PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced third quarter 2014 net
income attributable to EQT of $98.6 million, or $0.65 per diluted share
(EPS), 12% higher than the third quarter 2013 earnings of $88.3 million,
or $0.58 per diluted share. EQT’s reported results were negatively
impacted by a $19.4 million increase in net income attributable to
noncontrolling interests totaling $33.7 million in the third quarter
2014, which represents earnings attributable to EQT Midstream Partners’
noncontrolling unit holders. This increase was primarily as a result of
the sale of the Jupiter natural gas gathering system to EQT Midstream
Partners, LP in May 2014. When adjusted for certain items, including a
$34.3 million gain associated with a reduction in hedge ineffectiveness,
adjusted EPS attributable to EQT was $0.51 in the third quarter 2014,
down 7% year-over-year. The non-GAAP financial measures are detailed and
reconciled in the Non-GAAP Disclosures section below.
Highlights for Third Quarter 2014 vs. 2013:
-
Production sales volume was 25% higher
-
Midstream gathered volume was 24% higher
-
Midstream gathering and compression expense per unit was 18% lower
-
MLP distribution exceeded the 50% GP incentive distribution threshold
of $0.525
Operating cash flow was $335.3 million in the third quarter 2014, 42%
higher than the third quarter 2013, while adjusted operating cash flow
attributable to EQT was $291.3 million, or 5% higher. Operational
results were higher due to increased production sales volume, increased
gathered volume, and increased firm transmission capacity sales and
throughput, partially offset by lower realized commodity prices. Net
operating revenues, excluding a $34.3 million gain associated with a
reduction in hedge ineffectiveness, increased 12% to $495.3 million,
while net operating expenses increased 8%, to $298.1 million, in support
of the Company’s growth.
RESULTS BY BUSINESS
EQT
PRODUCTION
For the third quarter 2014, EQT Production had sales
volume of 123.3 Bcfe, which was a 25% increase over the third quarter
2013, primarily driven by increased production from the Marcellus/Upper
Devonian plays. Natural gas liquids (NGL) volume totaled 2,008 Mbbls, an
87% increase over the same period last year, due to increased liquids
production in the Marcellus and Permian. Operating income for the
Production business in the third quarter 2014 was $140.0 million, $42.4
million higher than the third quarter 2013; while total net operating
revenues were $363.1 million, or $58.9 million higher, including the
gain associated with a reduction in hedge ineffectiveness.
The average effective sales price to EQT was 6% lower at $3.88 per Mcfe,
with $2.94 per Mcfe allocated to EQT Production; and $0.94 per Mcfe
allocated to EQT Midstream. While the NYMEX natural gas price was $0.48
per Mcfe higher, the realized price was impacted by negative basis,
which was only partially offset by third-party gathering and
transmission recoveries. These recoveries primarily represent the price
uplift received by selling some natural gas to higher-priced markets,
and resale of unused capacity. Basis plus recoveries averaged a negative
$0.68 per Mcfe during the quarter compared to a positive $0.12 per Mcfe
in the third quarter 2013.
Operating expenses for EQT Production for the third quarter 2014 were
$223.1 million, $16.5 million higher than the same quarter last
year. Selling, general and administrative expense (SG&A) was $9.0
million higher, including a $3.9 million charge for legal and other
reserves; production taxes were $3.4 million higher; depreciation,
depletion and amortization expenses (DD&A) was $3.4 million higher; and
lease operating expenses (LOE), excluding production taxes, were $2.4
million higher, all related to sales volume growth. Exploration expense
was $1.7 million lower.
During the quarter, EQT spud 42 gross wells in the Marcellus, 13 Upper
Devonian wells, and 36 Huron wells.
The Company’s 2014 sales volume guidance is 465 - 470 Bcfe; and its 2014
NGL volume guidance is 6,650 - 6,750 Mbbls. Sales volume for the
remainder of 2014 is projected to be at the low end of previous
guidance, primarily as a result of executing longer laterals, which have
been 5,800 feet on average vs. 4,800 feet planned for Marcellus wells;
and 6,800 feet vs. 3,800 feet planned for Upper Devonian wells. EQT
began substantially increasing lateral lengths earlier this year after
acquiring acreage adjacent to planned pads in its key operating areas.
Drilling longer laterals results in improved economic returns by
reducing cost per-foot-of-pay by 6%; however, it also increases the time
needed to drill, complete, and have the wells turned in-line.
For the fourth quarter of 2014, based on current market conditions, EQT
is forecasting basis to average negative $1.40 - $1.45 per Mcfe, and
third-party gathering and transmission recoveries to average positive
$1.20 - $1.25 per Mcfe.
EQT MIDSTREAM
EQT Midstream’s third quarter 2014 operating
income was $93.6 million; 19% higher than the third quarter of 2013. Net
gathering revenue was $102.4 million, a 12% increase, primarily due to a
24% increase in gathered volume, partly offset by lower average
gathering rates. Net transmission revenue totaled $55.8 million, a 40%
increase, primarily due to sales of new capacity, as well as higher
throughput. Operating expenses for the quarter were $72.9 million, which
was an $11.5 million increase, consistent with the growth of the
business. Per-unit gathering and compression expense decreased by 18%.
OTHER BUSINESS
EQT Midstream
Partners, LP (NYSE:EQM)
As of September 30, 2014, EQT had a
34.4% limited partner interest and a 2% general partner (GP) interest in
EQT Midstream Partners whose results are consolidated in EQT’s results.
For the third quarter 2014, EQT Corporation recorded $33.7 million of
earnings, or $0.22 per diluted share, attributable to noncontrolling
interests. EQT Midstream Partners’ results were released today and are
available at www.eqtmidstreampartners.com.
On October 21, 2014, EQT Midstream Partners announced a cash
distribution to its unit holders of $0.55 per unit for the third quarter
of 2014. EQT will receive $15.9 million including $4.2 million related
to its GP interest. The GP is entitled to 50% of distributed cash above
$0.525 per unit, with the third quarter distribution being the first to
exceed that threshold.
Mountain Valley Pipeline
EQT Midstream Partners will assume
EQT’s interest in Mountain Valley Pipeline, LLC, a joint venture with a
subsidiary of NextEra Energy, Inc. The Mountain Valley Pipeline (MVP)
will extend from EQT Midstream Partners’ existing transmission and
storage system in Wetzel County, West Virginia to Pittsylvania County,
Virginia. EQT Midstream Partners expects to own a majority interest in
the joint venture and will operate the estimated 300-mile pipeline.
