Eqt Corporation · NYSE:EQT
Eqt — Equitable Resources — The Oil and Gas Conference 2007
34 slides from Eqt's conference presentation, Aug 21, 2007
Slide 1: Analyst Presentation, The Oil and Gas Conference
Analyst Presentation The Oil and Gas Conference August 22, 2007
Slide 2: Cautionary Statements
www.eqt.com 2 EQUITABLE RESOURCES Equitable Resources (NYSE: EQT) 225 North Shore Drive Pittsburgh, PA 15212 Pat Kane ~ Director, Investor Relations (412) 553-7833 Cautionary Statements The Securities and Exchange Commission (the “SEC”) permits oil and gas companies, in their filings with the SEC, t
Slide 3: Equitable Resources (EQT): The Appalachian Leader
www.eqt.com 3 EQUITABLE RESOURCES Equitable Resources (EQT): The Appalachian Leader Appalachian Basin pure play Largest producer 5.7 Tcfe reserves; 2.5 Tcfe proved 3.3 MM gross acres (71% undeveloped) 12,000 producing wells >99% drilling success rate Extensive Midstream System 8,900 miles of gatheri
Slide 4: Why Appalachia? Appalachian Basin Overview
www.eqt.com 4 EQUITABLE RESOURCES Sources: U.S. Geological Survey; Schlumberger Why Appalachia? Appalachian Basin Overview Billions of cubic feet/year 7000 3500 US Natural Gas Flow Summary Appalachian Basin 0 Observations Oldest producing basin in U.S. Long-lived gas reserves Tremendous opportunity:
Slide 5: A New Focus
www.eqt.com 5 EQUITABLE RESOURCES Equitable Resources A New Focus A Proud Past...”A Utility with gas production” Obsession with Opex – “the low-cost producer wins!” Little priority given to booking reserves; proved or unproved “Just-In-Time” drilling / midstream Lock in ROTC – long-term hedging An E
Slide 6: Growth Strategy
www.eqt.com 6 EQUITABLE RESOURCES Growth Strategy Horizontal Drilling Midstream Expansion Coalbed Methane
Slide 7: Reserve Growth
www.eqt.com 7 EQUITABLE RESOURCES Reserve Growth Current assessment 18,000 drilling locations =2MM acres 3.0 Tcfe Devonian shale (Huron/Cleveland) 1.5 Tcfe CBM 1.2 Tcfe Conventional Future Enhanced understanding of horizontal drilling impact Huron / Cleveland Re-entry of vertical wells Marcellus sha
Slide 8: Organic Growth Potential
www.eqt.com 8 EQUITABLE RESOURCES Organic Growth Potential 0 50 100 150 2007E 2008E 2009E 2010E 2011E 2012E Annual Sales (Bcfe) 12% CAGR 2012E 2011E 2010E 2009E 2008E 2007E 1,200 1,050 950 825 750 670 Wells / Year 2012E 2011E 2010E 2009E 2008E 2007E 1,200 1,050 950 825 750 670 Wells / Year 0 50 100
Slide 9: Low-Cost Operator: F&D Costs
www.eqt.com 9 EQUITABLE RESOURCES Peer Group: APA, APC, BBG, CHK, DPTR, DVN, ECA, EOG, GDP, KWK, NBL, NFX, PXD, RRC, SWN, UPL, and XTO. Includes: property acquisition and development costs incurred divided by the sum of extensions, discoveries and other additions, revisions to and purchases of reser
Slide 10: Low-Cost Operator: Operating Expenses
www.eqt.com 10 EQUITABLE RESOURCES Low-Cost Operator Operating Expenses Operating concentration leads to low operating expenses 2006 operating expenses of $1.57/Mcfe vs. $1.96/Mcfe peer average Peer Group: APA, APC, BBG, CHK, DPTR, DVN, ECA, EOG, GDP, KWK, NBL, NFX, PXD, RRC, SWN, UPL, and XTO. Incl
Slide 11: Attention to Margins and Returns
www.eqt.com 11 EQUITABLE RESOURCES Attention to Margins and Returns Average 293% EQT 465% 2006 Gross Margin ROI Peer Comparison As of 12/31/06 Peer Group: APA, APC, BBG, CHK, DPTR, DVN, ECA, EOG, GDP, KWK, NBL, NFX, PXD, RRC, SWN, UPL, and XTO. Gross margin is oil and gas revenue less operating expe
Slide 12: An Industry Leader - ROTC
www.eqt.com 12 EQUITABLE RESOURCES An Industry Leader - ROTC Return on Total Capital 2000 - 2006 12.7% 15.6% 9.3% 11.3% 10.9% 11.4% 17.8% 0% 5% 10% 15% 20% 2000 2001 2002 2003 2004 2005 2006 ROTC Return on Total Capital 2000 - 2006 12.7% 15.6% 9.3% 11.3% 10.9% 11.4% 17.8% 0% 5% 10% 15% 20% 2000 2001
