PITTSBURGH, April 23,
2024 /PRNewswire/ -- EQT Corporation (NYSE: EQT)
today announced financial and operational results for the first
quarter of 2024.
First Quarter 2024 and Recent Highlights:
- Net cash provided by operating activities of $1,156 million; generated $402 million of free cash flow(1) and
exited the quarter with approximately $650
million of cash on the balance sheet
- Total sales volume of 534 Bcfe, towards the high-end of
guidance adjusted for curtailments, reflecting continued
operational efficiency gains and strong well performance
- Lease operating expenses of $0.10
per Mcfe, below the low-end of guidance despite curtailments,
driven by water infrastructure investment benefits
- Total debt and net debt(1) down from $5.8 billion and $5.7
billion at year-end 2023 to $5.5
billion and $4.9 billion,
respectively, at quarter-end; $500
million of cash proceeds to be received from the
non-operated asset sale to Equinor set to further strengthen
balance sheet
- Signed second non-binding Heads of Agreement with Texas LNG to
upsize liquefaction tolling capacity from 0.5 million tonnes per
annum to 2 million tonnes per annum beginning in
2028(2)
- Announced transformative acquisition of Equitrans Midstream
Corporation (Equitrans Midstream), which will create a premier
vertically integrated natural gas business that is well positioned
to be a globally competitive American energy leader
- Recent MVP in-service filing with FERC significantly de-risks
path to Equitrans Midstream deal consummation and EQT's ability to
serve growing power generation demand in the Southeast region
- Announced agreement with Equinor to sell 40% of EQT's
non-operated natural gas assets in Northeast Pennsylvania for total value of more
than $1.1 billion, inclusive of
expected synergies
President and CEO Toby Z. Rice
stated, "The strong operational momentum we achieved last year has
carried over into 2024, with our drilling team continuing to
perform at exceptional levels, and our completions team again
setting a new company record for pumping hours in the month of
March. We also saw LOE come in below our forecast, as the benefits
of our strategic water infrastructure investments are becoming
increasingly tangible to shareholders. These factors contributed to
free cash flow generation coming in above internal expectations and
we exited the quarter in a strong financial position with nearly
$650 million of cash on the balance
sheet."
Rice continued, "We also announced the transformational
acquisition of Equitrans Midstream during the first quarter. The
combination of EQT and Equitrans Midstream will create America's
first large-scale integrated natural gas business, with assets
uniquely positioned to create a well-to-watt solution that will
power growing baseload demand associated with the data center and
artificial intelligence booms that are burgeoning at the doorstep
of our asset base. The global power market is at a key inflection
point as we embark on a transformational journey into the age of
artificial intelligence and EQT's clean, reliable and affordable
natural gas will be foundational to meeting growing power needs
both domestically and abroad."
(1)
|
A non-GAAP financial
measure. See the Non-GAAP Disclosures section of this news release
for the definition of, and other important information regarding,
this non-GAAP financial measure.
|
(2)
|
Final terms remain
subject to negotiation of a definitive tolling agreement between
the parties thereto. Tolling agreement start up subject to change
with facility start up timing.
|
First Quarter 2024 Financial and Operational
Performance
|
Three Months Ended
March 31,
|
|
|
($ millions, except
average realized price and EPS)
|
2024
|
|
2023
|
|
Change
|
|
|
|
|
|
|
Total sales volume
(Bcfe)
|
534
|
|
459
|
|
75
|
Average realized price
($/Mcfe)
|
$
3.22
|
|
$
4.11
|
|
$
(0.89)
|
Net income attributable
to EQT
|
$
103
|
|
$
1,219
|
|
$
(1,116)
|
Adjusted net income
attributable to EQT (a)
|
$
365
|
|
$
669
|
|
$
(304)
|
Diluted earnings per
share (EPS)
|
$
0.23
|
|
$
3.10
|
|
$
(2.87)
|
Adjusted EPS
(a)
|
$
0.82
|
|
$
1.70
|
|
$
(0.88)
|
Net income
|
$
103
|
|
$
1,219
|
|
$
(1,116)
|
Adjusted EBITDA
(a)
|
$
1,012
|
|
$
1,278
|
|
$
(266)
|
Net cash provided by
operating activities
|
$
1,156
|
|
$
1,663
|
|
$
(507)
|
Adjusted operating cash
flow (a)
|
$
951
|
|
$
1,237
|
|
$
(286)
|
Capital expenditures,
excluding noncontrolling interests
|
$
549
|
|
$
464
|
|
$
85
|
Free cash flow
(a)
|
$
402
|
|
$
774
|
|
$
(372)
|
(a)
|
A non-GAAP financial
measure. See the Non-GAAP Disclosures section of this news release
for the definition of, and other important information regarding,
this non-GAAP financial measure.
|
Per Unit Operating Costs
The following table presents
certain of the Company's production-related operating costs on a
per unit basis.