The joint venture has secured a total of 2 Bcf per day of firm capacity
commitments at 20-year terms, and is currently in negotiation with
additional shippers who have expressed interest in the MVP project. As a
result, the final project scope, including pipe diameter and total
capacity, is not yet determined.
The pipeline, which is subject to Federal Energy Regulatory Commission
(FERC) approval, will provide Marcellus and Utica natural gas supply to
the growing demand markets in the southeast region. The pre-filing
process with FERC is expected to begin this month; and the pipeline is
expected to be in-service during the fourth quarter of 2018. For more
information on the project please visit www.mountainvalleypipeline.info.
Hedging
The Company’s total natural gas production hedge
positions through December 2016 are:
|
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2014**
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2015
|
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2016***
|
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Fixed Price
|
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|
|
|
|
|
|
|
|
|
|
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Total Volume (Bcf)
|
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|
|
|
|
58
|
|
|
|
207
|
|
|
|
107
|
|
Average Price per Mcf (NYMEX)*
|
|
|
|
|
$
|
4.34
|
|
|
$
|
4.24
|
|
|
$
|
4.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Collars
|
|
|
|
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|
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|
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Total Volume (Bcf)
|
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|
|
|
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6
|
|
|
|
40
|
|
|
|
–
|
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Average Floor Price per Mcf (NYMEX)*
|
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|
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$
|
5.05
|
|
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$
|
4.58
|
|
|
$
|
–
|
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Average Cap Price per Mcf (NYMEX)*
|
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|
|
|
$
|
8.85
|
|
|
$
|
7.21
|
|
|
$
|
–
|
* The average price is based on a conversion rate of 1.05 MMBtu/Mcf
**
October through December
*** The Company also has a natural gas
sales agreement for 35 Bcf that includes a NYMEX ceiling price of
$4.88/Mcf. The Company also granted swaptions for 17 Bcf in calendar
year 2016 at a strike price of $4.73/Mcf.
Operating Income
The Company reports operating income by
segment in this news release. Interest, income taxes and unallocated
expense are controlled on a consolidated, corporate-wide basis and are
not allocated to the segments. The Company’s management reviews and
reports segment results for operating revenues and purchased gas costs,
net of third-party transportation and processing costs.
The following table reconciles operating income by segment, as reported
in this news release, to the consolidated operating income reported in
the Company’s financial statements:
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
|
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|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Operating income (thousands):
|
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|
|
|
|
|
|
|
|
|
|
|
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EQT Production
|
|
|
|
|
$
|
140,036
|
|
|
$
|
97,600
|
|
|
|
$
|
561,930
|
|
|
$
|
276,753
|
|
|
EQT Midstream
|
|
|
|
|
|
93,600
|
|
|
|
78,533
|
|
|
|
|
265,196
|
|
|
|
224,993
|
|
|
Unallocated expense
|
|
|
|
|
|
(2,133
|
)
|
|
|
(9,069
|
)
|
|
|
|
(14,061
|
)
|
|
|
(28,223
|
)
|
|
Operating income
|
|
|
|
|
$
|
231,503
|
|
|
$
|
167,064
|
|
|
|
$
|
813,065
|
|
|
$
|
473,523
|
|
|
|
|
|
|
|
|
|
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|
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Unallocated expense is primarily due to certain incentive compensation
and administrative costs in excess of budget that are not allocated to
the operating segments.
Marcellus Horizontal Well Status (cumulative since inception)
|
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|
|
As of
9/30/14
|
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|
As of
6/30/14
|
|
|
As of
3/31/14
|
|
|
As of
12/31/13
|
|
|
As of
9/30/13
|
|
Wells spud
|
|
|
|
|
670
|
|
|
628
|
|
|
573
|
|
|
527
|
|
|
486
|
|
Wells online
|
|
|
|
|
480
|
|
|
439
|
|
|
390
|
|
|
373
|
|
|
338
|
|
Wells complete, not online
|
|
|
|
|
31
|
|
|
44
|
|
|
42
|
|
|
32
|
|
|
20
|
|
Frac stages (spud wells)*
|
|
|
|
|
17,119
|
|
|
15,632
|
|
|
13,512
|
|
|
11,991
|
|
|
10,613
|
|
Frac stages online
|
|
|
|
|
10,762
|
|
|
9,289
|
|
|
8,012
|
|
|
7,567
|
|
|
6,596
|
|
Frac stages complete, not online
|
|
|
|
|
968
|
|
|
1,381
|
|
|
959
|
|
|
708
|
|
|
553
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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* Includes planned stages for spud wells that have not yet been
hydraulically fractured.
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NON-GAAP DISCLOSURES
Adjusted
Net Income and Adjusted Earnings per Diluted Share
Adjusted net
income and adjusted earnings per diluted share are non-GAAP supplemental
financial measures that are presented because they are important
measures used by management to evaluate period-to-period comparisons of
earnings trends. Adjusted net income and adjusted earnings per diluted
share should not be considered as alternatives to net income or earnings
per diluted share presented in accordance with GAAP.
The table below reconciles adjusted net income and adjusted earnings per
diluted share with net income and earnings per diluted share, as derived
from the statements of consolidated income to be included in EQT’s
quarterly report on Form 10-Q for the quarter ended September 30, 2014.
