Eqt Corporation · NYSE:EQT
Eqt — Q3 2023 Earnings Presentation
40 slides from Eqt's earnings presentation, Oct 26, 2023
Slide 1: Investor Presentation Third Quarter 2023 Results
Investor Presentation Third Quarter 2023 Results October 25, 2023 10/25/2 1 023 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) NEPA ~1.0 Bcf/d ~200k core net acres $17.4 B Market Cap(1) #1 Producer of natural gas in the Un
Slide 4: Breaking Records Across the Company
Breaking Records Across the Company Integrating Tug Hill and XcL Midstream at record pace, setting new operational records, and signed record size long-term firm sales deals KEY RESULTS(1) Q3 2023 YTD 2023 Q3 AND RECENT HIGHLIGHTS › Closed strategic acquisition of Tug Hill and XcL Midstream; integra
Slide 5: Integrating Tug Hill and XcL Midstream at Record Pace
Integrating Tug Hill and XcL Midstream at Record Pace Proprietary deal integration application illuminates sophistication of digital platform and drives highly efficient integration ACQUISITION INTEGRATION PROGRESS # of integration action items complete REACHING INTEGRATION Tug Hill & XcL Midstream
Slide 6: Realizing Massive Efficiency Gains on Tug Hill Assets In Just 60 Days
Realizing Massive Efficiency Gains on Tug Hill Assets In Just 60 Days Implementing EQT best practices drives value creation through synergies OPERATING FASTER & CHEAPER SINCE ACQUIRING ASSETS(1) Implementation of EQT best practices already driving material performance gains FURTHER IMPROVEMENTS AHEA
Slide 7: Another Quarter of Record-Breaking Operational Efficiency
Another Quarter of Record-Breaking Operational Efficiency EQT broke its previous drilling world record and reached all-time high completion efficiencies in Q3 AVERAGE FRAC CREW PUMPING HOURS DRILLING BROKE THE WORLD RECORD, AGAIN Hours FOOTAGE DRILLED IN 48-HOURS(1) New EQT Record 18,264 Old EQT Rec
Slide 8: 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) CONVERTED ENTIRETY OF MVP CAPACITY INTO LONG-TERM, PREMIUM CONTRA
Slide 9: Continuing LNG Strategy Momentum
Continuing LNG Strategy Momentum Signed two 15-year HOAs for LNG tolling capacity covering 2 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 STRATEGY Ability
Slide 10: Long-Term Free Cash Flow Generation Highlights Intrinsic Value Proposition
Long-Term Free Cash Flow Generation Highlights Intrinsic Value Proposition Pro-forma free cash flow(1) generation of ~$14 billion at recent strip PRELIMINARY PRO-FORMA OUTLOOK 2024E – 2028E CUMULATIVE FREE CASH FLOW(1) OUTLOOK HIGHLIGHTS EQT VALUE PROPOSITION $B 2024E ~$14 B SALES VOLUMES ~2.3 Tcfe
Slide 11: EQT Provides Best Risk-Adjusted Exposure to Natural Gas
EQT Provides Best Risk-Adjusted Exposure to Natural Gas At current pricing, EQT shares provide investors the least downside risk, and 2nd most upside exposure to rising prices 2024E – 2028E CUMULATIVE FCF(1,4) 2024E – 2028E CUMULATIVE FCF(1,2,4) % of enterprise value(3) % of enterprise value(3) Appa
Slide 12: EQT is at the Low End of Both the Cost of Supply and Return Curves
EQT is at the Low End of Both the Cost of Supply and Return Curves Structurally positioned to provide investors the optimal combination of downside protection and upside price exposure NYMEX GAS PRICE NEEDED TO GENERATE CORPORATE RETURNS(1) $/MMBtu MARGINAL COST OF SUPPLY TO GENERATE CORPORATE RETUR
Slide 13: Unrivaled Inventory Depth and Quality
Unrivaled Inventory Depth and Quality EQT has by far the largest and highest quality 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
Slide 14: Shareholder Return Strategy Designed to Maximize Long-Term Value
Shareholder Return Strategy Designed to Maximize Long-Term Value Retired $1.9 B of debt, purchased $600+ million of shares generating ~40% 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 15: 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 $1,250 MM AN IMPORTANT STRATEGIC ADVANTAGE Term Loan Facility 2025 › Upgraded to Baa3 by Mo
Slide 16: First-of-its-Kind Forestry Management Partnership with the State of West Virginia
First-of-its-Kind Forestry Management Partnership with the State of West Virginia Transparent, verifiable emissions reductions paving the way for EQT to achieve 2025 net zero(1) goal CONSERVATION PRACTICES Fields overrun with invasive LAND MANAGEMENT TECHNIQUES PROPEL species cleared & prepped for E