|
Three Months
Ended
March
31,
|
Per Unit
($/Mcfe)
|
2024
|
|
2023
|
|
|
|
|
Gathering
|
$
0.58
|
|
$
0.67
|
Transmission
|
0.32
|
|
0.34
|
Processing
|
0.13
|
|
0.12
|
Lease operating expense
(LOE)
|
0.10
|
|
0.06
|
Production
taxes
|
0.09
|
|
0.04
|
Selling, general and
administrative (SG&A)
|
0.14
|
|
0.11
|
Total per unit
operating costs
|
$
1.36
|
|
$
1.34
|
|
|
|
|
Production
depletion
|
$
0.90
|
|
$
0.83
|
Gathering expense decreased on a per Mcfe basis for the three
months ended March 31, 2024 compared
to the same period in 2023 due primarily to the lower gathering
cost structure that resulted from the Company's ownership of the
gathering assets acquired in the Company's acquisition of Tug Hill
and XcL Midstream (the Tug Hill and XcL Midstream Acquisition).
Transmission expense decreased on a per Mcfe basis for the three
months ended March 31, 2024 compared
to the same period in 2023 due primarily to increased sales volume
from the assets acquired in the Tug Hill and XcL Midstream
Acquisition.
LOE increased on a per Mcfe basis for the three months ended
March 31, 2024 compared to the same
period in 2023 due primarily to increased LOE from the assets
acquired in the Tug Hill and XcL Midstream Acquisition.
Production taxes increased on a per Mcfe basis for the three
months ended March 31, 2024 compared
to the same period in 2023 due to increased West Virginia property tax expense from the
assets acquired in the Tug Hill and XcL Midstream Acquisition and
higher price as well as increased severance tax expense from
increased volumes from the assets acquired in the Tug Hill and XcL
Midstream Acquisition.
SG&A increased on a per Mcfe basis for the three months
ended March 31, 2024 compared to the
same period in 2023 due primarily to higher personnel costs due to
increased workforce headcount.
Pending Equitrans Midstream Acquisition
The
Company previously announced its agreement to acquire Equitrans
Midstream via a series of integrated mergers with indirect wholly
owned subsidiaries of the Company, which, upon effectiveness, would
result in each share of Equitrans Midstream common stock issued and
outstanding converting into 0.3504 shares of EQT common stock, with
cash issued in lieu of fractional shares (the Equitrans Midstream
Acquisition).
The Equitrans Midstream Acquisition will create a large-scale,
integrated natural gas producer with a low-cost structure that
provides investors with the best risk-adjusted exposure to natural
gas prices.
The closing of the Equitrans Midstream Acquisition remains
subject to, among other things, the approval of the transaction by
shareholders of each of EQT and Equitrans Midstream, and customary
regulatory approvals, including the termination or expiration of
the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Liquidity
As of March 31, 2024, the Company had
no borrowings and $15 million of
letters of credit outstanding under its $2.5
billion revolving credit facility. Total liquidity as of
March 31, 2024 was $3.1
billion.
As of March 31, 2024, total debt and net debt(1)
were $5.5 billion and $4.9 billion, respectively, compared to
$5.8 billion and $5.7 billion, respectively, as of
December 31, 2023.
(1)
|
A non-GAAP financial
measure. See the Non-GAAP Disclosures section of this news release
for the definition of, and other important information regarding,
this non-GAAP financial measure.
|
2024 Outlook
The Company updated its expectation of
2024 total sales volume to 2,100 – 2,200 Bcfe, which assumes 1
Bcf/d of operated production curtailments through May and embeds
future curtailment optionality dependent on market conditions. The
Company reiterates its maintenance capital expenditures of
$1,950 – $2,050 million in 2024 and strategic growth
capital expenditures, which target opportunistic, high-return
water, midstream and other infrastructure and land opportunities,
are expected to total $200 –
$300 million in 2024.
During the second quarter of 2024, the Company plans to
turn-in-line (TIL) 28 – 42 net wells. Total sales volume in the
second quarter of 2024 is expected to be 455 – 505 Bcfe, which
assumes 1 Bcf/d of operated production curtailments through May and
expected non-operated production curtailments and TIL
deferrals.
All guidance items exclude the impact of the pending Equitrans
Midstream Acquisition and non-operated asset transaction with
Equinor.
