EQT Corporation · NYSE:EQT

EQT — Investor Presentation (July 2014)

49 slides from EQT's investor presentation, Jul 24, 2014

  1. Slide 1: Analyst Presentation

    Analyst Presentation July 24, 2014

  2. 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

  3. 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 EQT Midstream operating income (loss) plus depreciation and amortization expense less gains on dispositions. Adjusted EQT Midstream EBITDA also ex

  4. 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

  5. Slide 5: Key Investment Highlights

    Key Investment Highlights  Extensive reserves of natural gas*  8.3 Tcfe Proved; >23 years R/P  36.4 Tcfe 3P; >100 years R/P  44 Tcfe Total Resource Potential; >120 years R/P  Proven ability to profitably develop our reserves  > 24% production sales volume growth in 2014  Industry leading cost

  6. Slide 6: Leading Appalachian E&P Company

    Leading Appalachian E&P Company  2013 Operating Income of $654.6 million 10,400 pipeline miles 8.3 Tcfe proved reserves 3.6 MM acres As of 12/31/13 6

  7. Slide 7: Production By Play

    Production By Play  Marcellus Shale drilling driving growth 1,600 Marcellus 1,400 Huron horizontal Vertical 1,200 1,000 Production MMcf/d 800 600 Began horizontal drilling 400 200 0 2006 2007 2008 2009 2010 2011 2012 2013 2014E 7

  8. Slide 8: Reserves By Play

    Reserves By Play Proved Reserve Growth 36.4 Tcfe 3P reserves (as of December 31, 2013) 9,000 8,348 Upper Devonian 215 8,000 CBM/Other 861 Huron 7,000 Marcellus 1,316 6,004 6,000 5,220 5,365 761 Huron 11.5 Bcfe 5,000 889 866 965 4,068 4,000 1,062 Marcellus 18.5 991 1,475 3,000 5,956 2,000 2,016 4,278

  9. Slide 9: Marcellus Play

    Marcellus Play  Near term development focused in four areas Central PA 580,000 EQT acres 86% NRI / 80% HBP 33% “wet” 18.5 Tcfe 3P 23.9 Tcfe total resource potential Southwestern PA 201 wells in 2014 >50% of acreage will utilize RCS Northern WV (Dry) Northern WV (Wet) EQT acreage 9

  10. Slide 10: Marcellus Play Southwestern PA

    Marcellus Play Southwestern PA  Prolific dry gas region Oliver West Pad 3 wells 3,919’ Avg Lateral Length per well 9,291 Mcfe Avg 30-day IP per well 115,000 EQT acres 1,460 locations Kevech Pad 6 wells 209 wells online* 2,970’ Avg Lateral Length per well 8,873 Mcfe Avg 30-day IP per well 102 wells

  11. Slide 11: Marcellus Play Northern West Virginia – Wet Gas Area

    Marcellus Play Northern West Virginia – Wet Gas Area  Enhanced economics from liquids uplift Big 190 Pad 5 wells 6,308’ Avg Lateral Length per well 12,511 Mcfe Avg 30-day IP per well 90,000 EQT acres 1,060 locations 134 wells online** 73 wells in 2014 PEN 16 Pad 4,800 foot laterals 5 wells 3,562’ A

  12. Slide 12: Marcellus Play Central Pennsylvania

    Marcellus Play Central Pennsylvania  Early stages of acreage delineation 80,000 EQT acres Frano Pad 3 wells 4,409’ Avg Lateral Length per well 7,532 Mcfe Avg 30-day IP per well 720 locations 50 wells online* 18 wells in 2014 4,800 foot laterals 110 acre spacing 6.6 Bcfe EUR / well 1,375 Mcfe EUR /