Reconciliation of Adjusted Net Income and Adjusted Earnings per
Diluted Share:
|
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|
|
|
Three Months Ended
September 30,
|
|
(thousands)
|
|
|
|
|
2014
|
|
2013
|
|
Net income attributable to EQT, as reported
|
|
|
|
|
$
|
98,555
|
|
|
$
|
88,256
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
Hedging ineffectiveness gain
|
|
|
|
|
|
(34,348
|
)
|
|
|
(3,436
|
)
|
|
Derivative (gain) loss, less net cash from settlements
|
|
|
|
|
|
(217
|
)
|
|
|
338
|
|
|
Legal and other reserves
|
|
|
|
|
|
3,943
|
|
|
|
−
|
|
|
Tax impact
|
|
|
|
|
|
10,035
|
|
|
|
775
|
|
|
Subtotal
|
|
|
|
|
$
|
77,968
|
|
|
$
|
85,933
|
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
−
|
|
|
|
(2,291
|
)
|
|
Adjusted net income attributable to EQT
|
|
|
|
|
$
|
77,968
|
|
|
$
|
83,642
|
|
|
Diluted weighted average common shares outstanding
|
|
|
|
|
|
152,330
|
|
|
|
151,663
|
|
|
Diluted EPS, as adjusted
|
|
|
|
|
$
|
0.51
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow
Operating cash flow is a non-GAAP
supplemental financial measure that is presented as an indicator of an
oil and gas exploration and production company’s ability to internally
fund exploration and development activities and to service or incur
additional debt. EQT includes this information because management
believes that changes in operating assets and liabilities relate to the
timing of cash receipts and disbursements, and therefore, may not relate
to the period in which the operating activities occurred. Operating cash
flow should not be considered as an alternative to net cash provided by
operating activities presented in accordance with GAAP. The table below
reconciles operating cash flow with net cash provided by operating
activities, as derived from the statements of consolidated cash flows to
be included in EQT’s quarterly report on Form 10-Q for the quarter ended
September 30, 2014.
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
(thousands)
|
|
|
|
|
2014
|
|
2013(a)
|
|
|
2014
|
|
2013(a)
|
|
Net Income
|
|
|
|
|
$
|
132,294
|
|
|
$
|
102,610
|
|
|
|
$
|
481,493
|
|
|
$
|
306,009
|
|
|
(Deduct) add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
175,578
|
|
|
|
175,648
|
|
|
|
|
484,908
|
|
|
|
493,341
|
|
|
Deferred income taxes
|
|
|
|
|
|
47,724
|
|
|
|
(48,383
|
)
|
|
|
|
102,301
|
|
|
|
14,869
|
|
|
Hedging ineffectiveness (gain) loss
|
|
|
|
|
|
(34,348
|
)
|
|
|
(3,436
|
)
|
|
|
|
(13,075
|
)
|
|
|
4,518
|
|
|
Derivative (gain) loss, less net cash from settlements
|
|
|
|
|
|
(217
|
)
|
|
|
338
|
|
|
|
|
6,826
|
|
|
|
(540
|
)
|
|
Non-cash incentive compensation
|
|
|
|
|
|
12,262
|
|
|
|
9,628
|
|
|
|
|
33,072
|
|
|
|
37,108
|
|
|
Non-cash gain on Nora asset exchange
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
(37,749
|
)
|
|
|
–
|
|
|
Non-cash gain on disposition
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
(3,598
|
)
|
|
|
–
|
|
|
Other items, net
|
|
|
|
|
|
2,040
|
|
|
|
334
|
|
|
|
|
4,348
|
|
|
|
6,272
|
|
|
Operating cash flow:
|
|
|
|
|
$
|
335,333
|
|
|
$
|
236,739
|
|
|
|
$
|
1,058,526
|
|
|
$
|
861,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
|
|
|
47,672
|
|
|
|
133,076
|
|
|
|
|
83,419
|
|
|
|
106,531
|
|
|
Net cash provided by operating activities
|
|
|
|
|
$
|
383,005
|
|
|
$
|
369,815
|
|
|
|
$
|
1,141,945
|
|
|
$
|
968,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes results of discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Cash Flow Attributable to EQT
Adjusted
operating cash flow attributable to EQT is a non-GAAP supplemental
financial measure that is presented as an indicator of an oil and gas
exploration and production company’s ability to internally fund
exploration and development activities and to service or incur
additional debt. EQT also includes this information because management
believes that changes in operating assets and liabilities relate to the
timing of cash receipts and disbursements, and therefore, may not relate
to the period in which the operating activities occurred. Adjusted
operating cash flow attributable to EQT should not be considered as an
alternative to net cash provided by operating activities presented in
accordance with GAAP. The table below provides the calculation for
adjusted operating cash flow attributable to EQT, as derived from the
financial statements to be included in EQT’s quarterly report on Form
10-Q for the quarter ended September 30, 2014.
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
(thousands)
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Operating cash flow (a non-GAAP measure reconciled above)
|
|
|
|
|
$
|
335,333
|
|
|
$
|
236,739
|
|
|
|
$
|
1,058,526
|
|
|
$
|
861,577
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA*
|
|
|
|
|
|
(45,440
|
)
|
|
|
(17,368
|
)
|
|
|
|
(101,830
|
)
|
|
|
(38,364
|
)
|
|
Exploration expense (cash)
|
|
|
|
|
|
1,396
|
|
|
|
1,257
|
|
|
|
|
3,748
|
|
|
|
2,992
|
|
|
Cash taxes on transactions
|
|
|
|
|
|
−
|
|
|
|
56,764
|
|
|
|
|
72,788
|
|
|
|
56,764
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
|
|
|
$
|
291,289
|
|
|
$
|
277,392
|
|
|
|
$
|
1,033,232
|
|
|
$
|
882,969
|
|
|
* Adjusted EQT Midstream Partners EBITDA and noncontrolling
interest portion of adjusted EQT Midstream Partners are non-GAAP
financial measures reconciled below.
|
|
|
Derivative Gain (Loss), Less Net Cash from Settlements
The
Company reports gain (loss) for hedging ineffectiveness and gain (loss)
on derivatives not designated as hedges within operating revenues. The
tables below reconcile derivative gain (loss), less net cash from
settlements, a non-GAAP supplemental financial measure, to gain (loss)
on derivatives not designated as hedges, presented in accordance with
GAAP, as derived from the financial statements to be included in EQT’s
quarterly report on Form 10-Q for the quarter ended September 30, 2014.
Derivative gains (losses), less net cash from settlements is presented
because it is an important measure used by management, analysts and
investors to evaluate period-to-period comparisons of earnings and cash
flow trends. Derivative gains (losses), less net cash from settlements,
should not be considered as an alternative to gains (losses) on
derivatives not designated as hedges presented in accordance with GAAP.
