Eqt Corporation · NYSE:EQT
Eqt — Q4 2023 Earnings Presentation
40 slides from Eqt's earnings presentation, Feb 14, 2024
Slide 1: Investor Presentation: Fourth Quarter and Full Year 2023 Results
Investor Presentation Fourth Quarter and Full Year 2023 Results February 13, 2024 2/13/20 1 24 1
Slide 2: Cautionary Statements
Cautionary Statements The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by applicat
Slide 3: The Premier North American Natural Gas Producer
The Premier North American Natural Gas Producer Combination of the greatest scale, premier assets, low-cost structure and responsible development PURE-PLAY APPALACHIAN PRODUCER EQT AT A GLANCE (NYSE: EQT) ~1.1 MM core net acres ~6.1 Bcfe/d NEPA ~200k core net acres Top U.S. Natural Gas Producer ~1.1
Slide 4: Record Breaking Year at EQT
Record Breaking Year at EQT Achieved all-time high operational efficiencies, integrated Tug Hill and XcL at record pace, and generated $880 million of FCF(1) KEY RESULTS 4Q23 2023 4Q23, 2023 AND RECENT HIGHLIGHTS › Q4 production of 564 Bcfe, toward the high-end of guidance driven by 564 2,016 contin
Slide 5: EQT Achieved Peak Operational Performance in 2023
EQT Achieved Peak Operational Performance in 2023 Set multiple world records and achieved significant y-o-y gains in drilling and completion efficiencies DRILLING TEAM PICKING UP THE PACE COMPLETION CREWS OPERATING AT RECORD EFFICIENCY Days per 1,000 horizontal feet drilled Average frac crew monthly
Slide 6: EQT is the Most Efficient Natural Gas Producer in the United States
EQT is the Most Efficient Natural Gas Producer in the United States Production per rig is more than 2.5x greater than the peer average PEER-LEADING EFFICIENCIES MAXIMIZE PRODUCTION PER RIG(1) Bcfe/d per rig (gross production) 2.0 PREMIER ASSETS + PREMIER EFFICIENCIES = PREMIER RESULTS Bcfe/d per rig
Slide 7: Tug Hill Cost Savings Exceeding Expectations
Tug Hill Cost Savings Exceeding Expectations Latest EQT-operated Marcellus drilling costs 50%+ lower than Tug Hill FASTER, MORE CONSISTENT DRILLING EXECUTION DRILLING COST SAVINGS SURPRISING TO THE UPSIDE ’23 Marcellus drilling days vs. depth ’23 Marcellus horizontal drilling costs - $ per foot Days
Slide 8: World-Class Reserve Base Resilient in All Parts of Commodity Cycle
World-Class Reserve Base Resilient in All Parts of Commodity Cycle EQT proved reserves steady at low point of the commodity cycle, highlighting quality and economic strength PROVED RESERVES STABILITY HIGHLIGHTS ASSET QUALITY FAVORABLE RISK/REWARD PROFILE Proved reserves (Tcfe) & SEC NYMEX Price ($/M
Slide 9: 2024 Maintenance Program with Opportunistic Infrastructure, Land Investments
2024 Maintenance Program with Opportunistic Infrastructure, Land Investments Maintenance capital program of $1.95-$2.05 billion and $0.20-$0.30 billion of value-enhancing growth projects 2024 OUTLOOK 2024 TOTAL CAPITAL EXPENDITURES PLAN HIGHLIGHTS 2,200 – 2,300 Leasehold › 2024 plan assumes 2-3 rigs
Slide 10: Strategic Infrastructure Projects Provide Robust Risk-Adjusted Returns
Strategic Infrastructure Projects Provide Robust Risk-Adjusted Returns Leveraging XcL platform to generate organic symbiotic midstream investment opportunities EQT WEST VIRGINIA GAS GATHERING SYSTEM STRATEGIC MIDSTREAM GROWTH PROJECTS 1 CLARINGTON CONNECTOR › 300 MMcf/d capacity pipe to move volumes
Slide 11: Opportunistic Working Interest Acquisition in Operated Gathering Systems
Opportunistic Working Interest Acquisition in Operated Gathering Systems Near-zero execution risk investment into durable infrastructure assets at a double-digit free cash flow yield BOLT-ON ACQUISITION OF MINORITY EQUITY OWNERSHIP IN EQT’S SEELY & WARRENSVILLE GATHERING SYSTEMS NEPA GATHERING SYSTE
Slide 12: West Virginia Water System Paying Dividends
West Virginia Water System Paying Dividends Efficient water handling resulting in material LOE savings; 2024 investments to drive additional future cost savings EQT WEST VIRGINIA WATER NETWORK WATER SYSTEM INVESTMENT HIGHLIGHTS › 2024 strategic growth budget includes ~$80 MM of capital associated wi
Slide 13: Land Capital Extends Inventory and Generates Robust Economics
