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Q3 2014 Earnings Call – EQT Corp

EQT Corp · Oct 23, 2014 · 46 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q3 2014 Earnings Call – EQT Corp – slide 1
    Analyst Presentation October 2014
  2. Q3 2014 Earnings Call – EQT Corp – slide 2
    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%…
  3. Q3 2014 Earnings Call – EQT Corp – slide 3
    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
  4. Q3 2014 Earnings Call – EQT Corp – slide 4
    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…
  5. Q3 2014 Earnings Call – EQT Corp – slide 5
    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…
  6. Q3 2014 Earnings Call – EQT Corp – slide 6
    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 199 wells in 2014 50% of acreage will utilize…
  7. Q3 2014 Earnings Call – EQT Corp – slide 7
    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 220 wells online* 2,970…
  8. Q3 2014 Earnings Call – EQT Corp – slide 8
    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 156 wells…
  9. Q3 2014 Earnings Call – EQT Corp – slide 9
    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 55 wells online* 21 wells in 2014…
  10. Q3 2014 Earnings Call – EQT Corp – slide 10
    Marcellus Play Northern West Virginia Dry Gas Area EQTs 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 49 wells online* 2 well in…
  11. Q3 2014 Earnings Call – EQT Corp – slide 11
    Marcellus Economics IRR - Blended Marcellus Development Areas PRICE ATAX IRR 3.00 26% 3.50 40% 4.00 59% 4.50 82% Realized Price See appendix for IRR by development area 14
  12. Q3 2014 Earnings Call – EQT Corp – slide 12
    Upper Devonian Play Developed in conjunction with Marcellus 170,000 near-term testing & development EQT acres 2,000 locations 26 wells online* 38 wells in 2014 4,800 foot laterals 83 acre spacing 6.1 Bcfe EUR / well* Greene…
  13. Q3 2014 Earnings Call – EQT Corp – slide 13
    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 /…
  14. Q3 2014 Earnings Call – EQT Corp – slide 14
    Huron Play Kentucky Targeting high-return, liquid-rich acreage 1.4 MM EQT acres 85 % Wet; 15 % Dry 10,000+ horizontal locations 924 horizontal wells online** 120 wells planned in 2014 6,000 foot laterals 1.4 Bcfe EUR / well*…
  15. Q3 2014 Earnings Call – EQT Corp – slide 15
    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…
  16. Q3 2014 Earnings Call – EQT Corp – slide 16
    Industry Leading Cost Structure 3-year F&D (all sources) 6.00 Mean = 2.74 4.00 0.88 /Mcfe 2.00 0.00 SM SWN CHK RRC EQT EOG EGN AR STR COG NFG NFX XEC RICE WLL CXO…
  17. Q3 2014 Earnings Call – EQT Corp – slide 17
    Liquids Volume Growth and Marcellus Price Uplift Marcellus Liquids Price Uplift Liquids Volume Growth 8,000 (1200 Btu Gas) 7,000 NGLs (1.6 Gal/Mcf) Btu Premium 6,000 6.00 NYMEX 5.19 5,000 5.00 4.55 1.23(1) /Mcf 4.00…
  18. Q3 2014 Earnings Call – EQT Corp – slide 18
    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…
  19. Q3 2014 Earnings Call – EQT Corp – slide 19
    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…
  20. Q3 2014 Earnings Call – EQT Corp – slide 20
    EQT Midstream Partners, LP (NYSE: EQM) Transmission and storage 2.8 Tbtu/d current capacity 700 mile FERC-regulated interstate pipeline 32 Bcf of gas storage capacity Gathering System Jupiter Gathering System Highlights market…
  21. Q3 2014 Earnings Call – EQT Corp – slide 21
    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 5.23 Total Distribution per LP Unit* 5.00…
  22. Q3 2014 Earnings Call – EQT Corp – slide 22
    EQT Midstream Partners, LP General Partner Cash Flow Valuation Present value of GP cash flows = 4.6 billion 250 228 200 184 150 138 Millions 100 92 48 50 14 0 2014E 2015E 2016E 2017E 2018E 2019E Assumptions:…
  23. Q3 2014 Earnings Call – EQT Corp – slide 23
    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 gathering and…
  24. Q3 2014 Earnings Call – EQT Corp – slide 24
    EQT Midstream Partners, LP Mountain Valley Pipeline Project Pipeline to growing demand center in southeast US 300-mile FERC regulated Q4 2018 expected in-service JV with NextEra Energy JV to construct & own pipeline EQM will be…
