EQT Reports Third Quarter 2024 Results and Announces Non-Operated Asset Divestiture
PITTSBURGH, Oct. 29, 2024 /PRNewswire/ -- EQT Corporation (NYSE:EQT) today announced financial and operational results for the third quarter of 2024.
Third Quarter 2024 and Recent Highlights:
Integration of Equitrans Midstream Corporation (Equitrans) more than 60% complete just three months following the transaction closing; actions taken to date estimated to result in $145 million of annualized base synergies, de-risking more than 50% of total base plan synergies
Sales volume of 581 Bcfe, above the high-end of guidance driven by continued operational efficiency gains and strong well performance, despite approximately 35 Bcfe of total net curtailments
Capital expenditures of $558 million; pro forma(1) capital expenditures of $573 million, below the low-end of guidance driven by efficiency gains and lower-than-expected midstream and pad spending
Differential $0.10 per Mcf tighter than mid-point of guidance as tactical curtailments match supply with demand in real-time and maximize value without sacrificing operational efficiencies
Total per unit operating costs of $1.14 per Mcfe; pro forma(1) total per unit operating costs of $1.07 per Mcfe, below the low-end of guidance driven by lower-than-expected LOE and SG&A expense
Announced agreement to sell remaining non-operated natural gas assets in Northeast Pennsylvania for $1.25 billion in cash
Became the first traditional energy producer of scale in the world to achieve net zero Scope 1 and 2 GHG emissions;(2) eliminated or offset over 900,000 metric tons of CO2e in just five years
President and CEO Toby Z. Rice stated, "The third quarter was hallmarked by the closing of our strategic acquisition of Equitrans, which transformed EQT into America's only large scale, vertically integrated natural gas business. Since closing the Equitrans acquisition, our integration team has been firing on all cylinders, with more than 60% of integration tasks completed and more than 50% of base synergies achieved in just three months. Alongside rapid integration and synergy capture, we are also seeing operational efficiency gains that are being unlocked as a direct consequence of the Equitrans acquisition, which could drive even greater value capture over time."
Rice continued, "Between asset-level cash flows since acquiring this position in 2021, and the two divestitures announced this year, we expect to realize approximately $3.6 billion of total value, implying 3.3x the original value allocation. This transaction, along with the positive momentum we are seeing in our regulated midstream asset sale process, gives us tremendous confidence in being able to achieve our year-end 2025 debt target."
(1)
"Pro forma" refers to results for the three months ended September 30, 2024 as though the Equitrans Midstream Merger had been completed on July 1, 2024 (see Pro Forma Financial Information below).
(2)
References herein to EQT being "net zero" are based on (i) EQT's 2023 Scope 1 GHG emissions, as reported to the U.S. Environmental Protection Agency (EPA) under the EPA's Greenhouse Gas Reporting Program (Subpart W) for the onshore petroleum and natural gas production segment and the gathering and boosting segment, plus (ii) EQT's 2023 Scope 2 GHG emissions using the location-based method and the EPA's Emissions & Generation Resource Integrated Database's state emission factors for EQT's operating areas, minus (iii) carbon offsets generated by EQT during calendar year 2024. EQT's "net zero" claim does not include Scope 3 GHG emissions or emissions from Equitrans and its related assets, which were acquired by EQT on July 22, 2024.
Third Quarter 2024 Financial and Operational Performance
Three Months Ended September 30,
($ millions, except average realized price and EPS)
2024
2023
Change
Total sales volume (Bcfe)
581
523
58
Average realized price ($/Mcfe)
$ 2.38
$ 2.28
$ 0.10
Net (loss) income attributable to EQT
$ (301)
$ 81
$ (382)
Adjusted net income attributable to EQT (a)
$ 69
$ 126
$ (57)
Diluted (loss) income per share (EPS)
$ (0.54)
$ 0.20
$ (0.74)
Adjusted EPS (a)
$ 0.12
$ 0.30
$ (0.18)
Net (loss) income
$ (297)
$ 81
$ (378)
Adjusted EBITDA (a)
$ 832
$ 521
$ 311
Net cash provided by operating activities
$ 593
$ 455
$ 138
Adjusted operating cash flow (a)
$ 522
$ 443
$ 79
Capital expenditures
$ (558)
$ (445)
$ (113)
Free cash flow (a)
$ (121)
$ (2)
$ (119)
(a)
A non-GAAP financial measure. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, this non-GAAP financial measure.
