Eqt Corporation · NYSE:EQT
Eqt — Merger or Acquisition (May 2021)
34 slides from Eqt's merger presentation, May 10, 2021
Slide 1: May 10, 2021
5/10/2011 21 May 10, 2021
Slide 2: Cautionary statements and forward-looking 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 proved, probable and possi
Slide 3: Important Additional Information will be Filed with the SEC
Important Additional Information will be Filed with the SEC This presentation is being made in respect of the proposed transaction involving EQT Corporation (EQT) and Alta Resources Development, LLC (Alta) and their respective subsidiaries. The issuance of the stock consideration for the proposed tr
Slide 4: Executive biographies
Toby was named President and Chief Executive Officer in July 2019, when he also was elected to EQT’s Board of Directors Since May 2018, Toby has served as a Partner at Rice Investment Group, a multi-strategy fund investing in all verticals of the oil and gas sector From October 2013 until its acquis
Slide 5: Overview of Alta Resources Acquisition
5 Overview of Alta Resources Acquisition 5
Slide 6: Transaction overview and consideration
Based on $1.925 billion equity consideration divided by 30-day VWAP as of 5/5/2021 market close. Anticipated closing adjustment is between $200-225 MM, which would result in share reduction of ~11 million shares.6
Slide 7: Key Highlights
Key Highlights Acquired assets at attractive free cash flow yield Accelerates deleveraging & timeline to return capital to shareholders Projected increase in annual free cash flow Decreases annual pro forma free cash flow breakeven(1) Conservative Underwriting Provides Upside Pro Forma Acreage Posit
Slide 8: Pro forma free cash flow and breakeven
1.Defined as the Henry Hub price needed to generate positive free cash flow under a maintenance production plan.8
Slide 9: Assets complement EQT's SWPA position and combo-development inventory
Assets complement EQT’s leading SWPA position and already deep combo-development inventory AVERAGE WELL PERFORMANCE BY PLAY(1) – PREMIER GAS PLAYS Chesapeake (Alta non-op) operates the best geology in NEPA with significant remaining Lower Marcellus inventory economics competitive with, and even supe
Slide 10: Operated and non-operated position
Operated Position ~222,000 net acres, 0.5 Bcfe/d, 96% HBP 381 operated wells, 93 operated pads, 6 current DUCs Low 14% average royalty burden; as low as 11% in the most prolific areas 80% of future operations set up for combo-development Owned and operated gathering system significantly reduces cost
Slide 11: Owned and operated midstream and water systems
Owned and operated midstream and water systems provide increased operational efficiencies and flexibility Drives a material reduction in cost structure and durable free cash flow Midstream ownership diversifies exposure and increases operational control Integrated business model expands the commerci
Slide 12: Firm transportation portfolio diversifies sales markets
Attractive firm transportation portfolio diversifies EQT’s sales markets ‘In the money’ contracts enhance margins and access winter price premiums Current PV10 mark to market > $235 MM(1) Operated production accesses markets from Transco Z6 (New York) to Transco Z4 (Gulf Coast) Non-operated producti
Slide 13: Pro forma 1P reserves
19,802 4,13123,933 2,186 1,945 1P Reserves (Bcfe) 6,161 13,641 15,586 EQTAltaPro Forma PD ReservesPUD Reserves 13
Slide 14: Applying EQT's operational successes in Northeast Marcellus core
Applying EQT’s Operational Successes in Northeast Marcellus Core EQT is poised for successful execution EXECUTION PLANEXECUTION CONFIDENCE Execute maintenance mode of ~1 Bcf/d ~225,000 net horizontal feet per year (op + non-op) 1 rig program on operated assets easily integrates into EQT’s master ope
Slide 15: Applying Proven Integration Processes
Applying Proven Integration Processes Integration Timeline May 5, 2021 Deal Announced EQT Assumes Full Operations Expected Q3 2021 Full Ops. Integration System Integration: Accounting Finance and Risk Mgmt. Land Operations Marketing and Trading 6-9 months after close May 6, 2021 90-120 days after cl
Slide 16: Conservative underwriting and significant value upside
16 Conservative Underwriting | Significant Value Upside Attractive Valuation for Core Assets | Attractive Entry Point Optimized Financing Structure | Accelerates Deleveraging Robust Free Cash Flow and Highly Accretive | Accelerates Shareholder Returns Midstream Ownership Drives Superior Economics |
Slide 17: Company Overview
17 Company Overview 17
Slide 18: Dominant Position in the Core of the Appalachian Basin
Dominant Position in the Core of the Appalachian Basin Reduced 2021 capital program by 7% EQT CORPORATE OVERVIEW ASSET PROFILE Total Net Marcellus Acres(1) 1,300,000 Acres Core Net Marcellus Acres(1) 710,000 Acres Core Net Undeveloped Marcellus Locations(1,2) 1,660 Locations 1Q21 Sales Volumes 4.6 B