  13. Slide 13: Marcellus Play Northern West Virginia – Dry Gas Area

    Marcellus Play Northern West Virginia – Dry Gas Area  EQT’s newest development area GRT26 Pad 2 wells 3,270’ Avg Lateral Length per well 6,547 Mcfe Avg 30-day IP per well 30,000 EQT acres 300 locations 46 wells online* 8 wells in 2014 4,800 ft laterals 97 acre spacing 8.4 Bcfe EUR / well 1,741 Mcfe

  14. Slide 14: Marcellus Economics

    Marcellus Economics IRR - Blended Marcellus Development Areas PRICE ATAX IRR $4.00 59% $4.50 82% $5.00 110% Realized Price See appendix for IRR by development area 14

  15. Slide 15: Upper Devonian Play

    Upper Devonian Play  Developed in conjunction with Marcellus 170,000 near-term testing & development EQT acres 2,000 locations 22 wells online* 36 wells in 2014 4,800 foot laterals 83 acre spacing 6.1 Bcfe EUR / well* Greene County 7 wells 1,274 Mcfe EUR / ft. of lateral 5,964’ Avg Lateral Length p

  16. Slide 16: Dry Utica / Point Pleasant Potential

    Dry Utica / Point Pleasant Potential  Targeting deep, high pressure rock beneath existing development areas 400,000 EQT acres 3,000 locations 1 well in Q4 2014 Greene County, PA 6,400 foot lateral 13,500 feet deep $12 - $17 MM / well EQT acreage 16

  17. Slide 17: Huron Play Kentucky

    Huron Play Kentucky  Targeting high-return, liquid-rich acreage 1.4 MM EQT acres 85 % Wet; 15 % Dry 10,000+ horizontal locations 900 horizontal wells online** 120 wells planned in 2014 6,000 foot laterals 1.4 Bcfe EUR / well* 120 wells 230 Mcfe EUR / ft. of lateral* $1.6 MM / well EQT acreage * Liq

  18. Slide 18: Permian Basin

    Permian Basin  Stacked Horizontal Potential 73,000 net acres 78% WI / 62% NRI Howard Mitchell Nolan 98% HBP 500 MMBOE of resource potential Stacked Play Opportunity Upper Wolfcamp Sterling Lower Wolfcamp Glasscock Coke Cline Development 1,500-1,700 horizontal locations Tom Green 2014: 4 wells 2015:

  19. Slide 19: Industry Leading Cost Structure

    Industry Leading Cost Structure 3-year F&D (all sources) Mean = $2.74 $0.88 $/Mcfe For the three years ended 12/31/13 Per Unit Operating Expenses Mean = $1.68 $0.52 $/Mcfe Year ended 12/31/13 19

  20. Slide 20: Liquids Volume Growth and Marcellus Price Uplift

    Liquids Volume Growth and Marcellus Price Uplift Liquids Volume Growth Marcellus Liquids Price Uplift 8,000 (1200 Btu Gas) 7,000 NGLs (1.6 Gal/Mcf) Btu Premium 6,000 $6.00 NYMEX $5.84 5,000 $4.93 $1.55(1) $5.00 $0.82 4,000 $4.00 $0.18 $/Mcf Mbbls 3,000 $3.00 2,000 $2.00 $4.10 $4.10 1,000 $1.00 - $0.

  21. Slide 21: Midstream Overview

    Midstream Overview  Transmission & Storage Legend Transmission  Gathering Gathering EQT Leases  Marketing Storage Pool Marcellus Huron EQT Utica Midstream Total* Transmission capacity (BBtu/d) 2,700 Miles of transmission pipeline 900 Marcellus gathering capacity (BBtu/d) 1,500 Miles of Marcellus

  22. Slide 22: Midstream Overview

    Midstream Overview  EQT Production sales drive EQT Midstream EBITDA growth  70% of Midstream revenues from EQT Corporation  Fixed fee contracts  Transmission contracts with 15-year weighted average life*  Minimal direct commodity exposure EQT Corporation Adjusted EQT Midstream EBITDA** $500 500

