The New EQT New Company, New Leadership, New Focus January 22, 2019
The New EQT New Company, New Leadership, New Focus Q4 volumes exceed guidance midpoint by 20 Bcfe Q4 2018 Performance Q4 development CapEx in-line with prior guidance Back on Track Forecasted Q4 Free Cash Flow of 100 MM(1)…
EQTs Transformation Into the Leading U.S. Natural Gas Producer Our leadership transition and complex transformation is now behind us 1 3 5 7 9 After an intensive search, Launched COO search Announced plan to Announced streamlining…
The New EQT: Strong Fundamentals to Deliver Shareholder Value World-class asset base, sustainable free cash flow and financial strength Leading U.S. natural gas producer at 4.0 Bcfe per day World-Class 680,000 core net Marcellus…
Substantial Position in the Core of the Core Well-positioned to deliver sustainable free cash flow from our world-class asset base EQT Acreage Overlays the SW Marcellus Core Market Cap(1) 4.8 B Data sets include 4,000 wells in the…
Consolidated Core Position Top-tier dry, wet and rich gas Marcellus assets SW Marcellus Heat Map / Core Acreage EQTs core acreage consistently yields average EURs(1) Data sets include 4,000 wells in the Marcellus of 2.4 Bcfe / 1,000…
The New EQT: The Next Phase of Our Transformation Our plan to generate sustainable free cash flow and shareholder value Action Item Measure Timeline Deliver on 2019 plan and execute 5-year plan In Process Execution and Implement…
1 2019 Plan Supports Near-Term Free Cash Flow Approximately 350 MM of Adjusted Free Cash Flow in 2019(1) Net Development Activity (Turned in Line) Operational and Financial Detail 2019E Sales Volumes (Bcfe) 1,470 1,510 Adjusted…
1 Improvements in Capital Efficiency: 2018E vs. 2019E Reserve Development Stabilized scheduling and focus on operational efficiencies drive 2019 improvements Total D&C CapEx Cost per Foot (/ft.)(1) Spud and Turned-in-line Average…
1 Detailed 2019 Development and CapEx Plan Enhanced transparency, accountability and results 160 14,000 Average Lateral Length (ft.) 140 13,000 147 12,000 120 126 Net Well Count 11,000 100 10,000 100 80 91 9,000 60…
1 Development Efficiencies and Optimization Increasing lateral lengths and optimizing spacing generates higher single-well returns Increasing lateral well spacing optimizes reservoir development Core PA Marcellus - 13,000' Lateral…
1 5-Year Financial and Operating Plan Generates cumulative Adjusted Free Cash Flow of 2.7 B(1) 160 15,000 140 Average Lateral Length (ft.) 14,000 120 13,000 Net Well Count 100 12,000 80 11,000 60 10,000 40 20 9,000…
1 The Next Wave of Savings Target 10% Initiative Transition to Manufacturing Mode Q1 2019 Evaluation 2019 Execution 2020 Full Realization Savings Opportunities Identified Realization Timeline and Measures and Metrics in Place and…
1 Committed to Mitigating Curtailments Full realization of benefits expected by year-end 2020 Example: Single Well Wellhead Constraints(1) Minimize adjacent operations and resulting operational reductions 1,400 5% of volumes 1,200…
1 New Chief Operating Officer and Board Committee Focus on capital efficiency and operational excellence Chief Operating Officer Search underway for new external COO Identifying shortlist of highly qualified candidates Expect to…
2 Restructuring and Early Cost Reductions Annual administrative and development cost reductions of 100 MM Performed intensive internal review of corporate overhead and identified quick win development cost efficiencies…
3 Reduce Leverage and Return Capital to Shareholders 19.9% equity stake in Equitrans Midstream (ETRN) worth 1.0 B(1) Adjusted Free Cash Flow(5) Yield EQT vs. Marcellus Peers(2,3) Monetization of ETRN stake could reduce 20 %…
Rice Claims vs. The Facts No incremental free cash flow Rice Claims The Facts Not practical given capacity and acreage portfolio; All development activity focused in the PA Marcellus; EQT to drill 91 PA Marcellus wells at 13,200…