Land Capital Extends Inventory and Generates Robust Economics Leasehold replenishment perpetuates free cash flow capacity LEASEHOLD REPLENISHMENT TANGIBLE VALUE CREATION FROM IN-FILL LEASING Organic leasehold acquisitions backfill core EQT acreage as developed Polecat North provides concrete example
Slide 14: EQT Signed Two of the Largest, Long-Term Physical Supply Deals Ever Executed
EQT Signed Two of the Largest, Long-Term Physical Supply Deals Ever Executed EQT’s combination of scale, credit ratings and inventory quality allows us to create differentiated value out of each molecule MOUNTAIN VALLEY PIPELINE (MVP) MVP CAPACITY CONVERTED INTO LONG-TERM, PREMIUM CONTRACTS WITH IG-
Slide 15: Continuing LNG Strategy Momentum
Continuing LNG Strategy Momentum Signed three 15-year non-binding HOAs for LNG tolling capacity covering 2.5 million tons per annum EQT’S FIRM TRANSPORTATION CAPACITY CONNECTS OUR LOW-COST TOLLING STRATEGY CHECKS ALL THE BOXES SUPPLY TO THE HIGHEST PRICED INTERNATIONAL MARKETS PRODUCT DELIVERY LNG S
Slide 16: Unrivaled Inventory Depth and Quality
Unrivaled Inventory Depth and Quality EQT leads peers in depth and quality of natural gas inventory in the United States EQT LEADS PEERS IN HIGH QUALITY INVENTORY DEPTH(1) Gross operated Appalachian locations HIGH-QUALITY INVENTORY DEPTH UNDERPINS LONG-TERM OUTLOOK <$2.50 $2.50-$3.00 $3.00-$3.50 4,0
Slide 17: Shareholder Return Strategy Designed to Maximize Long-Term Value
Shareholder Return Strategy Designed to Maximize Long-Term Value Retired $2.3 B of debt, purchased $600+ million of shares generating ~15% return, and increased base dividend 25%+ since late 2021 TARGETING $3.5 B ABSOLUTE DEBT, $2.0 B SHARE REPURCHASE 1.0-1.5x LONG-TERM LEVERAGE(1) AT $2.75 GAS AUTH
Slide 18: Investment Grade Ratings Reduce Cost of Capital and Maximize Flexibility
Investment Grade Ratings Reduce Cost of Capital and Maximize Flexibility Continued progress towards long-term debt target of $3.5 billion EQT SENIOR NOTES MATURITIES(2) INVESTMENT GRADE CREDIT RATINGS PROVIDE AN IMPORTANT STRATEGIC ADVANTAGE $115 MM 7.750% $1.17 B 7/26 3.900% › Recent actions elimin
Slide 19: EQT Provides a Differentiated Investment Opportunity
EQT Provides a Differentiated Investment Opportunity Track record of peer-leading operating performance, low-cost structure and scale PEER-LEADING LOW-COST STRUCTURE DRIVES DURABLE FREE CASH FLOW(1) Expect to generate 40%+ of enterprise value(2) in FCF(1) through 2028 Low-cost profile structurally m
Slide 20: ESG & Macro Update
Update i Oo — a = 1.) ae O- ( 9g = & Ps P = Led 0} O Y) Lid pall ; f ‘ i | Se sei 4 Foc
Slide 21: Clear Visibility Towards Achieving Net Zero Goal by 2025
Clear Visibility Towards Achieving Net Zero(2) Goal by 2025 Proven path to reach emissions targets, not relying on future technological advancements SET AGGRESSIVE GOALS TAKE AGGRESSIVE ACTION GET TO THE FINISH LINE Peer-Leading Speed Execute High Impact Initiatives Net Zero(2) by 2025 Scope 1 & Sco
Slide 22: Increased Transparency on EQT Progressing a Low-Carbon, Reliable Energy Future
Increased Transparency on EQT Progressing a Low-Carbon, Reliable Energy Future Differentiated natural gas supply and new venture efforts support long-term goals and demand WORLD CLASS REPORTING, CERTIFIED PERFORMANCE › EQT 2022 ESG Report brings transparency to our performance 2022 ESG REPORT AVAILA
Slide 23: High Impact, Low-Cost Initiative Drives Down Methane Emissions
High Impact, Low-Cost Initiative Drives Down Methane Emissions Successful elimination of natural gas-powered pneumatic devices reduces largest methane emission source GAS POWERED PNEUMATIC DEVICE ELIMINATION IMPACTFUL >300,000 MT CO2e 9,000 GHG Emissions Reductions Attributable to Pneumatic Devices(
Slide 24: 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, strengthening energy security while reducing global emissions THE DEMAND THE RESULT › There is ~175 Bcf/d of coal-to-gas switching demand › By 2030, unleashed U.S. LNG scenario
Slide 25: Structural Changes in the U.S. Power Market are Tailwinds for Natural Gas