Slide 19: Uniquely positioned to sustainably deliver shareholder value
19 Uniquely positioned to sustainably deliver shareholder value 19 Non-GAAP measure. See appendix for definition.
Slide 20: First Quarter 2021
First Quarter 2021: Sales volumes of 415 Bcfe, in-line with guidance Received an average realized price of $2.61/Mcfe Total per unit operating costs of $1.31/Mcfe, $0.04 below midpoint of annual guidance Net cash provided by operating activities of $400 MM; free cash flow(1) of $259 MM Capital expen
Slide 21: PA Marcellus well costs
PA MARCELLUS WELL COSTS(1) $/ft. $850 $800 $745 $680$660$695 $635 Legacy (FY 2019E) 3Q194Q191Q202Q203Q204Q201Q21 Materially reducing well costs over time Includes pad construction and production facilities.21
Slide 22: Doing our part to lower GHG emissions
Doing our part to lower GHG emissions while delivering sustainable and reliable energy Why Low Emissions Matter Access to Capital Capital providers pushing for net zero emissions targets Premium valuation in marketplace Access to Customers & End Markets End users beginning to value low emissions nat
Slide 23: Significant FCF generation strengthens the balance sheet
Significant FCF generation strengthens the balance sheet $B 3/31/21 12/31/20 Cash & Cash Equivalents $0.0 $0.0 Current Portion of Debt $0.0 $0.1 Note Payable to EQM Midstream Partners $0.1 $0.1 $2.5 B Senior Unsecured Revolver $0.3 $0.3 LT Debt (Bonds)(1) $4.4 $4.4 Total Debt $4.8 $4.9 Net Debt(2) $
Slide 24: Liquidity is $1.4 B
Liquidity is $1.4 B(1) $2.5 B unsecured revolver: April 23, 2021: Entered into a one-year extension agreement Commercial terms remain relatively unchanged Demonstrates banks’ comfort in financial positioning LIQUIDITY(1) $2.5 $0.8 ~$0.8 B of letters of credit posted(1) $0.3 $1.4 •~$0.3 B drawn(1) Re
Slide 25: Executing maintenance program
Executing maintenance program Strategy unchanged pro forma for the acquisition of Alta Deliver an attractive free cash flow yield Alta significantly increases future free cash flows Combo-development on majority of new 2021 wells Provides high confidence in well performance and capital efficiency Co
Slide 26: Appendix
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Slide 27: Future Focused: 2019 ESG Highlights
Future Focused Calendar Year 2019 ESG Highlights Environmental Stewardship EQT’s methane intensity is ~78% lower than the 2025 target set by the ONE Future Coalition for the production sector ~81% of EQT’s produced water was recycled in 2019 Safety Zero Tier 1 Process Safety events ~49% decrease in
Slide 28: Marcellus' leading emissions intensity and cost of carbon
Marcellus’ Leading Emissions Intensity Translates to Lower “Cost of Carbon” As the largest producer of natural gas, EQT is playing a leading role Appalachian natural gas is the clear low-cost, low-emitting energy source “Cost of Carbon” 2019 PRODUCTION(1) (BOE/D) EMISSIONS(1) (KG CO2e/BOE) COST PER
Slide 29: Hedge Position as of April 30, 2021
Hedge Position as of April 30, 2021 Protecting the balance sheet Philosophy: Risk mitigation tool to de-risk cash flow and manage leverage Large scale combo-development strategy allows us to plan several years into the future Provides certainty on development costs which leads to confidence in locki
Slide 30: Year-over-year Reserve Report Changes
Year-over-year Reserve Report Changes Proved Reserves by Play (Bcfe)(1) Year Ended December 31, 2020 2019 Proved developed reserves Marcellus 11,943 10,513 Upper Devonian 839 880 Ohio Utica 757 947 Other 102 104 Total 13,641 12,444 Proved undeveloped reserves Marcellus 6,061 4,584 Ohio Utica 100 441
Slide 31: Adjusted EBITDA definition
Adjusted EBITDA is defined as net loss, excluding interest expense, income tax (benefit) expense, depreciation and depletion, amortization of intangible assets, (gain) loss on sale/exchange of long-lived assets, impairments, the revenue impact of changes in the fair value of derivative instruments p
Slide 32: Adjusted EBITDA reconciliation
The table below reconciles adjusted EBITDA with net loss, the most comparable financial measure as calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated Operations included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. Oth
Slide 33: Free cash flow reconciliation
Free cash flow is defined as net cash provided by operating activities less changes in other assets and liabilities, less accrual-based capital expenditures, excluding capital expenditures attributable to noncontrolling interests. Free cash flow is a non-GAAP supplemental financial measures used by
Slide 34: Net debt reconciliation
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. Net debt is a non-GAAP supplemental financial measure used by the Company’s management