  23. Slide 23: EQT Midstream Partners, LP (NYSE: EQM)

    EQT Midstream Partners, LP (NYSE: EQM)  Transmission and storage  2.25 Tbtu/d current capacity  700 mile FERC-regulated interstate pipeline  32 Bcf of working gas storage  Gathering System  Jupiter Gathering System  Highlights market valuation of EQM Compressor Station Equitrans Transmission

  24. Slide 24: EQT Midstream Partners, LP Distributions

    EQT Midstream Partners, LP Distributions  EQM forecasting 29% per unit distribution growth in 2014*  EQM forecasting 22% per unit distribution growth in 2015* $8.00 $7.15 $7.00 $6.19 $6.00 Total Distribution per LP Unit $5.23 $5.00 $4.27 $4.00 $3.31 $3.00 $2.37 $4.54 $2.00 $4.06 $3.58 $3.10 $2.62

  25. Slide 25: General Partner Cash Flow Valuation

    EQT Midstream Partners, LP General Partner Cash Flow Valuation  Present value of GP cash flows = $3.9 billion $250 $200 $194 $158 $150 $ Millions $123 $100 $82 $50 $45 $14 $0 2014E 2015E 2016E 2017E 2018E 2019E 2014E GP Discounted Cash Flow Sensitivity Present Value of 2014-2019 $ 470 $ Billion Ter

  26. Slide 26: Jupiter Gathering System

    EQT Midstream Partners, LP Jupiter Gathering System  EQT sold to EQT Midstream Partners May 2014  $1.2 billion Central PA  35 mile gathering system in Greene and Washington Counties in Pennsylvania  10-year firm transportation Southwestern PA agreement Jupiter  Currently 225 MMcfe/d  Additiona

  27. Slide 27: EQT Midstream Marcellus Gathering

    EQT Midstream Marcellus Gathering Total Tioga 2013 2014 capacity 65 MMcf/d year-end capacity after (MMcf/d) capacity additions additions Pennsylvania 1,150 120 1,270 Longhorn West Virginia 350 320 670 130 MMcf/d Total 1,500 440 1,940 Terra 80 MMcf/d Mercury 2014 CAPEX 250 MMcf/d Applegate $240 MM (E

  28. Slide 28: EQT Midstream Transmission

    EQT Midstream Transmission  Allegheny Valley Connector  EQT acquired December 2013  200 mile FERC-regulated interstate pipeline  450 BBtu/d capacity  15 Bcf working gas storage  ~$90 MM CAPEX in 2014  ~$40 MM projected annual EBITDA Equitrans Transmission Allegheny Valley Connector EQT acreag

  29. Slide 29: Mountain Valley Pipeline Project

    EQT Midstream Mountain Valley Pipeline Project  Pipeline to growing demand center in southeast US  Completed a non-binding open season in July 2014  Expected JV with NextEra Energy  JV to construct & own pipeline  EQT and/or EQM will be operator  2 Bcf/day capacity  1 Bcf/day committed from t

  30. Slide 30: 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

  31. Slide 31: Drilling and Hydraulic Fracturing

    Drilling and Hydraulic Fracturing  EQT meets or exceeds all 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 sampling withi

  32. Slide 32: Investment Summary

    Investment Summary  Extensive reserves of natural gas  Proven ability to profitably develop our reserves  Committed to maximize shareholder value by:  Accelerating the monetization of our vast reserves  Operating in a safe and environmentally responsible manner  Funding with cash flow and debt

  33. Slide 33: Appendix

    Appendix 33

  34. Slide 34: Capital Investment Summary

    Capital Investment Summary $2.3 $1.8 $1.4 $1.2 $1.1 Midstream Production Distribution Excludes acquisitions 34

  35. Slide 35: Marcellus Play Acres Within Each Core Development Area

    Marcellus Play Acres Within Each Core Development Area  EQT has 580,000 total Marcellus acres  Expect to develop in four areas for several years  Active areas represent 315,000 acres and 3,540 locations  EQT has 130,000 additional acres in PA & 135,000 additional acres in WV  Estimated 1,200 Mc

