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ANALYST PRESENTATION – EQT Midstream Partners Lp

EQT Midstream Partners Lp · Sep 1, 2014 · 48 slides

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Slides

  1. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 1
    Analyst Presentation September 2014
  2. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 2
    Non-GAAP Measures The Company uses Adjusted EQT Midstream EBITDA as a financial measure in this presentation. Adjusted EQT Midstream EBITDA is defined as EQT Midstream operating income (loss) plus depreciation and amortization expense…
  3. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 3
    Calculations Within This Presentation Finding and development costs (F&D costs) from all sources for peer companies presented in this presentation are calculated as the cost incurred, relating to natural gas and oil activities in…
  4. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 4
    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%…
  5. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 5
    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
  6. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 6
    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…
  7. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 7
    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…
  8. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 8
    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 201 wells in 2014 50% of acreage will utilize…
  9. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 9
    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 209 wells online* 2,970…
  10. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 10
    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 134 wells…
  11. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 11
    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 50 wells online* 18 wells in 2014…
  12. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 12
    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 46 wells online* 8 wells in…
  13. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 13
    Marcellus Economics IRR - Blended Marcellus Development Areas PRICE ATAX IRR 4.00 59% 4.50 82% 5.00 110% Realized Price See appendix for IRR by development area 14
  14. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 14
    Upper Devonian Play Developed in conjunction with Marcellus 170,000 near-term testing & development EQT acres 2,000 locations 22 wells online* 36 wells in 2014 4,800 foot laterals 83 acre spacing 6.1 Bcfe EUR / well* Greene…
  15. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 15
    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 /…
  16. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 16
    Huron Play Kentucky Targeting high-return, liquid-rich acreage 1.4 MM EQT acres 85 % Wet; 15 % Dry 10,000+ horizontal locations 900 horizontal wells online** 120 wells planned in 2014 6,000 foot laterals 1.4 Bcfe EUR / well*…
  17. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 17
    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…
  18. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 18
    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…
  19. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 19
    Liquids Volume Growth and Marcellus Price Uplift Liquids Volume Growth Marcellus Liquids Price Uplift 8,000 (1200 Btu Gas) 7,000 NGLs (1.6 Gal/Mcf) Btu Premium 6,000 6.00 NYMEX 5.84 5,000 4.93 1.55(1) 5.00 0.82 4,000 4.00…
  20. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 20
    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…
  21. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 21
    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…
  22. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 22
    EQT Midstream Partners, LP (NYSE: EQM) Transmission and storage 2.25 Tbtu/d current capacity 700 mile FERC-regulated interstate pipeline 32 Bcf of working gas storage Gathering System Jupiter Gathering System Highlights market…
  23. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 23
    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 Total Distribution per LP Unit 5.23…
  24. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 24
    EQT Midstream Partners, LP General Partner Cash Flow Valuation Present value of GP cash flows = 3.9 billion 250 200 194 158 150 Millions 123 100 82 50 45 14 0 2014E 2015E 2016E 2017E 2018E 2019E 2014E GP…
  25. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 25
    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 transportation…
  26. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 26
    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…
  27. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 27
    EQT Midstream Transmission Allegheny Valley Connector EQT acquired December 2013 200 mile FERC-regulated interstate pipeline 450 BBtu/d capacity 15 Bcf working gas storage 90 MM CAPEX in 2014 40 MM projected annual EBITDA…
  28. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 28
    EQT Midstream Mountain Valley Pipeline Project Pipeline to growing demand center in southeast US Completed a non-binding open season in July 2014 JV with NextEra Energy JV to construct & own pipeline EQT and/or EQM will be…
  29. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 29
    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…
  30. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 30
    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…
  31. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 31
    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…
  32. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 32
    Appendix 33
  33. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 33
    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
  34. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 34
    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…
  35. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 35
    Marcellus Play Type Curves by Area - 4,800 lateral Type curve and well cost data posted on www.eqt.com under investor relations 36
  36. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 36
    Marcellus Economics IRR - Southwestern PA PRICE ATAX IRR 4.00 79% 4.50 119% 5.00 171% Realized Price 37
  37. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 37
    Marcellus Economics IRR - Northern WV Wet Gas Area PRICE ATAX IRR 4.00 111% 4.50 141% 5.00 176% Realized Price 38
  38. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 38
    Marcellus Economics IRR - Central PA PRICE ATAX IRR 4.00 19% 4.50 28% 5.00 38% Realized Price 39
  39. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 39
    Marcellus Economics IRR - Northern WV Dry Gas Area PRICE ATAX IRR 4.00 26% 4.50 37% 5.00 50% Realized Price 40
  40. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 40
    Upper Devonian Play Blended Type Curve - 4,800 lateral Type curve and well cost data posted on www.eqt.com under investor relations 41
  41. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 41
    Upper Devonian IRR PRICE ATAX IRR 4.00 32% 4.50 45% 5.00 59% Realized Price 42
  42. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 42
    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
  43. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 43
    Marcellus Capacity EQT Capacity & Firm Sales Market Mix* 2014E 2015E Tetco M2 48-50% 36-38% Tetco M3 26-28% 28-30% TCO 11-13% 9-10% Midwest 0% 9-10% NYMEX 11-13% 14-16% 44
  44. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 44
    Ample Financial Flexibility to Execute Business Plan Debt ratings Moodys Standard & Poors Fitch Long-term debt Baa3 BBB BBB- Outlook Stable Stable Stable Strong balance sheet ( thousands, except net debt / capital) June 30,…
  45. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 45
    Risk Management Hedging 2014** 2015 2016*** Fixed Price Total Volume (Bcf) 114 138 64 Average Price per Mcf (NYMEX)* 4.36 4.33 4.45 Collars Total Volume (Bcf) 12 23 Average Floor Price per Mcf (NYMEX)* 5.05 5.03 Average Cap…
  46. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 46
    Price Reconciliation Three Months Ended Six Months Ended June 30, June 30, in thousands (unless noted) 2014 2013 2014 2013 LIQUIDS Natural Gas Liquids (NGLs): Gross NGL Revenue (a) 58,034 49,260 130,148 100,683 Oil: Net Oil…
  47. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 47
    Per Unit Operating Expenses Three Months Ended Six Months Ended UNIT COSTS June 30, June 30, 2014 2013 (a) 2014 2013 (a) Production segment costs: (/Mcfe) LOE 0.14 0.15 0.14 0.16 Production taxes 0.15 0.14 0.15 0.14 SG&A 0.30 0.24…
  48. ANALYST PRESENTATION – EQT Midstream Partners Lp – slide 48
    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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