Per Unit Operating CostsThe following table presents certain of the Company's consolidated operating costs on a per unit basis.(a)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Per Unit ($/Mcfe)
2024
2023
2024
2023
Gathering
$ 0.20
$ 0.63
$ 0.44
$ 0.66
Transmission
0.43
0.32
0.37
0.33
Processing
0.13
0.11
0.13
0.11
Lease operating expense (LOE)
0.09
0.08
0.09
0.07
Production taxes
0.07
0.04
0.08
0.04
Operating and maintenance (O&M)
0.07
—
0.04
—
Selling, general and administrative (SG&A)
0.15
0.11
0.14
0.12
Operating costs
$ 1.14
$ 1.29
$ 1.29
$ 1.33
Production depletion
$ 0.91
$ 0.84
$ 0.90
$ 0.83
(a)
References in this release to the "Company" refer to EQT Corporation together with its consolidated subsidiaries. As used throughout this release, per unit operating costs reflect, for each period presented, the consolidated amount of such operating cost for the Company (aggregated irrespective of business segment) divided by total sales volume of natural gas and liquids (Mcfe).
Gathering expense per Mcfe decreased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to the Company's ownership of the gathering and transmission and storage assets acquired in EQT's acquisition of Equitrans in July 2024 (the Equitrans Midstream Merger) and the Company's ownership of the additional interest in gathering assets located in Northeast Pennsylvania.
Transmission expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to additional contracted capacity, including on the Mountain Valley Pipeline (the MVP), which commenced long-term firm capacity obligations on July 1, 2024.
Processing expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to increased volumes from the development of liquids-rich areas and increased processing expense from the liquids-rich assets acquired in EQT's acquisition of upstream assets from THQ Appalachia I, LLC and gathering and processing assets from THQ-XcL Holdings I, LLC in August 2023 (the Tug Hill and XcL Midstream Acquisition).
Production tax expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to increased West Virginia property tax expense from the assets acquired in the Tug Hill and XcL Midstream Acquisition as well as increased severance tax expense from increased sales volume.
O&M expense per Mcfe increased for the three months ended September 30, 2024 as a result of the Company's operation of gathering and transmission and storage assets acquired in the Equitrans Midstream Merger.
SG&A expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to higher personnel costs due to increased workforce headcount, including as a result of the Equitrans Midstream Merger.
Production depletion expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due to increased sales volume and higher annual depletion rate.
Pro Forma Financial InformationThe Equitrans Midstream Merger closed on July 22, 2024, and, as such, the Company's results of operations for the three months ended September 30, 2024 include the results of operations of the assets acquired for the period subsequent to the closing date.
The following table presents certain pro forma combined financial information for the three months ended September 30, 2024 presented as though the Equitrans Midstream Merger had been completed on July 1, 2024. Such pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the Equitrans Midstream Merger occurred on July 1, 2024 nor is such information indicative of future consolidated results of operations.
Three Months Ended
September 30, 2024
EQT Corporation As Reported
Pro Forma Combined (a)
Per Unit ($/Mcfe)
Gathering
$ 0.20
$ 0.10
Transmission
0.43
0.43
Processing
0.13
0.13
LOE
0.09
0.09
Production taxes
0.07
0.07
O&M
0.07
0.08
SG&A
0.15
0.17
Operating costs
$ 1.14
$ 1.07
Production depletion
$ 0.91
$ 0.91
Selected financial information ($ in millions)
Pipeline, net marketing services and other revenues
$ 117
$ 142
Capital contributions to equity method investments
$ (85)
$ (160)
Capital expenditures
$ (558)
$ (573)
(a)
"Pro forma" refers to results for the three months ended September 30, 2024 as though the Equitrans Midstream Merger had been completed on July 1, 2024.