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
(thousands)
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Operating revenues, excluding hedging ineffectiveness and derivative
gain (loss)
|
|
|
|
|
$
|
542,554
|
|
|
$
|
477,113
|
|
|
|
$
|
1, 769,499
|
|
|
$
|
1,372,793
|
|
|
Gain (loss) for hedging ineffectiveness(a)
|
|
|
|
|
|
34,348
|
|
|
|
3,436
|
|
|
|
|
13,075
|
|
|
|
(4,518
|
)
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
|
|
|
1,821
|
|
|
|
(943
|
)
|
|
|
|
(16,058
|
)
|
|
|
307
|
|
|
Operating revenues, as reported
|
|
|
|
|
$
|
578,723
|
|
|
$
|
479,606
|
|
|
|
$
|
1,766,516
|
|
|
$
|
1,368,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
|
|
$
|
1,821
|
|
|
$
|
(943
|
)
|
|
|
$
|
(16,058
|
)
|
|
$
|
307
|
|
|
Net cash settlements (received) paid on derivative instruments not
designated as hedges
|
|
|
|
|
|
(1,604
|
)
|
|
|
605
|
|
|
|
|
9,232
|
|
|
|
233
|
|
|
Derivative gain (loss), less net cash from settlements
|
|
|
|
|
$
|
217
|
|
|
$
|
(338
|
)
|
|
|
$
|
(6,826
|
)
|
|
$
|
540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production derivative (loss) gain, less net cash from settlements
|
|
|
|
|
$
|
(2,208
|
)
|
|
$
|
–
|
|
|
|
$
|
(7,141
|
)
|
|
$
|
132
|
|
|
EQT Midstream derivative gain (loss), less net cash from settlements
|
|
|
|
|
|
2,425
|
|
|
|
(338
|
)
|
|
|
|
315
|
|
|
|
408
|
|
|
Derivative gain (loss), less net cash from settlements
|
|
|
|
|
$
|
217
|
|
|
$
|
(338
|
)
|
|
|
$
|
(6,826
|
)
|
|
$
|
540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Relates to EQT Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Revenues and Net Operating Expenses
Net
operating revenues and net operating expenses are non-GAAP supplemental
financial measures that exclude transportation and processing costs, but
are presented because they are important analytical measures used by
management to evaluate period-to-period comparisons of revenue and
operating expenses. Transportation and processing costs are typically
excluded by management in such analysis because more emphasis is placed
on the net price impact to revenues and expenses. Net operating revenues
and net operating expenses should not be considered as alternatives to
operating revenues or total operating expenses presented in accordance
with GAAP. The table below reconciles net operating revenues to
operating revenues, and net operating expenses to total operating
expenses, as derived from the statements of consolidated income to be
included in EQT’s quarterly report on Form 10-Q for the quarter ended
September 30, 2014.
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
(thousands)
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Net operating revenues
|
|
|
|
|
$
|
529,602
|
|
$
|
443,942
|
|
|
$
|
1,620,497
|
|
$
|
1,260,321
|
|
Plus: transportation and processing
|
|
|
|
|
|
49,121
|
|
|
35,664
|
|
|
|
146,019
|
|
|
108,261
|
|
Operating revenues
|
|
|
|
|
$
|
578,723
|
|
$
|
479,606
|
|
|
$
|
1,766,516
|
|
$
|
1,368,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
|
|
|
$
|
298,099
|
|
$
|
276,878
|
|
|
$
|
845,181
|
|
$
|
786,798
|
|
Plus: transportation and processing
|
|
|
|
|
|
49,121
|
|
|
35,664
|
|
|
|
146,019
|
|
|
108,261
|
|
Total operating expenses
|
|
|
|
|
$
|
347,220
|
|
$
|
312,542
|
|
|
$
|
991,200
|
|
$
|
895,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EQT Midstream Partners EBITDA and Noncontrolling Interest
Portion of Adjusted EQT Midstream Partners EBITDA
As used in
this news release, adjusted EQT Midstream Partners EBITDA means the
Partnership’s net income plus the Partnership’s net interest expense,
depreciation and amortization expense, income tax expense (if
applicable), non-cash long-term compensation expense and other non-cash
adjustments (if applicable), less the Partnership’s other income,
capital lease payments and Jupiter adjusted EBITDA prior to acquisition
(if applicable). As used in this news release, noncontrolling interest
portion of adjusted EQT Midstream Partners EBITDA means the portion of
adjusted EQT Midstream Partners EBITDA attributable to the
noncontrolling interest unit holders of the Partnership. Adjusted EQT
Midstream Partners EBITDA and noncontrolling interest portion of
adjusted EQT Midstream Partners EBITDA are non-GAAP supplemental
financial measures that management and external users of the Company’s
consolidated financial statements, such as industry analysts, investors,
lenders and rating agencies, use to assess the effects of the
noncontrolling interests in the Partnership in relation to:
-
the Company’s performance vs. prior periods;
-
the Company’s operating performance as compared to other companies in
its industry;
-
the ability of the Company’s assets to generate sufficient cash flow
to make distributions to its investors; and
-
the Company’s ability to incur and service debt and fund capital
expenditures.
The Company believes that adjusted EQT Midstream Partners EBITDA and
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA provide useful information to investors in assessing the
Company’s financial condition and results of operations. Adjusted EQT
Midstream Partners EBITDA and noncontrolling interest portion of
adjusted EQT Midstream Partners EBITDA should not be considered as
alternatives to the Partnership’s net income, operating income, or any
other measure of financial performance or liquidity presented in
accordance with GAAP. Adjusted EQT Midstream Partners EBITDA and
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA have important limitations as analytical tools because they
exclude some, but not all, items that affect the Partnership’s net
income. Additionally, because adjusted EQT Midstream Partners EBITDA and
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA may be defined differently by other companies in the Company’s or
the Partnership’s industry, the definitions of adjusted EQT Midstream
Partners EBITDA and noncontrolling interest portion of adjusted EQT
Midstream Partners EBITDA may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility. The
table below reconciles adjusted EQT Midstream Partners EBITDA and
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA to the Partnership’s net income, as derived from the statements
of consolidated operations to be included in the Partnership’s quarterly
report on Form 10-Q for the quarter ended September 30, 2014.
