We Want To Deliver EQTs Potential to Shareholders What Is Our Goal Transform EQT into the lowest cost gas operator in the U.S. Reduce well costs to levels this asset base merits and realize the synergies EQT promised from the RICE…
The Rice Plan
Our Plan is to Transform EQT into the Lowest Cost Gas Operator Transform EQT into the lowest cost gas operator in the U.S. Decrease well costs to improve EQTs free cash flow profile by 500mm/yr (10% of EQTs market cap/yr) We see…
Lower Well Costs Drive FCF Generation in any Price Environment The key to unlocking shareholder value is decreasing well costs These well costs were achieved by Rice Energy on the same asset base 12,000' PA-Marcellus Well Cost…
RICE Operated at Lower Well Costs Than Our Targeted Goal PA-Marcellus Costs vs. Lateral Length RICEs historical well costs demonstrate the cost savings of 1,300 developing longer laterals EQT 2018 Actual (1) 1,250/ft 1,200 Thesis…
How To Lower EQTs Well Costs: Proven Leadership Combined with Technology to Enable Effective Planning 12,000' PA-Marcellus Well Costs (/ft) 1 Proven Leadership Toby Rice as CEO. Pioneered RICEs technological and organizational…
Effective Planning Increases Efficiency & Lowers Well Costs Rig Mobilizations Rig Efficiency Midstream Curtailments EQTs chaotic rig mobilizations are the output Drilling performance is heavily dependent EQT has 10% of its production…
RICE Track Record of Well Results that Consistently Outperformed EQT Across the same geological footprint, RICEs wells consistently outperformed EQT by 10% (50%+ for wells TIL in 2017) 3rd Party Reservoir Analysis (RSEG) (1)…
We See Incremental FCF Opportunities Beyond Our 500mm/yr Goal Our primary focus is lowering well costs but there are multiple, additional optimization opportunities at EQT FCF Opportunities Across all wells in Washington and Greene…
Response to EQTs Attempt To Discredit Rice
The Facts Refute EQTs Claims EQT Claim The Facts EQT is a new team with a new focus EQTs team is not new: executive team has an average 12 year tenure, Chairman has 23 year tenure 1 Current leadership has consistently lagged peer…
An Example of EQTs Claims Hiding the Real Story What EQT Presents The Rest of the Story for Those 1H 2017 Wells All Wells TIL in 1H 2017 EQT: 16 Wells Rice: 19 Wells Costs for 1H 2017 Wells Frac Design 18 Months of Production RICE…
Conclusion
The Option in Front of Shareholders Team Rice EQT Team: Highly qualified and experienced team Team: Legacy EQT employees that have not delivered Successful, experienced senior leadership CEO with little to no operational experience…
We Want To Deliver EQTs Potential to Shareholders We plan to deliver 500mm/year (10% of EQTs market cap/year) of additional FCF versus EQTs plan We see further upside through a number of specifically-identified optimization…
Appendix: Specific Response to EQTs False Claims
The Facts Refute EQTs Claims EQT Claim The Facts EQT is a new team with a new focus EQTs team is not new: executive team has an average 12 year tenure, Chairman has 23 year tenure 1 Current leadership has consistently lagged peer…
1 The New EQT is the Old EQT EQT Claim: EQT is a new team with a new focus EQTs New Executive Team Key decision makers for: Position Years at EQT Hiring Manager Source 2016-2017: 2bn acquisitions in WV (fewer than 10 wells on newly…
2 Rice Energy: Same Scale as EQT Today EQT Claim: RICE was a small-scale, early stage enterprise. EQT is big and complex. Greene & Washington, PA and 90% of development in Geographic Footprint Belmont, OH RICEs footprint Rigs 8…
3 EQT Repeatedly Ignores Rices Plan to Generate Shareholder Value EQT Claim: Rice did not provide a detailed plan 2017 2018 2019 2017 RICE/EQT Integration November 2018 Private Meetings January 2019 Board Meeting 5 Months 4 weeks…
4 Rices Plan Incorporates EQTs 2019 Development Plans EQT Claim: Not all development activity is in PA-Marcellus. Not practical to drill 150 wells at 12,000 average lateral length given capacity and acreage portfolio Now that EQT has…
5 RICE has a Track Record of Delivering Lower Well Costs Per Foot EQT Claim: Rices estimated well costs ignore historical results and todays oilfield service market PA-Marcellus Costs vs. Lateral Length 1,300 Lateral lengths drive…
5 Peers Have Reduced Well Costs Every Year Since 2015 EQT Claim: Rices estimated well costs ignore historical results and todays oilfield service market Despite marginal service cost fluctuations, peers have Indexed Well Cost…
5 EQT is the Only Operator Citing Service Costs as an Excuse EQT is more susceptible to service cost increases due to ineffective planning and a higher reliance on the spot market RRC: These drilling efficiencies have served to offset…
6 90% of EQT Activity is Focused in RICEs Geographic Footprint EQT Claim: Rice fails to account for EQTs footprint EQT 2019 Development RICE + EQT 2016-2017 Development EQT 2018 Development Post-Merger Showing all Undrilled permits…
6 RICE Well Costs Included Produced Water Delivery EQT Claim: RICE piped 100% of its water needs EQT Claim: Rice fails to account for EQTsinfrastructure and produced water dynamics Rice well cost guidance incorporates EQTs produced…
5 6 EQTs Well Cost Bridge is Misleading Rice cost model for a 13,200 lateral = 680/ft 1 RICE 3Q17 results: 860/ft EQT comparable well cost = 1,035/ft with capitalized costs 2 RICE 3Q17 average lateral length: 6,600 (1) Lateral…
7 RICEs Well Results Demonstrate Better Understanding of the Reservoir EQT Claim: Rices wider spaced wells will have lower EURs than EQTs because EQT Focus Drivers of Rice isnt upsizing their frac. 2017 Wells at 750 Spacing…
8 RICE LOE was Lower than EQTs EQT Claim: Rice expensed many well cost components that are capitalized by EQT, artificially deflating /foot metric EQT points to RICEs 2017 LOE guidance to prove their point and claims a 150mm cash flow…
No Matter How You Allocate Costs, EQTs Cost Structure is Too High RICE was a more efficient operator than EQT and that translated into lower cash costs across the 3 primary cost categories that are in control of an E&P operator: (1)…
Combo-Development: Only Possible with a Coordinated Ops Team Efficient development in the form of Combo Development is dependent on setting up highly coordinated projects at scale which RICE successfully executed in 2017 Combo…
Disclaimer The materials contained herein (Materials) are for informational purposes only and may not be relied on by any person for any purpose and are not, and should not be construed as investment, financial, legal, tax or other…
Disclaimer (Contd) IMPORTANT INFORMATION Toby Z. Rice and Derek A. Rice, as well as certain of their affiliates, may file a proxy statement with the U.S. Securities and Exchange Commission (SEC) to solicit proxies from stockholders of…
Contact information For Investor Inquiries: Kyle Derham kyleteamrice.com For Media Inquiries: Sard Verbinnen & Co Jim Barron: 212-687-8080 Frances Jeter: 832-680-5120 35
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