LiquidityAs of September 30, 2024, the Company had $2.0 billion of borrowings outstanding under EQT's $3.5 billion revolving credit facility. Total liquidity, excluding available capacity under Eureka Midstream, LLC's revolving credit facility, as of September 30, 2024 was $1.6 billion.
As of September 30, 2024, total debt and net debt(1) were $13.8 billion and $13.7 billion, respectively, compared to $5.8 billion and $5.7 billion, respectively, as of December 31, 2023.
(1)
A non-GAAP financial measure. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, this non-GAAP financial measure.
Sale of Remaining Non-Operated AssetsEQT announced it has entered into an agreement with Equinor USA Onshore Properties Inc. and Equinor Natural Gas LLC to sell the Company's remaining interest in its non-operated natural gas assets in Northeast Pennsylvania, representing approximately 350 MMcf/d of forecasted 2025 net production. Consideration for the transaction is $1.25 billion of cash, subject to customary purchase price adjustments, which the Company intends to use towards debt repayment. The transaction has an effective date of December 31, 2024 and is expected to close in the fourth quarter of 2024, subject to required regulatory approvals and clearances.
Jefferies LLC acted as a financial advisor to EQT. Kirkland & Ellis LLP is serving as EQT's legal counsel on the transaction.
Fourth Quarter 2024 Guidance
Production
Q4 2024
Total sales volume (Bcfe)
555, 605
Liquids sales volume, excluding ethane (Mbbl)
4,100, 4,400
Ethane sales volume (Mbbl)
1,350, 1,500
Total liquids sales volume (Mbbl)
5,450, 5,900
Btu uplift (MMBtu/Mcf)
1.060, 1.070
Average differential ($/Mcf)
($0.60), ($0.50)
Resource Counts
Top-hole rigs
1, 2
Horizontal rigs
2
Frac crews
2, 3
Midstream Revenue ($ Millions)
Third-party revenue
$130, $155
Mountain Valley Pipeline (MVP) ($ Millions)
Distributions from MVP
$50, $60
Capital contributions to MVP
$70, $80
Per Unit Operating Costs ($/Mcfe)
Gathering
$0.09, $0.11
Transmission
$0.42, $0.44
Processing
$0.13, $0.15
Upstream LOE
$0.09, $0.11
Production taxes
$0.08, $0.10
Midstream operating and maintenance (O&M)
$0.08, $0.10
SG&A
$0.18, $0.20
Total per unit operating costs
$1.07, $1.21
Capital Expenditures ($ Millions)
EQT maintenance
$475, $525
EQT strategic growth
$65, $90
Equitrans
$90, $115
Total capital expenditures
$630, $730
Third Quarter 2024 Earnings Webcast InformationThe Company's conference call with securities analysts begins at 10:00 a.m. ET on Wednesday, October 30, 2024 and will be broadcast live via webcast. An accompanying presentation is available on the Company's investor relations website, www.ir.eqt.com under "Events & Presentations." To access the live audio webcast, visit the Company's investor relations website at ir.eqt.com. A replay will be archived and available for one year in the same location after the conclusion of the live event.
Hedging (as of October 25, 2024)The following table summarizes the approximate volume and prices of the Company's NYMEX hedge positions. The difference between the fixed price and NYMEX price is included in average differential presented in the Company's price reconciliation. With the additional hedges added since July and pro-forma for the recently announced non-operated asset sale, the Company is now approximately 60% hedged for 2025 at an average floor price of $3.25.
Q4 2024 (a)
Q1 2025
Q2 2025
Q3 2025
Q4 2025
Hedged Volume (MMDth)
377
332
336
281
281
Hedged Volume (MMDth/d)
4.1
3.7
3.7
3.1
3.1
Swaps, Short
Volume (MMDth)
304
250
290
281
95
Avg. Price ($/Dth)
$ 3.18
$ 3.49
$ 3.11
$ 3.26
$ 3.27
Calls, Long
Volume (MMDth)
13
—
—
—
—
Avg. Strike ($/Dth)
$ 3.20
$ ,
$ ,
$ ,
$ ,
Calls, Short
Volume (MMDth)
91
188
46
—
137
Avg. Strike ($/Dth)