2024 Guidance(a)
Production
|
|
Q2
2024
|
|
Full Year
2024
|
Total sales volume
(Bcfe)
|
|
455 – 505
|
|
2,100 –
2,200
|
Liquids sales volume,
excluding ethane (Mbbl)
|
|
3,250 –
3,550
|
|
14,550 –
15,350
|
Ethane sales volume
(Mbbl)
|
|
1,250 –
1,400
|
|
5,250 –
5,650
|
Total liquids sales
volume (Mbbl)
|
|
4,500 –
4,950
|
|
19,800 –
21,000
|
|
|
|
|
|
Btu uplift
(MMBtu/Mcf)
|
|
1.050 –
1.060
|
|
1.050 –
1.060
|
|
|
|
|
|
Average differential
($/Mcf)
|
|
($0.75) –
($0.65)
|
|
($0.70) –
($0.50)
|
|
|
|
|
|
Resource
Counts
|
|
|
|
|
Top-hole
rigs
|
|
1 – 2
|
|
1 – 2
|
Horizontal
rigs
|
|
2 – 3
|
|
2 – 3
|
Frac crews
|
|
3 – 4
|
|
3 – 4
|
|
|
|
|
|
Per Unit Operating
Costs ($/Mcfe)
|
|
|
|
|
Gathering
|
|
$0.51 –
$0.53
|
|
$0.52 –
$0.54
|
Transmission
|
|
$0.43 –
$0.45
|
|
$0.42 –
$0.44
|
Processing
|
|
$0.12 –
$0.14
|
|
$0.11 –
$0.13
|
LOE
|
|
$0.14 –
$0.16
|
|
$0.11 –
$0.13
|
Production
taxes
|
|
$0.08 –
$0.10
|
|
$0.07 –
$0.09
|
SG&A
|
|
$0.15 –
$0.17
|
|
$0.14 –
$0.16
|
Total per unit
operating costs
|
|
$1.43 –
$1.55
|
|
$1.37 –
$1.49
|
|
|
|
|
|
Capital Expenditures
($ Millions)
|
|
|
|
|
Maintenance
|
|
$490 – $540
|
|
$1,950 –
$2,050
|
Strategic
growth
|
|
$55 – $80
|
|
$200 – $300
|
Total capital
expenditures
|
|
$545 –
$620
|
|
$2,150 –
$2,350
|
(a)
|
Assumes Mountain Valley
Pipeline in-service date during June 2024.
|
First Quarter 2024 Earnings Webcast
Information
The Company's conference call with securities
analysts begins at 10:00 a.m. ET on
Wednesday April 24, 2024 and will be broadcast live via
webcast. An accompanying presentation is available on the Company's
investor relations website, www.ir.eqt.com under "Events &
Presentations." To access the live audio webcast, visit the
Company's investor relations website at ir.eqt.com. A replay will
be archived and available for one year in the same location after
the conclusion of the live event.
Hedging (as of April 19,
2024)
The following table summarizes the approximate
volume and prices of the Company's NYMEX hedge positions. The
difference between the fixed price and NYMEX price is included in
average differential presented in the Company's price
reconciliation.
|
Q2 2024
(a)
|
|
Q3
2024
|
|
Q4
2024
|
|
Q1
2025
|
|
Q2
2025
|
Hedged Volume
(MMDth)
|
260
|
|
242
|
|
255
|
|
222
|
|
224
|
Hedged Volume
(MMDth/d)
|
2.9
|
|
2.6
|
|
2.8
|
|
2.5
|
|
2.5
|
Swaps –
Short
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
215
|
|
197
|
|
203
|
|
118
|
|
178
|
Avg. Price
($/Dth)
|
$
3.26
|
|
$
3.25
|
|
$
3.24
|
|
$
3.39
|
|
$
3.08
|
Calls –
Long
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
13
|
|
13
|
|
13
|
|
—
|
|
—
|
Avg. Strike
($/Dth)
|
$
3.20
|
|
$
3.20
|
|
$
3.20
|
|
$
—
|
|
$
—
|
Calls –
Short
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
61
|
|
62
|
|
66
|
|
104
|
|
46
|
Avg. Strike
($/Dth)
|
$
4.22
|
|
$
4.22
|
|
$
4.22
|
|
$
3.98
|
|
$
3.48
|
Puts –
Long
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
45
|
|
45
|
|
52
|
|
104
|
|
46
|
Avg. Strike
($/Dth)
|
$
4.05
|
|
$
4.05
|
|
$
3.68
|
|
$
3.19
|
|
$
2.83
|
Option
Premiums
|
|
|
|
|
|
|
|
|
|
Cash Settlement of
Deferred
Premiums (millions)
|
$
(4)
|
|
$
(4)
|
|
$
—
|
|
$
—
|
|
$
—
|
(a)
|
April 1 through June
30.
|
The Company has also entered into transactions to hedge basis.
The Company may use other contractual agreements from time to time
to implement its commodity hedging strategy.
Non-GAAP Disclosures
This news release includes the
non-GAAP financial measures described below. These non-GAAP
measures are intended to provide additional information only and
should not be considered as alternatives to, or more meaningful
than, net income attributable to EQT Corporation, net income,
diluted earnings per share, net cash provided by operating
activities, total operating revenues, total debt, or any other
measure calculated in accordance with GAAP. Certain items excluded
from these non-GAAP measures are significant components in
understanding and assessing a company's financial performance, such
as a company's cost of capital, tax structure, and historic costs
of depreciable assets.
Adjusted Net Income Attributable to EQT and Adjusted Earnings
per Diluted Share (Adjusted EPS)
Adjusted net income
attributable to EQT is defined as net income
attributable to EQT Corporation, excluding loss on
sale/exchange of long-lived assets, impairments, the revenue impact
of changes in the fair value of derivative instruments prior to
settlement and certain other items that the Company's management
believes do not reflect the Company's core operating performance.