Slide 13: Growth Strategy
www.eqt.com 13 EQUITABLE RESOURCES Growth Strategy Horizontal Drilling Midstream Expansion Coalbed Methane
Slide 14: Horizontal Drilling Shale Development
www.eqt.com 14 EQUITABLE RESOURCES Pennsylvanian Devonian CBM 1,000 – 3,500 ft Lower Huron Shale 2,500 – 5,000 ft Marcellus Shale 2,500 – 7,500 ft Horizontal Drilling Shale Development Ubiquitous to our acreage 2,500 – 7,500 ft. deep 200 – 2,000 ft. thick Low reservoir pressure (500-3,400 PSI) EUR/w
Slide 15: Horizontal Drilling Shale Development Strategy
www.eqt.com 15 EQUITABLE RESOURCES Horizontal Drilling Shale Development Strategy A-Basin Shale Gas-in-Place estimates 225 – 2,000 Tcfe Total A-Basin shale gas produced to date 5 - 6 Tcfe Sources: U.S. Geological Survey; Schlumberger, EQT
Slide 16: Horizontal Drilling Shale Development Progress
www.eqt.com 16 EQUITABLE RESOURCES Horizontal Drilling Shale Development Progress 2007 Objectives and Status Drill at least 25 wells On target to drill at least 70 No longer drilling vertical shale wells in KY Test 7 of 11 prospect areas in KY 7 tested ~ 6 encouraging Keep Learning Increased expecte
Slide 17: Horizontal Drilling Shale Development - 2008
www.eqt.com 17 EQUITABLE RESOURCES Horizontal Drilling Shale Development - 2008 Drill at least 200 wells Expand vertical well re-entry program Test West Virginia Devonian shale opportunity Test Marcellus Test multi-lateral drilling geometry Improve completion techniques Progress up the learning curv
Slide 18: Growth Strategy
www.eqt.com 18 EQUITABLE RESOURCES Growth Strategy Horizontal Drilling Midstream Expansion CBM Horizontal Drilling Midstream Expansion Coalbed Methane
Slide 19: CBM Development
www.eqt.com 19 EQUITABLE RESOURCES CBM Development Jawbone coal deeper coal methane methane 1,000 – 3,500 ft. deep 10 – 75 ft. thick zone Multiple thin seams Spacing: 60 30 acres EUR/well: 0.3 – 0.5 Bcfe Cost/well: $0.3MM
Slide 20: CBM Resource Plays – U.S.
www.eqt.com 20 EQUITABLE RESOURCES CBM Resource Plays – U.S. Sources: U.S. Geological Survey
Slide 21: Growth Catalyst: Infill Drilling, Nora VA CBM Field
www.eqt.com 21 EQUITABLE RESOURCES Growth Catalyst Infill Drilling -- Nora VA CBM Field Drilled 60 acre grids Dickenson Co. 2006 pilot 50-70 wells in 2007 Un-drilled KY VA NC TN WV OH PA NY 100 miles IN MI Russell Co. Wise Co. Buchanan Co. Location
Slide 22: Nora CBM Infill Project Middlefork Pilot
www.eqt.com 22 EQUITABLE RESOURCES Volumes higher than expected from infill wells Offset well volume decline a little greater than expected Overall, volumes meeting expectations Existing well Infill well 60 acres Nora CBM Infill Project Middlefork Pilot
Slide 23: Nora Field Development
www.eqt.com 23 EQUITABLE RESOURCES Nora Field Development $300MM Agreement with Range Resources 50% W.I. including producing wells, undrilled acreage and gathering system $3.23/Mcfe for proved reserves EQT operates CBM producing wells, CBM new drilling, gathering system RRC drills non-CBM -- tight g
Slide 24: CBM Development Strategy
www.eqt.com 24 EQUITABLE RESOURCES CBM Development Strategy Expand infill program Extend drilling to Kentucky and West Virginia Evaluate horizontal drilling applicability VA WV KY 50 mi Equitable CBM Plays
Slide 25: Deep Development
www.eqt.com 25 EQUITABLE RESOURCES Deep Development Pennsylvanian Coal 1,000 – 2,000 ft Devonian Shale 1,500 – 5,000 ft Deep Horizons 6,000 – 15,000 ft Trenton Black River Rome Trough Appalachian Basin extensively probed more than a million wells Less than 1% reached depths below 7,500 ft EQT has 3.
