Eqt Corporation · NYSE:EQT
Eqt — Proxy Contest (December 2018)
16 slides from Eqt's proxy contest presentation, Dec 10, 2018
Slide 1: Realizing EQT's Potential
Realizing EQT’s Potential December 10, 2018
Slide 2: Disclaimer
Disclaimer IMPORTANT INFORMATION Toby Z. Rice and Derek A. Rice, as well as certain of their affiliates, may file a proxy statement with the U.S. Securities and Exchange Commission (“SEC”) to solicit proxies from stockholders of EQT for use at EQT’s 2019 annual meeting of stockholders. TOBY Z. RICE
Slide 3: EQT: A path forward
EQT: A path forward The Rice Team believes in the tremendous potential of EQT’s assets The completion of the merger in November 2017 created a world-class asset in the core of the Appalachian Basin capable of peer-leading capital efficiency and returns We took approximately 80% of the merger conside
Slide 4: The Issue: EQT's Operational Performance
The Issue: EQT’s Operational Performance
Slide 5: EQT is trading at 3.4x TEV/EBITDA, well below comparable peers
EQT is trading at 3.4x TEV/EBITDA, well below comparable peers EQT is trading at or below PDP value, well below peers and where recent substantially inferior gas assets have traded hands No value is being given for undeveloped acreage, signaling little confidence in EQT’s ability to effectively deve
Slide 6: EQT's 2018 well development budget implies Marcellus well costs of $1,250/ft
EQT’s 2018 well development budget of $2.5bn implies Marcellus well costs of $1,250/ft EQT’s goals of $1,000/ft in 2018 and $900/ft in 2019 represent no improvement to their 2017 development plan which was established well before the RICE merger and contemplated shorter lateral lengths RICE and peer
Slide 7: EQT's resource base enables well costs below $750/ft, but planning is required
We are deep believers that EQT’s resource base enables well cost execution at <$750/ft, but effective planning is required EQT should streamline their organizational structure and break down silos to facilitate inter-departmental collaboration EQT should increase operational and logistical efficienc
Slide 8: Drilling performance depends on a well-planned operations schedule
Drilling performance is heavily dependent on a well-planned operations schedule with all departments working seamlessly together EQT needs 2x the number of horizontal rigs to drill the same horizontal footage as RICE and other industry peers In 2018, EQT operated RICE’s rigs and schedule and saw a ~
Slide 9: EQT is expected to curtail gas volumes in 2019
EQT is expected to curtail 170 Bcfe of gas volumes in 2019 (>10% of production) due to system constraints, fuel/LUF, operational reductions and wellhead constraints. This represents $250mm of annual cash flow which is not included in our $400-$600mm of incremental annual pre-tax free cash flow we ex
Slide 10: The Opportunity: Proven Team Executing a Known Asset
The Opportunity: Proven Team Executing a Known Asset
Slide 11: The Rice Plan: a proven track record of success
The Rice Plan: a proven track record of success Decreased well costs + 1,000’ spacing = >$1.0bn of annual free cash flow generation RICE delivered Marcellus well costs at ~$750/ft prior to the merger with EQT Increase well productivity by widening to 1,000’ spacing to improve EURs by ~10%+ Provides
Slide 12: Lower well costs to $750/ft in the Marcellus
Lower well costs to $750/ft in the Marcellus 1. Pad assumes $2mm for pad construction, 10 wells per pad. Optimized EQT Cost Forecast Based on 2017 Actual RICE Performance Optimized Program Budget $750/ft for 10,000’ laterals The Rice Team has a track record of delivering basin-leading well costs. In
Slide 13: Example of Combo-Development from RICE
Example of Combo-Development from RICE. Covered on Final Conference Call in 2Q17 19 Wells developed simultaneously from 4 adjacent pads. Avg lateral length: 9,200’ at a cost of $770/ft Total 175,000 hz feet brought to sales for $135 million (the 11,000’ laterals within this project were $680/ft) Bro
Slide 14: 1,000' spacing versus 750' spacing
Cum Production/1K’ (Mcf) 1000’ Spacing 750’ Spacing RICE Tested 1000’ spacing in 2016-2017. After 14 months online the 1000’ wells are 10-15% better than 750’ spacing Considerations: Reduces inventory life by ~2 years Benefits: 10-15% increase in EURs Base case single well economics improve from ~35
Slide 15: Realizing EQT's Potential: Next steps
Realizing EQT’s Potential: Next steps The Rice Team is committed to improving EQT’s operations and delivering value for all EQT shareholders EQT must add proven operational experience to the board and senior management team The Rice Team has a track record of delivering basin-leading well costs We h
Slide 16: Contact information
Contact information For Investor Inquiries: Kyle Derham kyle@teamrice.com For Media Inquiries: Sard Verbinnen & Co Jim Barron: 212-687-8080 Frances Jeter: 832-680-5120