Adjusted EPS is defined as adjusted net income attributable
to EQT divided by diluted weighted average common
shares outstanding. The Company's management believes adjusted net
income attributable to EQT and adjusted EPS provide
useful information to investors regarding the Company's financial
condition and results of operations because it helps facilitate
comparisons of operating performance and earnings trends across
periods by excluding the impact of items that, in their opinion, do
not reflect the Company's core operating performance. For
example, adjusted net income attributable to EQT and
adjusted EPS reflect only the impact of settled derivative
contracts; thus, the measures exclude the often-volatile revenue
impact of changes in the fair value of derivative instruments prior
to settlement.
The table below reconciles adjusted net income attributable to
EQT and adjusted EPS with net income attributable to EQT
Corporation and diluted earnings per share, respectively, the most
comparable financial measures calculated in accordance with GAAP,
each as derived from the Statements of Condensed Consolidated
Operations to be included in the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2024.
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
|
(Thousands, except
per share amounts)
|
Net income attributable
to EQT Corporation
|
$
103,488
|
|
$
1,218,548
|
Add
(deduct):
|
|
|
|
Loss on sale/exchange
of long-lived assets
|
147
|
|
16,528
|
Impairment and
expiration of leases
|
9,209
|
|
10,546
|
Gain on
derivatives
|
(106,511)
|
|
(824,852)
|
Net cash settlements
received on derivatives
|
451,004
|
|
157,000
|
Premiums paid for
derivatives that settled during the period
|
(34,669)
|
|
(99,417)
|
Other expenses
(a)
|
22,852
|
|
19,662
|
Income from
investments
|
(2,260)
|
|
(4,764)
|
Loss (gain) on debt
extinguishment
|
3,449
|
|
(6,606)
|
Non-cash interest
expense (amortization)
|
3,030
|
|
3,414
|
Tax impact of non-GAAP
items (b)
|
(85,131)
|
|
178,504
|
Adjusted net income
attributable to EQT
|
$
364,608
|
|
$
668,563
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
444,967
|
|
393,883
|
Diluted EPS
|
$
0.23
|
|
$
3.10
|
Adjusted EPS
|
$
0.82
|
|
$
1.70
|
(a)
|
Other expenses
primarily consist of transaction costs associated with acquisitions
and other strategic transactions, costs related to exploring new
venture opportunities and executive severance.
|
(b)
|
The tax impact of
non-GAAP items represents the incremental tax benefit (expense)
that would have been incurred had these items been excluded from
net income attributable to EQT Corporation, which resulted in
blended tax rates of 24.6% and 24.5% for the three months ended
March 31, 2024 and 2023, respectively. The rates differ from the
Company's statutory tax rate due primarily to state taxes,
including valuation allowances limiting certain state tax
benefits.
|
Adjusted EBITDA
Adjusted EBITDA is defined as
net income, excluding interest expense, income tax expense,
depreciation and depletion, loss on sale/exchange of long-lived
assets, impairments, the revenue impact of changes in the fair
value of derivative instruments prior to settlement and certain
other items that the Company's management believes do not reflect
the Company's core operating performance. The Company's management
believes that this measure provides useful information to investors
regarding the Company's financial condition and results of
operations because it helps facilitate comparisons of operating
performance and earnings trends across periods by excluding the
impact of items that, in their opinion, do not reflect the
Company's core operating performance. For example, adjusted EBITDA
reflects only the impact of settled derivative instruments and
excludes the often-volatile revenue impact of changes in the fair
value of derivative instruments prior to
settlement.
The table below reconciles adjusted EBITDA with net income, the
most comparable financial measure as calculated in accordance with
GAAP, as reported in the Statements of Condensed Consolidated
Operations to be included in the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2024.
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
|
(Thousands)
|
Net income
|
$
103,063
|
|
$
1,219,233
|
Add
(deduct):
|
|
|
|
Interest expense,
net
|
54,371
|
|
46,546
|
Income tax
expense
|
24,302
|
|
356,646
|
Depreciation and
depletion
|
486,750
|
|
387,685
|
Loss on sale/exchange
of long-lived assets
|
147
|
|
16,528
|
Impairment and
expiration of leases
|
9,209
|
|
10,546
|
Gain on
derivatives
|
(106,511)
|
|
(824,852)
|
Net cash settlements
received on derivatives
|
451,004
|
|
157,000
|
Premiums paid for
derivatives that settled during the period
|
(34,669)
|
|
(99,417)
|
Other expenses
(a)
|
22,852
|
|
19,662
|
Income from
investments
|
(2,260)
|
|
(4,764)
|
Loss (gain) on debt
extinguishment
|
3,449
|
|
(6,606)
|
Adjusted
EBITDA
|
$
1,011,707
|
|
$
1,278,207
|
(a)
|
Other expenses
primarily consist of transaction costs associated with acquisitions
and other strategic transactions, costs related to exploring new
venture opportunities and executive severance.
|
Adjusted Operating Cash Flow and Free Cash
Flow
Adjusted operating cash flow is defined as net cash
provided by operating activities less changes in other assets and
liabilities. Free cash flow is defined as adjusted operating cash
flow less accrual-based capital expenditures, excluding capital
expenditures attributable to noncontrolling interests. The
Company's management believes adjusted operating cash flow and free
cash flow provide useful information to investors regarding the
Company's liquidity, including the Company's ability to generate
cash flow in excess of its capital requirements and return cash to
shareholders.