Slide 17: ARCH2 Hub Selected for DOE's Regional Clean Hydrogen Funding
ARCH2 Hub Selected for DOE’s Regional Clean Hydrogen Funding American natural gas driving the transition to zero-carbon energy, led by ARCH2 and Appalachian natural gas › Appalachian region provides significant existing resources including infrastructure for low-cost natural gas production APPALACHI
Slide 18: 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 ~60% of enterprise value(2) in FCF(1) through 2028 Low-cost profile structurally m
Slide 19: ESG & Macro Update
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Slide 20: 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 21: 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 NOW AV
Slide 22: 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 23: 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 24: LNG Macro: Material Global Natural Gas Demand Growth
LNG Macro: Material Global Natural Gas Demand Growth Non-North American demand set to increase by ~90 Bcf/d in less than 30 years NON-NORTH AMERICAN NATURAL GAS DEMAND FORECAST Bcf/d STRENGTHENING INTERNATIONAL 400 MARKET OUTLOOK 350 ~4 - 5 Bcf/d 300 › 1.5 - 2.5% average annual growth of gas 250 dem
Slide 25: 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 26: 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 LNG SUPPLY U.S. LNG CAPACITY BUILDOUT Bcf/d Bcf/d 30 Sabine Pass Cove Point Corpus Christi North America Middle East Australia Africa 100 Cameron El
Slide 27: Investor Appendix
Investor Appendix 27 27
Slide 28: 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 AMERICAN SHALE: A NEW HOPE 458,000 video views TRUST | TEAMWORK | HEART | EVOLUTION Digital Wildcatters 40,500 hours of watch time › 1% Pledge: Employees encouraged to
Slide 29: Consistent Proved Reserves Underpinned by Combo-Development
Consistent Proved Reserves Underpinned by Combo-Development Proved reserves slightly higher year-over-year with positive performance revisions 2022 PROVED RESERVES DEMONSTRATE RESILIENCY FAVORABLE RISK/REWARD PROFILE Proved reserves (Tcfe) ATAX PV-10(1), net of debt, per share PROVED RESERVES INCLUD
Slide 30: Leveraging Large-Scale Operations on a Large-Scale Asset Base
Leveraging Large-Scale Operations on a Large-Scale Asset Base Highly predictable and repeatable operations through combo-development EQT COMBO-DEVELOPMENT EXAMPLE REQUIREMENTS • Contiguous asset base REAL RESULTS • ~8,300 acres >75% >15 ~2.3 Tcfe Combo-development Years of core net Consistent 3-4 ri
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 2023E(1) 2024E › Diversity of delivery sales points provides significant We hedge local Local 43% 31% › c
Slide 32: Hedging Strategy Provides Compelling Risk-Adjusted Upside
Hedging Strategy Provides Compelling Risk-Adjusted Upside Hedge position as of October 20, 2023 2023 2024 2024 2024 2024 Q4 (1) Q1 Q2 Q3 Q4 EQT NATURAL GAS PRICE UPSIDE Hedged Volume (MMDth) 377 263 239 237 98 › Balance sheet improvements have allowed EQT to shift from Hedged Volume (MMDth/d) 4.1 2.
Slide 33: 2023 Operational Guidance
2023 Operational Guidance Consistent spending, operational outlook Production 4Q23E Total sales volumes (Bcfe) 525 - 575 Liquids sales volume, excluding ethane (MBbls) 4,000 - 4,300 Ethane sales volume (MBbls) 1,350 - 1,450 Total liquids sales volume (MBbls) 5,350 - 5,750 Btu uplift (MMBtu/Mcf) 1.05
Slide 34: Well Activity Details
Well Activity Details 3Q23 actuals and 4Q23 estimates Wells Drilled (Spud) SWPA NEPA WV OH TOTAL 3Q23A 4Q23E 3Q23A 4Q23E 3Q23A 4Q23E 3Q23A 4Q23E 3Q23A 4Q23E Net wells 12 9 - 12 5 4 - 6 - 7 - 10 0.2 1 - 2 18 21 - 30 Net avg. lateral (1k ft.) 13 12 - 15 15 12 - 15 - 13 - 15 13 9 - 11 14 12 - 15 Wells
Slide 35: Disclosures
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Slide 36: 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 37: Non-GAAP Financial Measure: LTM Adjusted EBITDA
Non-GAAP Financial Measure Reconciliation of Last Twelve Month (LTM) Adjusted EBITDA The table below reconciles adjusted EBITDA with net income (loss), the most comparable financial measure as calculated in accordance with GAAP, as reported in the Statements of Condensed Consolidated Operations to b
Slide 38: Non-GAAP Financial Measure: Free Cash Flow and Yield
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 U.S. GAAP. PV-10 differs from Standardized Measure because it does not include the ef