Adjusted EQT Midstream Partners’ EBITDA and Noncontrolling Interest
Portion of Adjusted EQT Midstream Partners EBITDA
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
(thousands)
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Net Income
|
|
|
|
|
$
|
56,533
|
|
|
$
|
44,054
|
|
|
|
$
|
158,117
|
|
|
$
|
124,448
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
8,660
|
|
|
|
196
|
|
|
|
|
20,944
|
|
|
|
613
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
9,846
|
|
|
|
6,624
|
|
|
|
|
26,742
|
|
|
|
19,323
|
|
|
Income tax expense
|
|
|
|
|
|
–
|
|
|
|
9,993
|
|
|
|
|
12,456
|
|
|
|
31,841
|
|
|
Non-cash long-term compensation expense
|
|
|
|
|
|
779
|
|
|
|
210
|
|
|
|
|
2,584
|
|
|
|
772
|
|
|
Non-cash adjustments
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
(680
|
)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
|
|
|
(806
|
)
|
|
|
(319
|
)
|
|
|
|
(1,634
|
)
|
|
|
(845
|
)
|
|
Capital lease payments for AVC
|
|
|
|
|
|
(3,565
|
)
|
|
|
–
|
|
|
|
|
(14,760
|
)
|
|
|
–
|
|
|
Pre-merger capital lease payments (Sunrise)
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
(15,201
|
)
|
|
Adjusted EBITDA attributable to Jupiter prior to acquisition
|
|
|
|
|
|
–
|
|
|
|
(27,677
|
)
|
|
|
|
(34,733
|
)
|
|
|
(77,051
|
)
|
|
Adjusted EQT Midstream Partners EBITDA
|
|
|
|
|
$
|
71,447
|
|
|
$
|
33,081
|
|
|
|
$
|
169,716
|
|
|
$
|
83,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest ownership percentage(a)
|
|
|
|
|
|
63.6
|
%
|
|
|
52.5
|
%
|
|
|
|
60.0
|
%
|
|
|
46.1
|
%
|
|
Noncontrolling interest portion of Adjusted EQT Midstream Partners
EBITDA
|
|
|
|
|
$
|
45,440
|
|
|
$
|
17,368
|
|
|
|
$
|
101,830
|
|
|
$
|
38,364
|
|
|
|
|
(a) Represents weighted average noncontrolling interest
ownership percentage for the period.
|
|
|
Q3 2014 Webcast Information
The
Company's conference call with securities analysts, which begins at
10:30 a.m. ET today, will be broadcast live via the Company's web site
at http://www.eqt.com,
and on the investor information page of the Company’s web site at http://ir.eqt.com,
with a replay available for seven days following the call.
EQT Midstream Partners, LP (NYSE:EQM), for which EQT Corporation is the
general partner and a significant equity owner, will host a conference
call with security analysts today, beginning at 11:30 a.m. ET. The call
will be broadcast live via http://www.eqtmidstreampartners.com,
with a replay available for seven days following the call.
About EQT Corporation:
EQT
Corporation is an integrated energy company with emphasis on Appalachian
area natural gas production, gathering, and transmission. EQT is the
general partner and significant equity owner of EQT Midstream Partners,
LP. With more than 125 years of experience, EQT continues to be a leader
in the use of advanced horizontal drilling technology – designed to
minimize the potential impact of drilling-related activities and reduce
the overall environmental footprint. Through safe and responsible
operations, the Company is committed to meeting the country’s growing
demand for clean-burning energy, while continuing to provide a rewarding
workplace and enrich the communities where its employees live and work.
Company shares are traded on the New York Stock Exchange as EQT.
Visit EQT Corporation at www.EQT.com.
EQT Management speaks to investors from time-to-time and the analyst
presentation for these discussions, which is updated periodically, and
is available via the Company’s investor relations website at http://ir.eqt.com.
Cautionary Statements
The United States Securities and
Exchange Commission (SEC) permits oil and gas companies, in their
filings with the SEC, to disclose only proved, probable and possible
reserves that a company anticipates as of a given date to be
economically and legally producible and deliverable by application of
development projects to known accumulations. We use certain terms, such
as “EUR” (estimated ultimate recovery) and “3P” (proved, probable and
possible), that the SEC’s guidelines prohibit us from including in
filings with the SEC. These measures are by their nature more
speculative than estimates of reserves prepared in accordance with SEC
definitions and guidelines and accordingly are less certain.
Total sales volume per day (or daily production) is an operational
estimate of the daily production or sales volume on a typical day
(excluding curtailments).
EBITDA is defined as earnings before interest, taxes, depreciation, and
amortization and is not a financial measure calculated in accordance
with GAAP. EBITDA is a non-GAAP supplemental financial measure that the
Company’s management and external users of the Company’s financial
statements, such as industry analysts, investors, lenders and rating
agencies, may use to assess: (i) the Company’s performance versus prior
periods; (ii) the Company’s operating performance as compared to other
companies in its industry; (iii) the ability of the Company’s assets to
generate sufficient cash flow to make distributions to its investors;
(iv) the Company’s ability to incur and service debt and fund capital
expenditures; and (v) the viability of acquisitions and other capital
expenditure projects and the returns on investment of various investment
opportunities.
The Company is unable to provide a reconciliation of projected EBITDA to
projected operating income, the most comparable financial measure
calculated in accordance with GAAP, due to the unknown effect, timing
and potential significance of certain income statement items.
Similarly, the Company is unable to provide a reconciliation of its
projected operating cash flow to projected net cash provided by
operating activities, the most comparable financial measure calculated
in accordance with GAAP, because of uncertainties associated with
projecting future net income and changes in assets and liabilities.