The table below reconciles adjusted operating cash flow and 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 Cash Flows to
be included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2024.
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
|
(Thousands)
|
Net cash provided by
operating activities
|
$
1,155,663
|
|
$
1,662,768
|
Increase in changes in
other assets and liabilities
|
(205,122)
|
|
(425,676)
|
Adjusted operating cash
flow
|
$
950,541
|
|
$
1,237,092
|
Less: Capital
expenditures
|
(548,987)
|
|
(468,905)
|
Add: Capital
expenditures attributable to noncontrolling interests
|
—
|
|
5,378
|
Free cash
flow
|
$
401,554
|
|
$
773,565
|
Adjusted Operating Revenues
Adjusted operating
revenues (also referred to as total natural gas and liquids sales,
including cash settled derivatives) is defined as total operating
revenues, less the revenue impact of changes in the fair value of
derivative instruments prior to settlement and net marketing
services and other revenues. The Company's management believes that
this measure provides useful information to investors regarding the
Company's financial condition and results of operations because it
helps facilitate comparisons of operating performance and earnings
trends across periods. Adjusted operating revenues reflects only
the impact of settled derivative contracts; thus, the measure
excludes the often-volatile revenue impact of changes in the fair
value of derivative instruments prior to settlement. The measure
also excludes net marketing services and other revenues because it
is unrelated to the revenue for the Company's natural gas and
liquids production.
The table below reconciles adjusted operating revenues to total
operating revenues, the most comparable financial measure
calculated in accordance with GAAP, as reported in the Statements
of Condensed Consolidated Operations to be included in the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2024.
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
|
(Thousands, unless
otherwise noted)
|
Total operating
revenues
|
$
1,412,268
|
|
$
2,661,071
|
(Deduct)
add:
|
|
|
|
Gain on
derivatives
|
(106,511)
|
|
(824,852)
|
Net cash settlements
received on derivatives
|
451,004
|
|
157,000
|
Premiums paid for
derivatives that settled during the period
|
(34,669)
|
|
(99,417)
|
Net marketing services
and other
|
(1,852)
|
|
(5,861)
|
Adjusted operating
revenues
|
$
1,720,240
|
|
$
1,887,941
|
|
|
|
|
Total sales volume
(MMcfe)
|
534,050
|
|
458,805
|
Average realized price
($/Mcfe)
|
$
3.22
|
|
$
4.11
|
Net Debt
Net debt is defined as total debt less
cash and cash equivalents. Total debt includes the Company's
current portion of debt, revolving credit facility borrowings, term
loan facility borrowings, senior notes and note payable to EQM
Midstream Partners, LP (EQM). The Company's management believes net
debt provides useful information to investors regarding the
Company's financial condition and assists them in evaluating the
Company's leverage since the Company could choose to use its cash
and cash equivalents to retire debt.
The table below reconciles net debt with total debt, the most
comparable financial measure calculated in accordance with GAAP, as
derived from the Statements of Condensed Consolidated Balance
Sheets to be included in the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2024.
|
March 31,
2024
|
|
December 31,
2023
|
|
|
|
|
|
(Thousands)
|
Current portion of debt
(a)
|
$
606,967
|
|
$
292,432
|
Term loan facility
borrowings
|
497,390
|
|
1,244,265
|
Senior notes
|
4,319,747
|
|
4,176,180
|
Note payable to
EQM
|
80,637
|
|
82,236
|
Total debt
|
5,504,741
|
|
5,795,113
|
Less: Cash and cash
equivalents
|
648,048
|
|
80,977
|
Net debt
|
$
4,856,693
|
|
$
5,714,136
|
(a)
|
As of March 31, 2024,
the current portion of debt included the Company's senior notes due
February 1, 2025 and a portion of the note payable to EQM. As
of December 31, 2023, the current portion of debt included the
Company's 1.75% convertible notes and a portion of the note payable
to EQM. See the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2024 for further
discussion.
|
Investor Contact
Cameron
Horwitz
Managing Director, Investor Relations & Strategy
412.395.2555
cameron.horwitz@eqt.com
About EQT Corporation
EQT Corporation is a leading
independent natural gas production company with operations focused
in the Appalachian Basin. We are dedicated to responsibly
developing our world-class asset base and being the operator of
choice for our stakeholders. By leveraging a culture that
prioritizes operational efficiency, technology and sustainability,
we seek to continuously improve the way we produce environmentally
responsible, reliable and low-cost energy. We have a longstanding
commitment to the safety of our employees, contractors, and
communities, and to the reduction of our overall environmental
footprint. Our values are evident in the way we operate and in how
we interact each day – trust, teamwork, heart, and evolution are at
the center of all we do.