The New EQT: Strong Fundamentals to Deliver Shareholder Value World-class asset base, sustainable free cash flow and financial strength Leading U.S. natural gas producer at 4.0 Bcfe per day World-Class 680,000 core net Marcellus…
Appendix A: In-Depth Analysis of The Rice Assertions 20
EQT Has Conducted a Deep Dive Analysis We disagree with the Rice assertions The Rice claim of 400 600 MM of annual incremental free cash flow is fundamentally flawed The Rice Claims After careful analysis, the Rice claims Ignore…
Reconciling the Rice Headline Free Cash Flow Claims to EQTs Plan Rice vs. EQT free cash flow profiles are similar when adjusted on a directly comparable basis Multiple scenarios where the Rice 1 plan could deliver free cash flow…
2 Digging into the Rice 750 / ft. Well Cost Claim 3 Ignores rapid service cost inflation and assumes 100% fresh water delivery An internal review suggests that comparative PA Marcellus /ft. costs are much closer than the Rice claim…
2 Comparing the Rice 750 / ft. Well Cost Claim to EQT EQT vs. Rice: PA Marcellus / foot well costs comparison(1) Actual results reveal Rices 1H 2017 well costs were above EQTs EQT 1H 2017 TILs Rice 1H 2017 TILs 1,000 1,000 900…
2 Oil Field Service Cost Inflation Accelerated in 2H 2017 Service costs were on the rise and widely accepted 750/ft. does not align with Rices historical performance nor with current market realities Snapshot of Rice Energy…
3 Why Is Fresh and Produced Water Usage Important Critical implications for well costs and trickle-down effect on operations Water usage and associated cost treatment must be considered when analyzing comparative well costs The Rice…
4 Optimizing Well Spacing to Maximize Reservoir Development and Efficiency Rice claims that they can achieve 10% production uplift compared to EQTs current plan The Rice claim actually results in a negative production impact…
5 Analysis Fails to Consider Both Sides of the Equation LOE vs. Capital Costs - differing treatment of well cost components A simple D&C cost analysis misses important additional cost components Rice captured various well related…
Historical Drilling Performance in the Marcellus and Upper Devonian Economic optimization and geologic variation across asset drive EQTs drilling program EQTs rig program has multiple considerations: Historical EQT MRC/UD Horizontal…
Rice vs. EQT Free Cash Flow Profile Bridging the gap The Rice vs. EQT free cash flow profiles are similar when adjusted on a directly comparable basis Lateral CapEx D&C /ft. of Wells Lateral CapEx Length (ft) (MM) D&C /ft. of Wells…
Appendix B
2019 Guidance 350 MM of Adjusted Free Cash Flow(1) Full-Year 2019 Production Total production sales volume (Bcfe) 1,470 - 1,510 Liquids sales volume, excluding ethane (Mbbls) 8,130 - 8,330 Ethane sales volume (Mbbls) 5,780 -…
Detailed 2019E Activity 2019 /ft Details 2019 Total CapEx Details PA WV OH Total / Total Reserve Development PA WV OH 2019E Total Marcellus Marcellus Utica Average CapEx (MM) Marcellus Marcellus Utica of Net Wells Total Spud 60…
Long Term Value Creation 5-year Annual Volumes and Decline Rates 5-year Adjusted Free Cash Flow(1) and Adjusted EBITDA(1) Adj. FCF Adj. EBITDA 2,000 32% 35% 3.0 30% Annual Volumes (Bcfe) YE 2018 Exit Rate Decline 1,600…
Firm Transportation Portfolio Provides access, stability and opportunity Diversity of delivered markets provides significant commercial optionality Portfolio offers price stability by accessing 933,000 933,000 Dth/d Dth/d EQT…
Risk Management NYMEX Hedge position as of December 31, 2018 2019 2020 2021 2022 2023 Swaps Volume (MMDth) 699 452 303 136 61 Average Price (/dth) 2.96 2.82 2.78 2.75 2.74 Calls - Net Short Volume (MMDth) 304 89 55 40 26…
Unit Cost Comparison Q3 2018 YTD(1) Peer-leading unit costs for LOE, G&A Lease Operating Expense (/Mcfe)(2) General & Administrative (/Mcfe) Peer Mean (excl Peer 5): 0.16 Peer Mean: 0.20 0.21 0.93 0.26 0.17 0.22 0.14 0.19…
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