EQT Corporation · NYSE:EQT
EQT — Investor Presentation (November 2015)
35 slides from EQT's investor presentation, November 2015
Slide 1: Analyst Presentation
Analyst Presentation November 2015
Slide 2: EQT Cautionary Statements
EQT Cautionary Statements EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Pat Kane - Chief Investor Relations Officer (412) 553-7833 The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only p
Slide 3: Non-GAAP Measures
Non-GAAP Measures The Company uses Adjusted EQT Midstream EBITDA as a financial measure in this presentation. Adjusted EQT Midstream EBITDA is defined as the Company’s EQT Midstream business segment’s operating income (loss) plus depreciation and amortization expense less gains on dispositions. Adju
Slide 4: Calculations Within This Presentation
Calculations Within This Presentation Finding and development costs (F&D costs) from all sources for peer companies presented in this presentation are calculated as the cost incurred, relating to natural gas and oil activities in accordance with Financial Accounting Standards Board Accounting Standa
Slide 5: Key Investment Highlights
Key Investment Highlights Extensive reserves of natural gas* 10.7 Tcfe Proved; >22 years R/P 42.8 Tcfe 3P; >87 years R/P 53 Tcfe Total Resource Potential; >108 years R/P Proven ability to profitably develop our reserves >25% production sales volume growth forecasted in 2015 Industry le
Slide 6: Leading Appalachian E&P Company
Leading Appalachian E&P Company 2014 Operating Income of $853.4 million 9,100 pipeline miles 10.7 Tcfe proved reserves 3.4 MM acres As of 12/31/2014 6
Slide 7: Production By Play
Production By Play Marcellus Shale drilling driving growth 1,800 Marcellus 1,600 Huron Other 1,400 1,200 Production MMcf/d 1,000 800 600 Began horizontal drilling 400 200 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 7
Slide 8: Reserves By Play
Reserves By Play Proved Reserve Growth 42.8 Tcfe 3P reserves (as of December 31, 2014) 12,000 Upper Devonian Other 10,739 455 10,000 Huron 760 Marcellus 8,348 1,240 215 8,000 861 Huron 11.9 Bcfe 1,316 6,004 6,000 5,220 5,365 761 Marcellus 23.3 866 889 965 4,000 1,062 8,284 1,475 5,956 2,000 4,278 3,
Slide 9: Marcellus Play
Marcellus Play 600,000 EQT acres • 86% NRI / 80% HBP 23.3 Tcfe 3P 31 Tcfe total resource potential Core 138 wells in 2015 Development Area 9
Slide 10: Marcellus Core Development Area
Marcellus Core Development Area Near term development strategically focused on core ~260,000 EQT acres ~2,840 locations 526 wells online* 123 wells in 2015 5,400’ laterals 91 acre spacing Core 11.2 Bcfe EUR / well Development Area 2,065 Mcfe EUR / ft. of lateral $5.7 MM / well *As of 09/30/2015 10
Slide 11: Core Marcellus
Core Marcellus IRR Wellhead After OpEx After Tax 350% PRICE ATAX IRR $2.50 22% 300% $3.00 46% $3.50 82% 250% 200% 150% 100% 50% 0% $2.50 $3.00 $3.50 Realized Price 11
Slide 12: Utica Play
Utica Play 400,000 EQT acres 3,000 locations 1 well online* 2 wells in progress ~13,000’ deep 5,400’ lateral $12.5 – $14.0 MM / well** Scotts Run 591340 Pettit 593066 Greene County, PA Greene County, PA 3,221’ treated interval Spud August 17, 2015 24 hr. IP: 72.9 MMcf 13,400’ vertical depth 22.6 MMc
Slide 13: Utica Play Type Curves