Slide 26: Growth Strategy
www.eqt.com 26 EQUITABLE RESOURCES Growth Strategy Horizontal Drilling Midstream Expansion CBM Horizontal Drilling Midstream Expansion Coalbed Methane
Slide 27: Midstream Challenges
www.eqt.com 27 EQUITABLE RESOURCES Midstream Challenges Old gathering and transmission sized for slow growth vertical drilling Complex web of existing, leaky gathering pipes Increased drilling by EQT and others overwhelming capacity Long lead times for new pipeline and compressor projects Permitting
Slide 28: Infrastructure: Gathering Pipeline – Getting Bigger
www.eqt.com 28 EQUITABLE RESOURCES Infrastructure Gathering Pipeline – Getting Bigger 0 150 300 450 600 2003 2004 2005 2006 2007 Plan 2008 Est. 2012 Length Installed, Miles <6" 8" 12" 20" > 20" Forecast 0 150 300 450 600 2003 2004 2005 2006 2007 Plan 2008 Est. 2012 Length Installed, Miles <6" 8" 12"
Slide 29: Midstream Opportunity: Appalachian Hub
www.eqt.com 29 EQUITABLE RESOURCES Midstream Opportunity Appalachian Hub – Connecting to Markets OH WV VA PA Roanoke Charleston TGPL TCO ETNG DTI To Transco Existing pipe Potential projects EQT pipeline projects Existing compression EQT compression projects TGPL Tennessee Gas Pipeline DTI Dominion T
Slide 30: Midstream Planning for the Future
www.eqt.com 30 EQUITABLE RESOURCES Midstream Planning for the Future Big Sandy / Langley In KY horizontal drilling area 70 miles of 20” pipe 130,000 Dth/d capacity (phase 1) Expandable to 280,000 Dth/d Connects major pipelines Operational in 2007 Blue Ridge Supports Nora development 35 miles of 20"
Slide 31: A Proud Past... An Exciting Future!
www.eqt.com 31 EQUITABLE RESOURCES A Proud Past... An Exciting Future! Pure play Appalachian producer – “from well, to burner tip” Visible organic growth Production Reserves Low cost producer Upside from technology and exploration Focused on margins and ROTC Low implied reserve valuation: $2.00/Mc
Slide 32: Appendix
www.eqt.com 32 EQUITABLE RESOURCES Appendix
Slide 33: Horizontal Drilling Increased Recovery and Reserve Model
www.eqt.com 33 EQUITABLE RESOURCES Horizontal Drilling Increased Recovery and Reserve Model Initial production is first month average *Gross 0 10 20 30 40 50 60 70 80 1 6 11 16 21 26 31 36 41 46 Years MMcfe/yr 80 acres Vertical * Horizontal * Reserves 0.3 - 0.5 B cf e 0.75 - 1.0 Bcf e Initial Produc
Slide 34: CBM Recovery and Reserve Model
www.eqt.com 34 EQUITABLE RESOURCES CBM Recovery and Reserve Model Initial production is first month average *Gross 0 4 8 12 1 5 9 13 17 21 25 29 Years MMcfe/yr CBM Well * Reserves 0.3 Bcf e Initial Production 2 2 Mcf e /d Cost $0. 3 MM R/P 1 5.7 ATAX (PV10) $ 1 63,000 0 4 8 12 1 5 9 13 17 21 25 29 Y
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