EQT Management speaks to investors from time to time and the
analyst presentation for these discussions, which is updated
periodically, is available via EQT's investor relations website at
https://ir.eqt.com.
Cautionary Statements Regarding Forward-Looking
Statements
This news release contains certain
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Statements that do not relate
strictly to historical or current facts are forward-looking.
Without limiting the generality of the foregoing, forward-looking
statements contained in this news release specifically include the
expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of EQT
Corporation and its subsidiaries (collectively, EQT), including
guidance regarding EQT's strategy to develop its reserves; drilling
plans and programs (including the number and type of drilling rigs
and the number of frac crews to be utilized by EQT, the projected
amount of wells to be turned-in-line and the timing thereof);
projected natural gas prices, basis and average differential; the
impact of commodity prices on EQT's business; total resource
potential; projected production and sales volumes, including
liquified natural gas (LNG) volumes and sales; the potential final
terms of definitive LNG liquefaction tolling agreements EQT is
considering entering into, if at all; projected well costs and unit
costs; EQT's ability to successfully implement and execute its
operational, organizational, technological and environmental,
social and governance (ESG) initiatives, including EQT's emissions
reduction goals, and EQT's ability to achieve the anticipated
results of such initiatives; potential and pending acquisitions or
other strategic transactions (including the pending Equitrans
Midstream Acquisition and EQT's pending transaction with Equinor),
the timing thereof and EQT's ability to achieve the intended
operational, financial and strategic benefits from any such
transactions or from any recently complected strategic
transactions; the amount and timing of any redemptions, repayments
or repurchases of EQT's common stock, outstanding debt securities
or other debt instruments; EQT's ability to reduce its debt and the
timing of such reductions, if any; projected dividends, if any;
projected free cash flow; liquidity and financing requirements,
including funding sources and availability; EQT's ability to
maintain or improve its credit ratings, leverage levels and
financial profile, and the timing of achieving such improvements,
if at all; EQT's hedging strategy and projected margin posting
obligations; EQT's tax position and projected effective tax rate;
and the expected impact of changes in laws.
The forward-looking statements included in this news release
involve risks and uncertainties that could cause actual results to
differ materially from projected results. Accordingly, investors
should not place undue reliance on forward-looking statements as a
prediction of actual results. EQT has based these forward-looking
statements on current expectations and assumptions about future
events, taking into account all information currently known by EQT.
While EQT considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks and
uncertainties, many of which are difficult to predict and beyond
EQT's control. These risks and uncertainties include, but are not
limited to, volatility of commodity prices; the costs and results
of drilling and operations; uncertainties about estimates of
reserves, identification of drilling locations and the ability to
add proved reserves in the future; the assumptions underlying
production forecasts; the quality of technical data; EQT's ability
to appropriately allocate capital and other resources among its
strategic opportunities; access to and cost of capital, including
as a result of rising interest rates, inflation and other economic
uncertainties; EQT's hedging and other financial contracts;
inherent hazards and risks normally incidental to drilling for,
producing, transporting and storing natural gas, NGLs and oil;
cybersecurity risks and acts of sabotage; availability and cost of
drilling rigs, completion services, equipment, supplies, personnel,
oilfield services and sand and water required to execute EQT's
exploration and development plans, including as a result of supply
chain and inflationary pressures; risks associated with operating
primarily in the Appalachian Basin and obtaining a substantial
amount of EQT's midstream services from Equitrans Midstream; the
ability to obtain environmental and other permits and the timing
thereof; government regulation or action, including regulations
pertaining to methane and other greenhouse gas emissions; negative
public perception of the fossil fuels industry; increased consumer
demand for alternatives to natural gas; environmental and weather
risks, including the possible impacts of climate change; risks
related to the Equitrans Midstream Acquisition and the transaction
with Equinor, including potential delays in consummation, including
as a result of regulatory proceedings, the risk that EQT's
shareholders or the shareholders of Equitrans Midstream do not
approve the transaction (in the case of the Equitrans Midstream
Acquisition), the risk that regulatory approvals are not obtained
or are obtained subject to conditions that are not anticipated,
EQT's ability to integrate the acquired operations and assets in a
successful manner and in the expected time period and the
possibility that any of the anticipated benefits and projected
synergies of such transactions will not be realized or will not be
realized within the expected time period; and disruptions to EQT's
business due to acquisitions, divestitures and other strategic
transactions. These and other risks are described under the "Risk
Factors" section in EQT's Annual Report on Form 10-K for the year
ended December 31, 2023, the "Risk
Factors" section to be included in EQT's Quarterly Report on Form
10-Q for the quarterly period ended March
31, 2024, and other documents EQT files from time to time
with the Securities and Exchange Commission (the SEC).
