EQT Corporation to Acquire Rice Energy October 2017
EQT Acquisition of Rice Energy Executive Summary Combination creates compelling low-cost producer Basin consolidation drives best-in-class economics Sizeable transaction of high-quality, core acreage 1,200 locations with 12,000 foot…
Agenda I. Summary Terms / Transaction Overview II. Combination Creates Significant Shareholder Value III. Governance and Process IV. Conclusion Appendix 6
I. Summary Terms / Transaction Overview 7
Summary Terms Combination creates largest natural gas producer and one of the lowest-cost operators in U.S. EQT acquiring Rice Energy for 6.7 B 0.37x shares of EQT stock per Rice share Consideration 5.30 in cash per Rice share…
II. Combination Creates Significant Shareholder Value 9
Benefits of Increased Scale Through Consolidation Rices PA Marcellus position is contiguous with EQTs SW PA acreage Upstream Benefits Significantly improved well returns in Greene & Washington Counties Before transaction: 775…
Synergy Potential Present value of economic savings pro forma for Rice acquisition (B) Capital Efficiencies* G&A* Base Synergies Contiguous acreage leads to: Reduction of G&A for 10 years Longer laterals (12,000 ft) Fewer wells…
Upside Synergy Potential Up to PV Synergy Metric (B)* Drilling and completion best practices EUR improvements of 0 5% 2.5 Buying power 0 5% reduction in capital 1.4 Marketing optimization 0.00 - 0.05 / Mcfe improvement in realized…
Immediately Accretive to Cash Flow and NAV Per Share Cash flow per share accretion in excess Production Costs per Mcfe of 20% in 2018 and 30% in 2019 1.80 Accretive to NAV per share 1.60 1.40 1.20 1.32 Base synergies of 2.5…
Research Analysts See Value of Transaction Industry analysts agree transaction is outstanding strategic & operational fit that will create significant value for shareholders Investors cited the high-grading of EQTs acreage position…
Positive Market Reaction to Deal EQT Outperformed Peers and Market Since Merger Announcement 20% 15% 10% 8% 5% 5% 0% -3% -5% -10% -15% 6/16/2017 7/16/2017 8/15/2017 9/14/2017 10/14/2017 EQT S&P 500 INDEX Peer…
EQT Implementation Strategy 2017 Expected activity levels and production guidance unchanged Pro forma sales volume guidance unchanged estimated at 1.3 Tcfe Optimize long-term development plans realizing higher returns by integrating…
III. Governance and Process The EQT / Rice Energy Combination Reflects Extensive Due Diligence and Careful Consideration by a Highly Qualified and Experienced Board of Directors 18
EQT Board Process EQT Board reviews strategic opportunities in the ordinary course of business EQT Board explored options that would enhance its current acreage position and offer unique synergy opportunities with the goal of…
The Boards Long-Term Sustainable Value Creation Strategy Post-Combination Board focused on long-term shareholder value creation Post-Merger Pro forma company well positioned to be cash flow neutral in 2019 and increase the return of…
IV. Conclusion 21
EQT Acquisition of Rice Energy Board has and will continue to take action to support growth Combination creates compelling low-cost producer Basin consolidation drives best-in-class economics Sizeable transaction of high-quality, core…
Appendix 23
EQT + Rice Well-positioned to improve overall well economics and deliver stronger returns EQT Pro Current Forma Market Cap(1) 10.9 B 16.8 B Enterprise Value(2) 12.8 B 22.2 B Net Marcellus Acres 813,000 1,000,000 Core Net…
Transaction Overview Upstream Assets Retained Midstream Assets General Partner EIG Managed Funds 91.75% 8.25% GP Holdings 28% LP Units 100% IDRs 187,000 core PA Marcellus net acres Attractive assets for future…
Building Long Laterals in Appalachia The process Base EQT Acreage + Acquisitions + Trades/Leasing = Full Development 12 new wells with 4,000 ft 8 new wells with 4,900 ft 5 new wells with 14,500 ft 8 new wells with 16,200 ft average…
Balance Sheet Strength Strength in the numbers Benefits of investment grade Strong liquidity Supports consolidation strategy 2.5 billion revolver at EQT(1) Assures operational flexibility through cycles 1.0 billion revolver at EQM…
Marcellus Capacity Rice acquisition triples capacity to Gulf Increased exposure Ohio/Midwest Pipe Project ISD DTH/D to growing Gulf REX TETCO E2W U2GC Current Current 300,000 47,000 485,000 ETP Rover Q4 17 150,000…
2017 Capital and Development Plan Focus on core Marcellus development 2017 capital investments of 1.5 B* OH 1.3 B for well development Core Marcellus 178 wells in 2017 Average laterals of 8,400 ft PA Funding with…
EQT Midstream Partners, LP (NYSE: EQM) Appalachian Hub connecting supply to demand markets Marcellus Gathering 2.3 Bcf per day firm capacity, including 600 MMcf per day high pressure header pipeline for Range Resources 10-year…
EQT Midstream Partners, LP (NYSE: EQM) Mountain Valley Pipeline connects supply hub to southeast power generation markets JV with NextEra, ConEd, WGL, RGC Resources 45.5% EQM ownership interest EQM to construct and operate pipeline…
Cash flows to EQT from EQGP accelerating 500 400 Value of EQGP EQGP price units held by Value per per unit EQT (B) EQT share 300 26 6.2 36 28 6.7 39 MM 30 7.2 42 200 32 7.7 44 34 8.2 47 36 8.6 50 100 - 2014 2015…
EQT Board of Directors David L. Porges Executive Chairman Kenneth M. Burke Independent Director Steven A. Thorington Independent Director, Chair 20+ years of industry experience Former partner at Ernst & Young, with leadership of the…
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