Eqt Corporation · NYSE:EQT
Eqt — Proxy Contest (June 2019)
37 slides from Eqt's proxy contest presentation, Jun 19, 2019
Slide 1: Executive Summary
Executive Summary 1 cost structure 2 EQT Is Delivering delivering value to shareholders 3 accountable corporate governance in enhancing shareholder value 4 (1)Appalachian Peers represents the median total shareholder return of AR, CNX, COG, RRC and SWN from 11/13/2018 through 05/31/2019 (2)Non-GAAP
Slide 2: We Have Transformed the Company into the New EQT
We the HaveTransformed the Company into 1 New EQT 3
Slide 3: EQT Is a New Company with New Leadership and a New Focus
EQT Is a New Company with New Leadership and a New Focus 1 1 3 5 6 8 10 12 results announced with improvement and cash flow(1) generation Q2 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 9 11 13 2 Completed Rice qualified new New Company Appalachian E&P cash flow(1) in Q4’18 Developed
Slide 4: We Have Transformed EQT into a Focused, Pure-Play Upstream Industry Leader
1 We Have Transformed EQT into a Focused, Pure-Play Upstream Industry Leader Strong fundamentals and leadership are delivering exceptional value to shareholders Compelling Asset Base in Appalachia Core of the Appalachian Basin 15 to 20 year drilling inventory Refreshed Board Most proved / proved dev
Slide 5: EQT Has Significantly Outperformed Peers Despite a Difficult Market
EQT Has Significantly Outperformed Peers Despite a Difficult Market 1 Decisive actions by new leadership and strong results under EQT’s new plan are being rewarded vs Peer Median(1) through 05/31/2019 Relative TSR Outperformance Since EQT’s Refreshed Management 8 (74)% Source: S&P Capital IQ; market
Slide 6: EQT Is Delivering Significant Value through a Compelling New, Bottom-up Strategic Plan
EQTIsDeliveringSignificant Valuethrough a 2 Compelling New, Bottom-up Strategic Plan 7
Slide 7: We Are Leveraging a Top-Tier Asset Base to Generate Significant Free Cash Flow
We Are Leveraging Free Cash Flow a Top-Tier Asset Base to Generate Significant 2 Rank vs. Appalachian Peers(1) EQT Acreage Overlays the SW Marcellus Core Utica Cumulative Production Heat Map SW Marcellus Cumulative Production Heat Map Metro 1,950 Locations(5,6) NA Ownership Interest in ETRN $ 1.0 B
Slide 8: We Are Making Value Creation Measurable and Transparent
We Are Making Value Creation Measurable and Transparent Progress Toward Even More 2 Action Item Measure Timeline restructuring (1)Non-GAAP financial measure, see appendix for definition and pricing assumptions (2)ETRN share price as of 05/31/2019 9 Careful stewardship by EQT’s newly-refreshed Board
Slide 9: Strong Q4'18 and Q1'19 Operational Performance Underscores the EQT Team's Ability
Strong Q4’18 and Q1’19 Operational Performance Underscores the EQT 2 Team’s Ability to Achieve Demanding Targets (1)Non-GAAP financial measure, see appendix for definition and pricing assumptions (2)Utilizes Adjusted SG&A per unit, a non-GAAP financial measure, see appendix for definition 10 Focus o
Slide 10: Second Quarter Highlights through May 2019
Second Quarter Highlights through May 2019 Continued strong financial and operational performance 2 ▪ Second Quarter 2019 Financial Expectations ▪ ▪ ▪ Sales volumes at high-end of the guidance range of 355 – 375 Bcfe Capital expenditures in-line with expectations Adjusted free cash flow(1) improveme
Slide 11: EQT Is the Appalachian Basin's Low Cost Leader
EQT Is the Appalachian Basin’s Low Cost Leader 2 EQT’s unit costs & drilling efficiencies lead peers and enable significant free cash flow generation Lease Operating Expense ($/Mcfe) – TTM Selling, General & Administrative Expense ($/Mcfe) – TTM ean (excl. Peer 5): $0.14 Peer Mean: $0.19 $0.92 $0.23
Slide 12: Independent Analysis by Wood Mackenzie Undercuts the Toby Rice Group's Assertions
2 Independent Analysis by Industry Specialist Wood Mackenzie Undercuts the Toby Rice Group’s Assertions Energy standalone wells(1) outperformed design outperforms all previous Rice Energy or lower-cost than Rice Energy on total D&C(2) development planning than Rice Energy in 2017 planning Source: Wo
Slide 13: EQT Outperforms Comparable US E&P Companies
EQT Outperforms 25 of 27 Comparable US E&P Companies 2 We expect to deliver $300-400 MM of adjusted free cash flow(1) in 2019E, $3.0 B or more through 2023 Q4’18 and Q1’19 Cumulative Free Cash Flow ($ MM) for E&P Companies with EV of ~$2 B to ~$15 B Comparable E&P Median: $(110) (1) Co. 1 Co. 2 Co.