Any forward-looking statement speaks only as of the date on
which such statement is made, and, except as required by law, EQT
does not intend to correct or update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
Important Information for Investors and Shareholders;
Additional Information and Where to Find It
In connection
with the proposed transaction between EQT and Equitrans Midstream,
EQT intends to file with the SEC a registration statement on Form
S-4 (the registration statement) that will include a joint proxy
statement of EQT and Equitrans Midstream and that will also
constitute a prospectus of EQT (the joint proxy
statement/prospectus). EQT and Equitrans Midstream also intend to
file other documents regarding the proposed transaction with the
SEC. This document is not a substitute for the joint proxy
statement/prospectus or the registration statement or any other
document that EQT or Equitrans Midstream may file with the
SEC. BEFORE MAKING ANY VOTING DECISION, INVESTORS ARE URGED
TO CAREFULLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY
STATEMENT/PROSPECTUS, AND ALL OTHER RELEVANT DOCUMENTS FILED OR
THAT MAY BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED
TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION ABOUT EQT, EQUITRANS MIDSTREAM, THE
PROPOSED TRANSACTION, THE RISKS THERETO AND RELATED MATTERS.
After the registration statement has been declared effective, a
definitive joint proxy statement/prospectus will be mailed to the
shareholders of EQT and the shareholders of Equitrans Midstream.
Investors will be able to obtain free copies of the registration
statement and joint proxy statement/prospectus and other relevant
documents filed or that will be filed with the SEC by EQT or
Equitrans Midstream through the website maintained by the SEC at
www.sec.gov. Copies of the documents filed with the SEC by EQT may
be obtained free of charge on EQT's website at
www.ir.eqt.com/investor-relations. Copies of the documents filed
with the SEC by Equitrans Midstream may be obtained free of charge
on Equitrans Midstream's website at
www.ir.equitransmidstream.com.
Participants in the Solicitation
EQT and Equitrans
Midstream and their respective directors, executive officers and
other members of management and employees may be deemed to be
participants in the solicitation of proxies in connection with the
proposed transaction contemplated by the joint proxy
statement/prospectus. Information regarding EQT's directors
and executive officers and their ownership of EQT's securities is
set forth in EQT's filings with the SEC, including EQT's Annual
Report on Form 10-K for the fiscal year ended December 31, 2023 and its Definitive Proxy
Statement on Schedule 14A that was filed with the SEC on
March 1, 2024. To the extent
such person's ownership of EQT's securities has changed since the
filing of such proxy statement, such changes have been or will be
reflected on Statements of Changes in Beneficial Ownership on Form
4 filed with the SEC. Information regarding Equitrans Midstream's
directors and executive officers and their ownership of Equitrans
Midstream's securities is set forth in Equitrans Midstream's
filings with the SEC, including Equitrans Midstream's Annual Report
on Form 10-K for the fiscal year ended December 31, 2023 and its Definitive Proxy
Statement on Schedule 14A that was filed with the SEC on
March 4, 2024. To the extent
such person's ownership of Equitrans Midstream's securities has
changed since the filing of such proxy statement, such changes have
been or will be reflected on Statements of Changes in Beneficial
Ownership on Form 4 filed with the SEC. Additional information
regarding the interests of those persons and other persons who may
be deemed participants in the proposed transaction may be obtained
by reading the joint proxy statement/prospectus and other relevant
materials that will be filed with the SEC regarding the proposed
transaction when such documents become available. You may obtain
free copies of these documents as described in the preceding
paragraph.