Utica Play Type Curves - 5,400’ lateral 35,000 Utica 5.9 MMcf/ft Utica 4.3 MMcf/ft 30,000 ATAX IRR ($2.00 Realized Price) Well Cost 4.3 MMcf/ft 5.9 MMcf/ft $12.5 MM 34% 53% 25,000 $14.0 MM 21% 37% Daily Production (Mcf/d) 20,000 15,000 10,000 5,000 0 0 10 20 30 40 50 60 70 80 90 100 Time in Months (
Slide 14: Scott's Run Utica Well Update
Scott’s Run Utica Well Update Cumulative Production, Pressure and Rate vs. Time 3,500 3,000 2.3 Bcf / 1,000’ EUR: 5.9 Bcf / 1,000’ Cumulative Production recovered by day 254 2,500 (MMcf / 1,000’ Lateral) EUR: 4.3 Bcf / 1,000’ 2,000 Actual Projected 1,500 1,000 500 30 MMcf/d - 0 30 60 90 120 150 180
Slide 15: Industry Leading Cost Structure
Industry Leading Cost Structure $7 3-year F&D (all sources) $6 $5 Mean = $2.66 $4 $0.73 $/Mcfe $3 $2 $1 $0 RICE SWN MDU WLL COG CNX QEP AR RRC XCO EOG NBL SM CXO CHK EGN EQT UPL NFG XEC NFX For the three years ended 12/31/2014 Per Unit Operating Expenses $4 Mean = $1.69 $3 $0.47 $/Mcfe $2 $1 $0 RICE
Slide 16: EQT Corporation Midstream
EQT Corporation Midstream Overview – Consolidated Transmission & Storage* 3.5 Bcf/d current capacity 47 Bcf gas storage capacity Gathering* 2 Bcf/d capacity Formed MLP in 2012 (NYSE: EQM) $600 700 EQT Corporation Adjusted EQT Midstream EBITDA** EQT Midstream EQT Midstream Partners, LP 60
Slide 17: Marcellus Midstream Assets
EQT Corporation Midstream Marcellus Midstream Assets Allegheny Valley Allegheny Tioga Valley 65 MMcf/d Connector Connector 200-mile FERC pipeline Longhorn 130 MMcf/d 450 MMcf/d capacity ~$30MM CAPEX in 2015 Terra 80 MMcf/d ~$40 MM projected annual EBITDA Applegate 150 MMcf/d 2015 Gatheri
Slide 18: EQT GP Holdings, LP (NYSE: EQGP)
EQT GP Holdings, LP (NYSE: EQGP) EQT owns 90% LP interest of EQGP EQGP owns in EQM* 28% limited partner interest 1.8% general partner interest incentive distribution rights *As of 11/23/2015 18
Slide 19: EQT Midstream Partners, LP (NYSE: EQM)
EQT Midstream Partners, LP (NYSE: EQM) Transmission & Storage 3.1 Bcf/d current capacity 700 mile FERC-regulated interstate pipeline 32 Bcf of gas storage capacity Gathering System Jupiter Gathering System Supports EQT PA dry gas production Northern West Virginia Marcellus Gathering
Slide 20: EQT Midstream Partners Growth Projects
EQT Midstream Partners, LP Growth Projects Ohio Valley Connector 36-mile FERC regulated pipeline to connect transmission in West Virginia to Clarington, OH Q3 2016 in-service ~1 Bcf/d capacity 650 MMcf/d contracted under firm 20-year term Mountain Valley Pipeline 300-mile FERC-regulate
Slide 21: Corporate Citizenship
Corporate Citizenship Safety – Our first priority All accidents are preventable Company goal = zero incidents Committed to: The environment Our employees and contractors The communities where we drill and work EQT Foundation charitable giving of >$4 million / year More than $20 mil
Slide 22: Drilling and Hydraulic Fracturing
Drilling and Hydraulic Fracturing Committed to operate in accordance with federal, state and local regulations Industry leading spill prevention plans and results Supports the disclosure of frac fluid additives Utilize multiple barriers to protect drinking water supplies Pre-drilling water
Slide 23: Investment Summary
Investment Summary Extensive reserves of natural gas Proven ability to profitably develop our reserves >25% production sales volume growth forecasted in 2015 Strong liquidity position Committed to maximize shareholder value by: Accelerating the monetization of our vast reserves Operati
Slide 24: Appendix
Appendix 24