Structural Changes in the U.S. Power Market are Tailwinds for Natural Gas Natural gas demand from power generation could increase 20% by 2030 FORECASTED REGIONAL 5-YEAR POWER LOAD CAGR(2) 2022 5-Year CAGR 2023 5-Year CAGR 2024 5-Year CAGR POWER GENERATION GROWTH 2.50% DRIVING SIGNIFICANT UPSIDE TO U
Slide 26: Inadequate Natural Gas Storage Will Amplify Price Volatility
Inadequate Natural Gas Storage Will Amplify Price Volatility Lack of storage capacity relative to demand, limited coal switching ability and renewable intermittency will amplify price volatility U.S. GAS STORAGE: DAYS OF LTM DEMAND COVER(1) STORAGE EXPRESSED IN DAYS’ DEMAND COVER(1) Storage / Daily
Slide 27: Global LNG Supply and Demand Forecast
Global LNG Supply and Demand Forecast The LNG market is expected to double by the late 2030s, with the U.S. expected to be one of the largest suppliers GLOBAL LNG SUPPLY AND DEMAND ESTIMATES Bcf/d RUSSIA EUROPE GLOBAL LNG DEMAND NORTH AMERICA 13 EXPECTED TO RISE 17 18 17 15 4 0 6 0 7 0 0 1 1 1 1 202
Slide 28: U.S. LNG Export Capacity Buildout Underway
U.S. LNG Export Capacity Buildout Underway U.S. LNG exports are expected to continue growing, reaching 35% of supply by 2026, further supporting U.S. demand U.S. LNG EXPORT BUILD OUT Bcf/d Wave 2 LNG Buildout Underway 30 U.S. IS AN LNG Texas LNG EXPORT LEADER Lake Charles Commonwealth 25 Port Arthur
Slide 29: Investor Appendix
Investor Appendix 29 29
Slide 30: 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 OIL & GAS DRILLING RECLAMATION AWARD TRUST | TEAMWORK | HEART | EVOLUTION From the West Virginia Department of Environmental Protection › Site reclamations restore for
Slide 31: EQT Delivers Production to Diversified Sales Points
EQT Delivers Production to Diversified Sales Points Access to diverse sales points provides flexibility and opportunity Provides Operational and Cash Flow Flexibility Regional Mix - Price Points 2024E 2025E › Diversity of delivery sales points provides significant We hedge local Local 32% 33% › comm
Slide 32: Hedging Strategy Provides Compelling Risk-Adjusted Upside
Hedging Strategy Provides Compelling Risk-Adjusted Upside NYMEX hedge position as of February 9, 2024 2024 (1) Q2 Q3 Q4 EQT NATURAL GAS PRICE UPSIDE Q1 Hedged Volume (MMDth) 283 260 237 127 › Balance sheet improvements have allowed EQT to shift from defensively hedging to a more tactical and opportu
Slide 33: 2024 Operational Guidance
2024 Operational Guidance Production 1Q24E 2024E 1Q24E total sales volume guidance includes the impact of 10-15 Bcfe Total sales volumes (Bcfe) 525 - 575 2,200 - 2,300 of lower sales volume due to non-operated midstream constraints Liquids sales volume, excluding ethane (MBbls) 3,650 - 3,950 14,550
Slide 34: 2024 Financial Guidance
2024 Financial Guidance NYMEX natural gas price sensitivities ADJUSTED EBITDA(1) ADJUSTED OPERATING FREE CASH FLOW(1) $B CASH FLOW(1) $B $B $3.3 - $3.6 $3.0 - $3.3 $3.0 - $3.3 $2.7 - $3.0 $2.7 - $3.0 $2.4 - $2.7 $0.8 - $1.1 $0.5 - $0.8 $0.3 - $0.5 $2.50 $2.75 $3.00 $2.50 $2.75 $3.00 $2.50 $2.75 $3.0
Slide 35: Well Activity Details
Well Activity Details 4Q23 actuals, 1Q24 and 2024 estimates Wells Drilled (Spud) SWPA NEPA WV OH TOTAL 4Q23A 1Q24E 2024E 4Q23A 1Q24E 2024E 4Q23A 1Q24E 2024E 4Q23A 1Q24E 2024E 4Q23A 1Q24E 2024E Net wells 11 1 - 4 18 - 22 5 9 - 14 22 - 30 9 8 - 12 30 - 38 2 - - 27 18 - 30 70 - 90 Net avg. lateral (1k
Slide 36: Disclosures
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Slide 37: Non-GAAP Financial Measure: Reconciliation of Adjusted EBITDA
Non-GAAP Financial Measure Reconciliation of Adjusted EBITDA Adjusted EBITDA is defined as net income (loss), excluding interest expense, income tax expense (benefit), depreciation and depletion, loss (gain) on sale/exchange of long-lived assets, impairments, the revenue impact of changes in the fai
Slide 38: Non-GAAP Financial Measure: Adjusted Operating Cash Flow, Free Cash Flow
Non-GAAP Financial Measure Adjusted Operating Cash Flow, Free Cash Flow and Free Cash Flow Yield 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 operating cash flow less accrual-b
Slide 39: 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 40: 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 GAAP. PV-10 differs from Standardized Measure because it does not include the effects