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. Statements that do not relate strictly to historical or
current facts are forward-looking. Without limiting the generality of
the foregoing, forward-looking statements contained in this news release
specifically include the expectations of plans, strategies, objectives
and growth and anticipated financial and operational performance of the
Company and its subsidiaries, including guidance regarding the Company’s
strategy to develop its Marcellus and other reserves; drilling plans and
programs (including the number, type, feet of pay and location of wells
to be drilled); projected natural gas prices and changes in basis; total
resource potential, reserves, EUR, expected decline curve and reserve
replacement ratio; projected production sales volume and growth rates
(including liquids sales volume and growth rates); projected finding and
development costs, operating costs, unit costs, well costs, midstream
revenue deductions and third-party gathering and transmission
recoveries; projected gathering and transmission volume and growth
rates; projected firm pipeline capacity and sales; the Company’s access
to, and timing of, capacity on third-party pipelines; infrastructure
programs (including the timing, cost and capacity of the transmission
and gathering expansion projects); the timing, cost, capacity and
expected interconnects with facilities and pipelines of the Ohio Valley
Connector (OVC) and Mountain Valley Pipeline (MVP) projects; the
ultimate terms, partners and structure of the MVP joint venture;
technology (including drilling and completion techniques); projected EQT
Midstream and EQT Midstream Partners, LP (Partnership) EBITDA;
monetization transactions, including asset sales (dropdowns) to the
Partnership and other asset sales, joint ventures or other transactions
involving the Company’s assets; the projected cash flows resulting from,
and the value of, the Company’s general partner and limited partner
interests and incentive distribution rights in the Partnership,
including the assumptions used in making such projections; internal rate
of return (IRR) and returns per well; projected capital expenditures;
the amount and timing of any repurchases under the Company’s share
repurchase authorization; liquidity and financing requirements,
including funding sources and availability; projected operating
revenues, cash flows and cash-on-hand; hedging strategy; the effects of
government regulation and litigation; the Company dividend and
Partnership distribution amounts and rates; and tax position. These
forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from projected results.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. The
Company has based these forward-looking statements on current
expectations and assumptions about future events. While the Company
considers these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory and other risks and uncertainties, most of which are
difficult to predict and many of which are beyond the Company’s control.
With respect to the proposed OVC and MVP projects, these risks and
uncertainties include, among others, the ability to obtain regulatory
permits and approvals, the ability to secure customer contracts, and the
availability of skilled labor, equipment and materials. Additional risks
and uncertainties that may affect the operations, performance and
results of the Company’s business and forward-looking statements
include, but are not limited to, those set forth under Item 1A, “Risk
Factors,” of the Company’s Form 10-K for the year ended December 31,
2013, as updated by any subsequent Form 10-Qs.
Any forward-looking statement speaks only as of the date on which such
statement is made and the Company does not intend to correct or update
any forward-looking statement, whether as a result of new information,
future events or otherwise.
Information in this news release regarding the Partnership and its
subsidiaries is derived from publicly available information published by
the Partnership.
|
|
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
(Thousands, except per share amounts)
|
|
Operating revenues
|
|
|
|
|
$
|
578,723
|
|
$
|
479,606
|
|
|
$
|
1,766,516
|
|
$
|
1,368,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
|
|
|
49,121
|
|
|
35,664
|
|
|
|
146,019
|
|
|
108,261
|
|
Operation and maintenance
|
|
|
|
|
|
27,944
|
|
|
25,902
|
|
|
|
80,752
|
|
|
73,202
|
|
Production
|
|
|
|
|
|
33,840
|
|
|
28,076
|
|
|
|
97,662
|
|
|
80,712
|
|
Exploration
|
|
|
|
|
|
3,606
|
|
|
5,256
|
|
|
|
12,477
|
|
|
15,124
|
|
Selling, general and administrative
|
|
|
|
|
|
57,131
|
|
|
48,171
|
|
|
|
169,382
|
|
|
142,778
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
175,578
|
|
|
169,473
|
|
|
|
484,908
|
|
|
474,982
|
|
Total operating expenses
|
|
|
|
|
|
347,220
|
|
|
312,542
|
|
|
|
991,200
|
|
|
895,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash gain on Nora asset exchange
|
|
|
|
|
|
−
|
|
|
−
|
|
|
|
37,749
|
|
|
−
|
|
Operating income
|
|
|
|
|
|
231,503
|
|
|
167,064
|
|
|
|
813,065
|
|
|
473,523
|
|
Other income
|
|
|
|
|
|
1,004
|
|
|
2,310
|
|
|
|
6,134
|
|
|
6,632
|
|
Interest expense
|
|
|
|
|
|
35,717
|
|
|
35,554
|
|
|
|
99,558
|
|
|
110,690
|
|
Income before income taxes
|
|
|
|
|
|
196,790
|
|
|
133,820
|
|
|
|
719,641
|
|
|
369,465
|
|
Income taxes
|
|
|
|
|
|
64,496
|
|
|
33,501
|
|
|
|
239,920
|
|
|
106,347
|
|
Income from continuing operations
|
|
|
|
|
|
132,294
|
|
|
100,319
|
|
|
|
479,721
|
|
|
263,118
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
