss) income from continuing operations with loss from continuing operations, the most comparable financial measure calculated in accordance with GAAP, as deriv
Slide 31: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE ADJUSTED EBITDA Adjusted EBITDA is defined as loss from continuing operations, plus interest expense, income tax benefit, depreciation and depletion, amortization of intangible assets, impairments, proxy, transaction and reorganization costs, the revenue impact of changes
Slide 32: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF ADJUSTED EBITDA The table below reconciles adjusted EBITDA with loss from continuing operations, the most comparable financial measure as cal culated in accordance with GAAP, as reported in the Statements of Consolidated Operations included in the Company
Slide 33: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE ADJUSTED OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW Adjusted operating 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 supplem
Slide 34: Non-GAAP Financial Measure
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 35: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE EBITDA ATTRIBUTABLE TO DISCONTINUED OPERATIONS EBITDA attributable to discontinued operations is a non-GAAP supplemental financial measure defined as (loss) income from discontinued operations, net of tax plus interest expense, income tax (benefit) expense, depreciation, a
Slide 36: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF 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
Slide 37: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE NET DEBT Net debt is a non-GAAP supplemental financial measure that is presented because it is an important measure used by the Company's management to determine the Company's outstanding debt obligations that would not be readily satisfied by cash and cash equivalents on
Slide 38: Non-GAAP Financial Measure
NON-GAAP FINANCIAL MEASURE NET DEBT (AS OF 3/13/20) The table below reconciles net debt with total debt, the most comparable financial measure calculated in accordance with GAAP, as derived from the Company’s internal pro forma ledgers as of March 13, 2020. March 13, 2020 Current portion of debt $ 1