No Offer or Solicitation
This news release is for
informational purposes only and shall not constitute an offer to
sell or exchange, or the solicitation of an offer to buy or
exchange, any securities or a solicitation of any vote or approval,
in any jurisdiction, pursuant to the proposed transaction or
otherwise, nor shall there be any sale, issuance, exchange or
transfer of the securities referred to in this document in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
EQT CORPORATION AND
SUBSIDIARIES
STATEMENTS OF
CONDENSED CONSOLIDATED OPERATIONS (UNAUDITED)
|
|
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
|
(Thousands, except per share amounts)
|
Operating
revenues:
|
|
|
|
Sales of natural gas,
natural gas liquids and oil
|
$
1,303,905
|
|
$
1,830,358
|
Gain on
derivatives
|
106,511
|
|
824,852
|
Net marketing services
and other
|
1,852
|
|
5,861
|
Total operating
revenues
|
1,412,268
|
|
2,661,071
|
Operating
expenses:
|
|
|
|
Transportation and
processing
|
545,181
|
|
514,984
|
Production
|
102,319
|
|
47,940
|
Exploration
|
916
|
|
952
|
Selling, general and
administrative
|
73,053
|
|
51,894
|
Depreciation and
depletion
|
486,750
|
|
387,685
|
Loss on sale/exchange
of long-lived assets
|
147
|
|
16,528
|
Impairment and
expiration of leases
|
9,209
|
|
10,546
|
Other operating
expenses
|
11,973
|
|
19,662
|
Total operating
expenses
|
1,229,548
|
|
1,050,191
|
Operating
income
|
182,720
|
|
1,610,880
|
Income from
investments
|
(2,260)
|
|
(4,764)
|
Other income
|
(205)
|
|
(175)
|
Loss (gain) on debt
extinguishment
|
3,449
|
|
(6,606)
|
Interest expense,
net
|
54,371
|
|
46,546
|
Income before income
taxes
|
127,365
|
|
1,575,879
|
Income tax
expense
|
24,302
|
|
356,646
|
Net income
|
103,063
|
|
1,219,233
|
Less: Net (loss) income
attributable to noncontrolling interests
|
(425)
|
|
685
|
Net income attributable
to EQT Corporation
|
$
103,488
|
|
$
1,218,548
|
|
|
|
|
Income per share of
common stock attributable to EQT Corporation:
|
Basic:
|
|
|
|
Weighted average
common stock outstanding
|
439,459
|
|
361,462
|
Net income
attributable to EQT Corporation
|
$
0.24
|
|
$
3.37
|
|
|
|
|
Diluted:
|
|
|
|
Weighted average
common stock outstanding
|
444,967
|
|
393,883
|
Net income
attributable to EQT Corporation
|
$
0.23
|
|
$
3.10
|
EQT CORPORATION AND
SUBSIDIARIES
PRICE
RECONCILIATION
|
|
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
|
(Thousands, unless
otherwise noted)
|
NATURAL
GAS
|
|
|
|
Sales volume
(MMcf)
|
499,274
|
|
433,397
|
NYMEX price
($/MMBtu)
|
$
2.26
|
|
$
3.45
|
Btu uplift
|
0.13
|
|
0.17
|
Natural gas price
($/Mcf)
|
$
2.39
|
|
$
3.62
|
|
|
|
|
Basis ($/Mcf)
(a)
|
$
(0.14)
|
|
$
0.33
|
Cash settled basis
swaps ($/Mcf)
|
(0.03)
|
|
(0.17)
|
Average differential,
including cash settled basis swaps ($/Mcf)
|
$
(0.17)
|
|
$
0.16
|
Average adjusted price
($/Mcf)
|
$
2.22
|
|
$
3.78
|
Cash settled
derivatives ($/Mcf)
|
0.86
|
|
0.32
|
Average natural gas
price, including cash settled derivatives ($/Mcf)
|
$
3.08
|
|
$
4.10
|
Natural gas sales,
including cash settled derivatives
|
$
1,537,866
|
|
$
1,775,135
|
|
|
|
|
LIQUIDS
|
|
|
|
NGLs, excluding
ethane:
|
|
|
|
Sales volume (MMcfe)
(b)
|
20,732
|
|
13,497
|
Sales volume
(Mbbl)
|
3,455
|
|
2,250
|
NGLs price
($/Bbl)
|
$
41.59
|
|
$
38.75
|
Cash settled
derivatives ($/Bbl)
|
0.01
|
|
(2.36)
|
Average NGLs price,
including cash settled derivatives ($/Bbl)
|
$
41.60
|
|
$
36.39
|
NGLs sales, including
cash settled derivatives
|
$
143,731
|
|
$
81,856
|
Ethane:
|
|
|
|
Sales volume (MMcfe)
(b)
|
11,370
|
|
9,927
|
Sales volume
(Mbbl)
|
1,895
|
|
1,654
|
Ethane price
($/Bbl)
|
$
6.58
|
|
$
7.04
|
Ethane sales
|
$
12,462
|
|
$
11,652
|
Oil:
|
|
|
|
Sales volume (MMcfe)
(b)
|
2,674
|
|
1,984
|
Sales volume
(Mbbl)
|
446
|
|
331
|
Oil price
($/Bbl)
|
$
58.74
|
|
$
58.37
|
Oil sales
|
$
26,181
|
|
$
19,298
|
|
|
|
|
Total liquids sales
volume (MMcfe) (b)
|
34,776
|
|
25,408
|
Total liquids sales
volume (Mbbl)
|
5,796
|
|
4,235
|
Total liquids
sales
|
$
182,374
|
|
$
112,806
|
|
|
|
|
TOTAL
|
|
|
|
Total natural gas and
liquids sales, including cash settled derivatives (c)
|
$
1,720,240
|
|
$
1,887,941
|
Total sales volume
(MMcfe)
|
534,050
|
|
458,805
|
Average realized price
($/Mcfe)
|
$
3.22
|
|
$
4.11
|
(a)
|
Basis represents the
difference between the ultimate sales price for natural gas,
including the effects of delivered price benefit or deficit
associated with the Company's firm transportation agreements, and
the NYMEX natural gas price.
|
(b)
|
NGLs, ethane and oil
were converted to Mcfe at a rate of six Mcfe per barrel.
|
(c)
|
Also referred to herein
as adjusted operating revenues, a non-GAAP supplemental financial
measure.
|
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SOURCE EQT Corporation (EQT-IR)