−
|
|
|
2,291
|
|
|
|
1,772
|
|
|
42,891
|
|
Net income
|
|
|
|
|
|
132,294
|
|
|
102,610
|
|
|
|
481,493
|
|
|
306,009
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
33,739
|
|
|
14,354
|
|
|
|
79,824
|
|
|
30,642
|
|
Net income attributable to EQT Corporation
|
|
|
|
|
$
|
98,555
|
|
$
|
88,256
|
|
|
$
|
401,669
|
|
$
|
275,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
$
|
98,555
|
|
$
|
85,965
|
|
|
$
|
399,897
|
|
$
|
232,476
|
|
Income from discontinued operations
|
|
|
|
|
|
−
|
|
|
2,291
|
|
|
|
1,772
|
|
|
42,891
|
|
Net income
|
|
|
|
|
$
|
98,555
|
|
$
|
88,256
|
|
|
$
|
401,669
|
|
$
|
275,367
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
Basic:
|
|
Weighted average common stock outstanding
|
|
|
|
|
|
151,557
|
|
|
150,679
|
|
|
|
151,533
|
|
|
150,509
|
|
Income from continuing operations
|
|
|
|
|
$
|
0.65
|
|
$
|
0.57
|
|
|
$
|
2.64
|
|
$
|
1.54
|
|
Income from discontinued operations
|
|
|
|
|
|
−
|
|
|
0.02
|
|
|
|
0.01
|
|
|
0.29
|
|
Net income
|
|
|
|
|
$
|
0.65
|
|
$
|
0.59
|
|
|
$
|
2.65
|
|
$
|
1.83
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
|
|
|
152,330
|
|
|
151,663
|
|
|
|
152,468
|
|
|
151,365
|
|
Income from continuing operations
|
|
|
|
|
$
|
0.65
|
|
$
|
0.57
|
|
|
$
|
2.62
|
|
$
|
1.54
|
|
Income from discontinued operations
|
|
|
|
|
|
−
|
|
|
0.01
|
|
|
|
0.01
|
|
|
0.28
|
|
Net income
|
|
|
|
|
$
|
0.65
|
|
$
|
0.58
|
|
|
$
|
2.63
|
|
$
|
1.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Corporation
Price Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
in thousands (unless noted)
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
LIQUIDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Liquids (NGLs):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMcfe)(a)
|
|
|
|
|
|
12,047
|
|
|
|
6,426
|
|
|
|
|
27,768
|
|
|
|
20,048
|
|
|
Sales Volume (Mbbls)
|
|
|
|
|
|
2,008
|
|
|
|
1,071
|
|
|
|
|
4,628
|
|
|
|
3,341
|
|
|
Gross Price ($/Bbl)
|
|
|
|
|
$
|
42.27
|
|
|
$
|
40.89
|
|
|
|
$
|
46.46
|
|
|
$
|
43.24
|
|
|
Gross NGL Revenue
|
|
|
|
|
$
|
84,868
|
|
|
$
|
43,786
|
|
|
|
$
|
215,016
|
|
|
$
|
144,469
|
|
|
Oil:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMcfe)(a)
|
|
|
|
|
|
933
|
|
|
|
474
|
|
|
|
|
1,632
|
|
|
|
1,169
|
|
|
Sales Volume (Mbbls)
|
|
|
|
|
|
155
|
|
|
|
79
|
|
|
|
|
272
|
|
|
|
195
|
|
|
Net Price ($/Bbl)
|
|
|
|
|
$
|
87.91
|
|
|
$
|
94.78
|
|
|
|
$
|
87.46
|
|
|
$
|
87.51
|
|
|
Net Oil Revenue
|
|
|
|
|
$
|
13,668
|
|
|
$
|
7,488
|
|
|
|
$
|
23,785
|
|
|
$
|
17,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liquids Revenue
|
|
|
|
|
$
|
98,536
|
|
|
$
|
51,274
|
|
|
|
$
|
238,801
|
|
|
$
|
161,518
|
|
|
GAS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume - Natural Gas (MMBtu)
|
|
|
|
|
|
110,362
|
|
|
|
92,075
|
|
|
|
|
310,201
|
|
|
|
253,956
|
|
|
Sales Volume – Ethane sold as natural gas (MMBtu)
|
|
|
|
|
|
11,039
|
|
|
|
8,244
|
|
|
|
|
26,205
|
|
|
|
21,623
|
|
|
Sales Volume (MMBtu)
|
|
|
|
|
|
121,401
|
|
|
|
100,319
|
|
|
|
|
336,406
|
|
|
|
275,579
|
|
|
NYMEX Price ($/MMBtu)(b)
|
|
|
|
|
$
|
4.05
|
|
|
$
|
3.58
|
|
|
|
$
|
4.52
|
|
|
$
|
3.68
|
|
|
Gas Revenue
|
|
|
|
|
$
|
491,864
|
|
|
$
|
358,911
|
|
|
|
$
|
1,521,859
|
|
|
$
|
1,014,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross Gas & Liquids Revenue (unhedged)
|
|
|
|
|
$
|
590,400
|
|
|
$
|
410,185
|
|
|
|
$
|
1,760,660
|
|
|
$
|
1,176,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMcf)
|
|
|
|
|
|
110,362
|
|
|
|
92,075
|
|
|
|
|
310,201
|
|
|
|
253,956
|
|
|
Total Sales Volume (MMcfe)(a)
|
|
|
|
|
|
123,342
|
|
|
|
98,975
|
|
|
|
|
339,601
|
|
|
|
275,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Gas & Liquids Price ($/Mcfe)
|
|
|
|
|
$
|
4.79
|
|
|
$
|
4.14
|
|
|
|
$
|
5.18
|
|
|
$
|
4.27
|
|
|
Hedge impact
|
|
|
|
|
|
0.37
|
|
|
|
0.48
|
|
|
|
|
(0.06
|
)
|
|
|
0.37
|
|
|
Basis
|
|
|
|
|
|
(1.38
|
)
|
|
|
(0.28
|
)
|
|
|
|
(0.82
|
)
|
|
|
(0.11
|
)
|
|
Third-party gathering and transmission recoveries, net
|
|
|
|
|
|
0.70
|
|
|
|
0.40
|
|
|
|
|
0.67
|
|
|
|
0.35
|
|
|
Average adjusted price ($/Mcfe)
|
|
|
|
|
$
|
4.48
|
|
|
$
|
4.74
|
|
|
|
$
|
4.97
|
|
|
$
|
4.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Revenue Deductions ($ / Mcfe)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering to EQT Midstream
|
|
|
|
|
$
|
(0.74
|
)
|
|
$
|
(0.82
|
)
|
|
|
$
|
(0.74
|
)
|
|
$
|
(0.83
|
)
|
|
Transmission to EQT Midstream
|
|
|
|
|
|
(0.20
|
)
|
|
|
(0.23
|
)
|
|
|
|
(0.20
|
)
|
|
|
(0.23
|
)
|
|
Third-party gathering and transmission
|
|
|
|
|
|
(0.45
|
)
|
|
|
(0.52
|
)
|
|
|
|
(0.50
|
)
|
|
|
(0.58
|
)
|
|
Third-party processing
|
|
|
|
|
|
(0.15
|
)
|
|
|
(0.10
|
)
|
|
|
|
(0.13
|
)
|
|
|
(0.11
|
)
|
|
Total midstream revenue deductions
|
|
|
|
|
|
(1.54
|
)
|
|
|
(1.67
|
)
|
|
|
|
(1.57
|
)
|
|
|
(1.75
|
)
|
|
Average effective sales price to EQT Production(c)
|
|
|
|
|
$
|
2.94
|
|
|
$
|
3.07
|
|
|
|
$
|
3.40
|
|
|
$
|
3.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Revenue ($ / Mcfe)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues to EQT Midstream
|
|
|
|
|
$
|
0.94
|
|
|
$
|
1.05
|
|
|
|
$
|
0.94
|
|
|
$
|
1.06
|
|
|
Revenues to EQT Production
|
|
|
|
|
|
2.94
|
|
|
|
3.07
|
|
|
|
|
3.40
|
|
|
|
3.13
|
|
|
Average effective sales price to EQT Corporation(c)
|
|
|
|
|
$
|
3.88
|
|
|
$
|
4.12
|
|
|
|
$
|
4.34
|
|
|
$
|
4.19
|
|
|
(a)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods. Information for the three and nine
months ended September 30, 2013 has been recast to reflect this
conversion rate.