Slide 14: EQT Is on Track to Deliver $400 MM of Adjusted Free Cash Flow
Flow(1) 2 EQT Is on Track to Deliver $400 MM of Adjusted Through the Target 10% Initiative Free Cash Upside Cost Reduction Initiatives ▪ Jan 2019: $100 MM achieved in base plan restructuring ▪ Q1 2019: $50 MM of annual cost savings under Target 10% initiative identified ▪ ▪ ▪ Q2 Implementation of pr
Slide 15: EQT's Long-Term Free Cash Flow Tells a Compelling Story
EQT’s Long-Term Free Cash Flow Tells a Compelling Story 2 2019-2023 Cumulative Adjusted FCF Yield(1,2,4) ~ 60 - 70% EQT Adjusted FCF Yield(1,2,4) Peer Median(3,4) Consensus FCF Yield (5) (3,4) (1,4) (1) (1,2,4) (1)Non-GAAP financial measure, see appendix for definitions and pricing assumptions (2)Ba
Slide 16: New COO, Gary Gould, Accelerating EQT's Progress
2 New COO, Gary Gould (Effective Q2’19), Accelerating EQT’s Progress 1▪ Be the natural gas industry’s leading operator proven results and a focus on technology and continuous improvement. with 2▪ Maximize shareholder net present value by optimizing production, CAPEX, and LOE. ▪ Reduced Corporate pro
Slide 17: Toby Rice Group's Misleading Claims Do Not Deliver Any Incremental Free Cash Flow
Toby Rice Group’s Misleading Claims Do Not Deliver Any Incremental Free 2 Cash Flow vs. EQT’s Plan artificially deflating $ / foot metric; Must also consider LOE and SG&A and functionality is being expanded that ignores differences in well design and accounting across operators 18 While Rice was a p
Slide 18: EQT Actively Engages with Shareholders and Added Rice's Perspective to the Boardroom
EQT Actively EngageswithShareholders and Added 3 Rice’s Perspective to the Boardroom Two Years Ago 19
Slide 19: EQT Has Created an Independent, Diverse Director Slate
EQT Has Created an Independent, Diverse Director Slate 3 Possessing the right combination of experience, skills and perspectives accountability to shareholders 92 % 75 % well as what “success” looks like over cyclical periods 58 % enabling better counsel, insights to senior management as you execute
Slide 20: EQT Regularly and Extensively Engages with Shareholders
EQT Regularly and Extensively Engages with Shareholders 3 We implemented new policies and took other actions in response to shareholder feedback EQT Believes in Shareholder Engagement >750 interactions with shareholders in 2018 and 2019 on a wide variety of topics including strategy and governance A
Slide 21: EQT's Board Is Purpose-Built for Our New Returns-Focused Strategy
EQT’s Board Is Purpose-Built for Our New Returns-Focused Strategy As the largest operator in the Appalachian basin, Board refreshment focused on broad E&P 3 experience with records of driving value for all shareholders 161 % Philip Behrman, Ph.D. Former SVP, Worldwide Exploration, Marathon Oil Corpo
Slide 22: EQT's Board Is Purpose-Built for Our New Returns-Focused Strategy
EQT’s Board Is Purpose-Built for Our New Returns-Focused Strategy environmental 3 Our scale and complexity require deep board-level and other ESG issues understanding of safety, Applies career-long knowledge of and commitment to ESG principles in his new role as CEO Educational Professional Geology
Slide 23: If Elected, the Rice Slate Would Result in a Weaker Board and Managerial Chaos
IfElected,theRiceSlate Would Result in a Weaker 4 Board and Managerial Chaos 24
Slide 24: Toby Rice Group's Claims and Demands Are Not Based in Reality
4 Toby Rice Group’s Claims and Demands Are Not Based in Reality EQT has been significantly transformed over the past 6 months Rice Ask Reality Rice Risk Board Quality, Independence, CFO, and COO in the Past 9 Leadership For Performance and a Leadership Vacuum 25 Loss of Significant Talent under Toby
Slide 25: Toby Rice Is Not Fit to Lead a Public Company
4 Toby Rice Is Not Fit to Lead a Public Company Toby’s conflicts of interest and prior removal as CEO of Rice Energy demonstrate Toby is not qualified to be CEO lack of professionalism and experience as CEO products and services to EQT second, less qualified family member would reduce Board independ