  36. Slide 36: Marcellus Play Type Curves by Area

    Marcellus Play Type Curves by Area - 4,800’ lateral Type curve and well cost data posted on www.eqt.com under investor relations 36

  37. Slide 37: Marcellus Economics IRR - Southwestern PA

    Marcellus Economics IRR - Southwestern PA PRICE ATAX IRR $4.00 79% $4.50 119% $5.00 171% Realized Price 37

  38. Slide 38: Marcellus Economics IRR - Northern WV – Wet Gas Area

    Marcellus Economics IRR - Northern WV – Wet Gas Area PRICE ATAX IRR $4.00 111% $4.50 141% $5.00 176% Realized Price 38

  39. Slide 39: Marcellus Economics IRR - Central PA

    Marcellus Economics IRR - Central PA PRICE ATAX IRR $4.00 19% $4.50 28% $5.00 38% Realized Price 39

  40. Slide 40: Marcellus Economics IRR - Northern WV – Dry Gas Area

    Marcellus Economics IRR - Northern WV – Dry Gas Area PRICE ATAX IRR $4.00 26% $4.50 37% $5.00 50% Realized Price 40

  41. Slide 41: Upper Devonian Play Blended Type Curve

    Upper Devonian Play Blended Type Curve - 4,800’ lateral Type curve and well cost data posted on www.eqt.com under investor relations 41

  42. Slide 42: Upper Devonian IRR

    Upper Devonian IRR PRICE ATAX IRR $4.00 32% $4.50 45% $5.00 59% Realized Price 42

  43. Slide 43: Huron Play IRR

    Huron Play IRR 120% Wellhead Wellhead After OpEx ATAX 100% 80% 60% 40% PRICE ATAX IRR 20% $4.00 35% $4.50 42% $5.00 50% 0% $3.00 $3.50 $4.00 $4.50 $5.00 Realized Price 43

  44. Slide 44: Marcellus Capacity

    Marcellus Capacity EQT Capacity & Firm Sales Market Mix* 44

  45. Slide 45: Ample Financial Flexibility to Execute Business Plan

    Ample Financial Flexibility to Execute Business Plan Debt ratings Moody’s Standard & Poor’s Fitch Long-term debt Baa3 BBB BBB- Outlook Stable Stable Stable Strong balance sheet ($ thousands, except net debt / capital) June 30, 3014 Short-term debt $330,000 Long-term debt 2,497,619 Cash and cash equi

  46. Slide 46: Risk Management Hedging

    Risk Management Hedging * The average price is based on a conversion rate of 1.05 MMBtu/Mcf ** July through December *** For 2016, the Company also has a natural gas sales agreement for approximately 35 Bcf that includes a NYMEX ceiling price of $4.88 per Mcf As of July 24, 2014 46

  47. Slide 47: Price Reconciliation

    Price Reconciliation (a) NGLs and crude oil were converted to Mcfe at the rate of six Mcfe per barrel for all periods. Information for the three and six months ended June 30, 2013 has been recast to reflect this conversion rate. 47

  48. Slide 48: Per Unit Operating Expenses

    Per Unit Operating Expenses (a) NGLs and crude oil were converted to Mcfe at the rate of six Mcfe per barrel for all periods. Information for the three and six months ended June 30, 2013, has been recast to reflect this conversion rate. 48

  49. Slide 49: Appendix Non-GAAP Reconciliation

    Appendix Non-GAAP Reconciliation EQT Corporation Adjusted Midstream EBITDA (millions) 2008 2009 2010 2011 2012 2013 Midstream operating income $120 $154 $179 $417 $237 $329 Add: depreciation and amortization 35 53 62 57 65 75 Less: gains on dispositions – – – 203 – 20 Less: Big Sandy and Langley 23

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