  25. Q3 2014 Earnings Call – EQT Corp – slide 25
    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…
  26. Q3 2014 Earnings Call – EQT Corp – slide 26
    EQT Midstream Transmission Allegheny Valley Connector EQT acquired December 2013 200 mile FERC-regulated interstate pipeline 450 BBtu/d capacity 15 Bcf gas storage capacity 90 MM CAPEX in 2014 40 MM projected annual EBITDA…
  27. Q3 2014 Earnings Call – EQT Corp – slide 27
    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…
  28. Q3 2014 Earnings Call – EQT Corp – slide 28
    Drilling and Hydraulic Fracturing Committed to operate in accordance with federal, state and local regulations Industry leading spill prevention plans and results Supports the disclosure of frac fluid additives Utilize multiple…
  29. Q3 2014 Earnings Call – EQT Corp – slide 29
    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…
  30. Q3 2014 Earnings Call – EQT Corp – slide 30
    Appendix 33
  31. Q3 2014 Earnings Call – EQT Corp – slide 31
    Capital Investment Summary 3.0 2.5 2.3 1.8 2.0 1.4 B 1.5 1.2 1.1 1.0 0.5 0.0 2010 2011 2012 2013 2014F Midstream Production Distribution Excludes acquisitions 34
  32. Q3 2014 Earnings Call – EQT Corp – slide 32
    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…
  33. Q3 2014 Earnings Call – EQT Corp – slide 33
    Marcellus Play Type Curves by Area - 4,800 lateral Type curve and well cost data posted on www.eqt.com under investor relations 36
  34. Q3 2014 Earnings Call – EQT Corp – slide 34
    Marcellus Economics IRR - Southwestern PA PRICE ATAX IRR 3.00 28% 3.50 49% 4.00 79% 4.50 119% Realized Price 37
  35. Q3 2014 Earnings Call – EQT Corp – slide 35
    Marcellus Economics IRR - Northern WV Wet Gas Area PRICE ATAX IRR 3.00 65% 3.50 86% 4.00 111% 4.50 141% Realized Price 38
  36. Q3 2014 Earnings Call – EQT Corp – slide 36
    Marcellus Economics IRR - Central PA PRICE ATAX IRR 3.00 7% 3.50 12% 4.00 19% 4.50 28% Realized Price 39
  37. Q3 2014 Earnings Call – EQT Corp – slide 37
    Marcellus Economics IRR - Northern WV Dry Gas Area PRICE ATAX IRR 3.00 9% 3.50 16% 4.00 26% 4.50 37% Realized Price 40
  38. Q3 2014 Earnings Call – EQT Corp – slide 38
    Upper Devonian Play Blended Type Curve - 4,800 lateral Type curve and well cost data posted on www.eqt.com under investor relations 41
  39. Q3 2014 Earnings Call – EQT Corp – slide 39
    Upper Devonian IRR PRICE ATAX IRR 3.00 13% 3.50 22% 4.00 32% 4.50 45% Realized Price 42
  40. Q3 2014 Earnings Call – EQT Corp – slide 40
    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
  41. Q3 2014 Earnings Call – EQT Corp – slide 41
    Marcellus Capacity EQT Capacity & Firm Sales Market Mix 2014E 2015E Tetco M2 43-46% 31-33% Tetco M3 33-35% 34-36% TCO 11-13% 9-10% Midwest 0% 9-10% NYMEX 11-13% 14-16% 44
  42. Q3 2014 Earnings Call – EQT Corp – slide 42
    Ample Financial Flexibility to Execute Business Plan EQT Debt ratings Moodys Standard & Poors Fitch Long-term debt Baa3 BBB BBB- Outlook Stable Stable Stable Capital Strong Structure balance sheet September 30, ( thousands,…
  43. Q3 2014 Earnings Call – EQT Corp – slide 43
    Risk Management Hedging 2014** 2015 2016*** Fixed Price Total Volume (Bcf) 58 207 107 Average Price per Mcf (NYMEX)* 4.34 4.24 4.37 Collars Total Volume (Bcf) 6 40 Average Floor Price per Mcf (NYMEX)* 5.05 4.58 Average Cap…
  44. Q3 2014 Earnings Call – EQT Corp – slide 44
    Price Reconciliation Three Months Ended Six Months Ended September 30, September 30, in thousands (unless noted) 2014 2013 2014 2013 LIQUIDS Natural Gas Liquids (NGLs): Gross NGL Revenue (a) 84,868 43,786 215,016 144,469 Oil: Net…
  45. Q3 2014 Earnings Call – EQT Corp – slide 45
    Per Unit Operating Expenses Three Months Ended Six Months Ended UNIT COSTS September 30, September 30, 2014 2013 (a) 2014 2013 (a) Production segment costs: (/Mcfe) LOE 0.14 0.15 0.14 0.15 Production taxes 0.14 0.13 0.15 0.14 SG&A…
  46. Q3 2014 Earnings Call – EQT Corp – slide 46
    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…

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