Slide 26: Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT's Momentum
Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT’s Momentum. Vote FOR all EQT Nominees on the GOLD Universal Proxy Card 1 cost structure 2 EQT Is Delivering delivering value to shareholders 3 accountable corporate governance in enhancing shareholder value 4 (1)Appalac
Slide 27: Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT's Momentum
Vote FOR the Highly Qualified Board Nominees Who Are Best Suited to Continue EQT’s Momentum. Vote FOR all EQT Nominees on the GOLD Universal Proxy Card We Have Transformed the Company into the New EQT EQTIs Delivering Significant Value through a Compelling New, Bottom-up. Strategic Plan EQT Actively
Slide 28: Third Party Validation For the Right Direction and Success of Our Plan
Third Party Validation For the Right Direction and Success of Our Plan 5/1/2019 Permission to use quotations neither sought nor obtained 29 Wells Fargo 5/9/2019 “…Our investor meetings with EQT’s management team on the West Coast earlier this week left us more shareholder vote, based on our meetings
Slide 29: Cautionary Statements
Cautionary Statements EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Blake McLean – Senior Vice President, Investor Relations and Strategy – 412.395.3561 The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the S
Slide 30: Non-GAAP Financial Measure: Adjusted EBITDA
Non-GAAP Financial Measure Adjusted EBITDA As used in this presentation, adjusted EBITDA is defined as net income from continuing operations, plus interest expense, income tax expense (benefit), depreciation and depletion, amortization of intangible assets, long-lived asset and goodwill impairments,
Slide 31: Reconciliation of Adjusted EBITDA
Non-GAAP Financial Measure Reconciliation of Adjusted EBITDA The table below reconciles adjusted EBITDA with income (loss) from continuing operations, the most comparable financial measure as calculated in accordance with GAAP, as reported in the Statements of Condensed Consolidated Operations inclu
Slide 32: Non-GAAP Financial Measure: Adjusted Free Cash Flow
Non-GAAP Financial Measure Adjusted Free Cash Flow As used in this presentation, adjusted free cash flow is defined as the Company’s net cash provided by operating activities less changes in other assets and liabilities, less EBITDA attributable to discontinued operations (a non-GAAP supplemental fi
Slide 33: Reconciliation of Adjusted Free Cash Flow
Non-GAAP Financial Measure Reconciliation of Adjusted Free Cash Flow The table below reconciles adjusted free cash flow with net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated C
Slide 34: EBITDA Attributable to Discontinued Operations
Non-GAAP Financial Measure EBTIDA Attributable to Discontinued Operations EBITDA attributable to discontinued operations is a non-GAAP supplemental financial measure defined as income from discontinued operations, net of tax plus interest expense, income tax expense, depreciation, amortization of in
Slide 35: Non-GAAP Financial Measure: Adjusted SG&A per unit
Non-GAAP Financial Measure Adjusted SG&A per unit Adjusted SG&A per unit is a non-GAAP supplemental financial measure that is presented because it is an important measure used by the Company’s management to evaluate period-to-period comparisons of earnings trends. Adjusted SG&A per unit is defined a
Slide 36: Important Information
Important Information EQT Corporation (the “Company”) filed a definitive proxy statement and associated GOLD universal proxy card with the Securities and Exchange Commission (the “SEC”) on May 22, 2019 in connection with the solicitation of proxies for the Company’s 2019 Annual Meeting of Shareholde
Slide 37: Important Information
Important Information EQT Corporation (the “Company’) filed a definitive proxy statement and associated GOLD universal proxy card with the Securities and Exchange Commission (the "SEC”) on May 22, 2019 in connection with the solicitation of proxies for the Company's 2019 Annual Meeting of Shareholde