Slide 25: Liquids Volume Growth and Marcellus Impact
Liquids Volume Growth and Marcellus Impact Liquids Volume Growth Marcellus Liquids Price Impact $5.00 (1200 Btu Gas) NGLs (1.6 Gal/Mcf) 10,000 Btu Premium NYMEX 9,000 $4.00 8,000 $3.27 $3.23 7,000 $3.00 $0.54 $0.39 $/Mcf $0.12 6,000 5,000 Mbbls $2.00 4,000 3,000 $2.72 $2.72 $1.00 2,000 1,000 - $0.00
Slide 26: Capital Investment Summary
Capital Investment Summary $1.9 $1.8 $1.6 $1.2 $1.3 Midstream Production Distribution Excludes acquisitions and EQT Midstream Partners, LP 26
Slide 27: Marcellus Play Development Areas
Marcellus Play Development Areas Undeveloped Acres Undeveveloped Total Locations Locations PA Core 145,000 116,000 1,610 1,300 WV Core 115,000 92,000 1,230 980 PA Tier 2 200,000 189,000 1,600 1,520 WV Tier 2 140,000 136,000 1,120 1,100 TOTAL 600,000 533,000 5,560 4,900 Type curve and well cost data
Slide 28: Type Curves: Core Marcellus vs Utica
Type Curves - 5,400’ lateral Core Marcellus vs Utica 35,000 Utica 5.9 MMcf/ft Utica 4.3 MMcf/ft Core Marcellus 2.1 MMcf/ft 30,000 25,000 Daily Production (Mcf/d) 20,000 15,000 10,000 5,000 0 0 10 20 30 40 50 60 70 80 90 100 Time in Months (First 100 Months Represented) 28
Slide 29: Marcellus Core Type Curve
Marcellus Play Core Type Curve - 5,400’ lateral 15,000 14,000 13,000 12,000 11,000 Daily Production (Mcf/d) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 0 10 20 30 40 50 60 70 80 90 100 Time in Months (First 100 Months Represented) 29
Slide 30: Marcellus Capacity
Marcellus Capacity EQT Capacity & Firm Sales Market Mix Q4 2015 2016E 2017E TETCO M2 29‐31% 19‐21% 14‐16% TETCO M3 34‐36% 31‐33% 28‐30% TCO 10‐11% 9‐10% 6‐8% Midwest 10‐11% 23‐25% 32‐34% NYMEX 14‐16% 12‐14% 15‐17% 30
Slide 31: Risk Management
Risk Management Hedge Position as of October 21, 2015 300 $4.09 $4.50 $3.81 $3.63 $4.00 250 $3.50 200 $3.00 $3.16 $2.94 $2.50 $ / Mcf $2.70 Bcf 150 $2.00 100 $1.50 $1.00 50 $0.50 84 248 110 - $0.00 2015** 2016 2017 Hedged Volume Average Hedge Price NYMEX Price 2015** 2016*** 2017*** NYMEX Price ($/M
Slide 32: Ample Financial Flexibility to Execute Business Plan
Ample Financial Flexibility to Execute Business Plan EQT Debt ratings Moody’s Standard & Poor’s Fitch Long-term debt Baa3 BBB BBB- Outlook Stable Stable Stable Strong balance sheet ($ MM, except net debt / capital) Sept. 30, 2015 Short-term debt* $ 0 Long-term debt* 2,478 Cash and cash equivalents*
Slide 33: Price Reconciliation
Price Reconciliation Three Months Ended Nine Months Ended September 30, September 30, in thousands (unless noted) 2015 2014 2015 2014 LIQUIDS NGLs: Sales volume (MMcfe) (a) 13,827 12,047 39,552 27,768 Sales volume (Mbbls) 2,304 2,008 6,592 4,628 Gross price ($/Bbl) $ 8.10 $ 42.27 $ 15.17 $ 46.46 Gro
Slide 34: Price Reconciliation (continued)
Price Reconciliation (continued) Three Months Ended Nine Months Ended September 30, September 30, in thousands (unless noted) 2015 2014 2015 2014 Midstream Deductions ($/Mcfe) Gathering to EQT Midstream $ (0.72) $ (0.74) $ (0.74) $ (0.74) Transmission to EQT Midstream (0.19) (0.20) (0.19) (0.20) Thi
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation EQT Corporation Adjusted EQT Midstream EBITDA (millions) 2010 2011 2012 2013 2014 Midstream operating income $179 $417 $237 $329 $384 Add: depreciation and amortization 62 57 65 75 87 Less: gains on dispositions – 203 – 20 7 Less: Big Sandy and Langley 31 14 – – – Adjusted Mi