|
|
(b)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $4.06 and $3.58 for
the three months ended September 30, 2014 and 2013, respectively,
and $4.55 and $3.67 for the nine months ended September 30, 2014 and
2013, respectively).
|
|
(c)
|
|
The average effective sales price to EQT Production and EQT
Corporation included the favorable impact of hedging ineffectiveness
and derivative losses, less net cash from settlements of $0.26 per
Mcfe and $0.02 per Mcfe for the three and nine months ended
September 30, 2014, respectively, and $0.03 per Mcfe for the three
months ended September 30, 2013. The average effective sales price
to EQT Production and EQT Corporation included the unfavorable
impact of hedging ineffectiveness and derivative losses, less net
cash from settlements of $0.02 per Mcfe for the nine months ended
September 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNIT COSTS
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
2014
|
|
2013(a)
|
|
|
2014
|
|
2013(a)
|
|
Production segment costs: ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOE
|
|
|
|
|
$
|
0.14
|
|
$
|
0.15
|
|
|
$
|
0.14
|
|
$
|
0.15
|
|
Production taxes
|
|
|
|
|
|
0.14
|
|
|
0.13
|
|
|
|
0.15
|
|
|
0.14
|
|
SG&A
|
|
|
|
|
|
0.26
|
|
|
0.23
|
|
|
|
0.27
|
|
|
0.25
|
|
|
|
|
|
|
$
|
0.54
|
|
$
|
0.51
|
|
|
$
|
0.56
|
|
$
|
0.54
|
|
Midstream segment costs: ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering and transmission
|
|
|
|
|
$
|
0.18
|
|
$
|
0.23
|
|
|
$
|
0.20
|
|
$
|
0.23
|
|
SG&A
|
|
|
|
|
|
0.15
|
|
|
0.14
|
|
|
|
0.15
|
|
|
0.15
|
|
|
|
|
|
|
$
|
0.33
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
$
|
0.38
|
|
Total ($/Mcfe)
|
|
|
|
|
$
|
0.87
|
|
$
|
0.88
|
|
|
$
|
0.91
|
|
$
|
0.92
|
|
(a)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods. Information for the three and nine
months ended September 30, 2013, has been recast to reflect this
conversion rate.
|
|
|
|
|
|
|
|
EQT PRODUCTION
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horizontal Marcellus Play(a)
|
|
|
|
|
|
97,861
|
|
|
73,059
|
|
|
|
266,835
|
|
|
197,393
|
|
Horizontal Huron Play
|
|
|
|
|
|
9,187
|
|
|
8,627
|
|
|
|
24,165
|
|
|
26,783
|
|
CBM Play
|
|
|
|
|
|
410
|
|
|
3,108
|
|
|
|
5,916
|
|
|
9,340
|
|
Other
|
|
|
|
|
|
15,884
|
|
|
14,181
|
|
|
|
42,685
|
|
|
41,657
|
|
Total production sales volumes(b)
|
|
|
|
|
|
123,342
|
|
|
98,975
|
|
|
|
339,601
|
|
|
275,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
|
|
|
1,341
|
|
|
1,076
|
|
|
|
1,244
|
|
|
1,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average effective sales price to EQT Production ($/Mcfe)
|
|
|
|
|
$
|
2.94
|
|
$
|
3.07
|
|
|
$
|
3.40
|
|
$
|
3.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
|
|
|
$
|
0.14
|
|
$
|
0.15
|
|
|
$
|
0.14
|
|
$
|
0.15
|
|
Production taxes ($/Mcfe)
|
|
|
|
|
$
|
0.14
|
|
$
|
0.13
|
|
|
$
|
0.15
|
|
$
|
0.14
|
|
Production depletion ($/Mcfe)
|
|
|
|
|
$
|
1.23
|
|
$
|
1.50
|
|
|
$
|
1.22
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DD&A (thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
|
|
|
$
|
151,576
|
|
$
|
148,362
|
|
|
$
|
413,794
|
|
$
|
412,514
|
|
Other DD&A
|
|
|
|
|
|
2,455
|
|
|
2,275
|
|
|
|
7,727
|
|
|
7,105
|
|
Total DD&A (thousands)
|
|
|
|
|
$
|
154,031
|
|
$
|
150,637
|
|
|
$
|
421,521
|
|
$
|
419,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands)(c)
|
|
|
|
|
$
|
511,971
|
|
$
|
332,370
|
|
|
$
|
1,855,518
|
|
$
|
977,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net operating revenues
|
|
|
|
|
$
|
363,126
|
|
$
|
304,231
|
|
|
$
|
1,152,971
|
|
$
|
860,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOE, excluding production taxes
|
|
|
|
|
|
17,166
|
|
|
14,801
|
|
|
|
47,526
|
|
|
42,452
|
|
Production taxes
|
|
|
|
|
|
16,674
|
|
|
13,275
|
|
|
|
50,136
|
|
|
38,260
|
|
Exploration expense
|
|
|
|
|
|
3,593
|
|
|
5,256
|
|
|
|
12,444
|
|
|
15,124
|
|
SG&A
|
|
|
|
|
|
31,626
|
|
|
22,662
|
|
|
|
90,400
|
|
|
68,666
|
|
DD&A
|
|
|
|
|
|
154,031
|
|
|
150,637
|
|
|
|
421,521
|
|
|
419,619
|
|
Total operating expenses
|
|
|
|
|
|
223,090
|
|
|
206,631
|
|
|
|
622,027
|
|
|
584,121
|
|
Gain on sale / exchange of assets
|
|
|
|
|
|
−
|
|
|
−
|
|
|
|
30,986
|
|
|
−
|
|
Operating income
|
|
|
|
|
$
|
140,036
|
|
$
|
97,600
|
|
|
$
|
561,930
|
|
$
|
276,753
|
|
(a)
|
|
Includes Upper Devonian wells.
|
|
(b)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods. Information for the three and nine
months ended September 30, 2013 has been recast to reflect this
conversion rate.
|
|
(c)
|
|
Includes $159.0 million of cash capital expenditures and $353.1
million of non-cash capital expenditures for the exchange of assets
with Range Resources Corp. during the nine months ended September
30, 2014 and $114.6 million of capital expenditures for the purchase
of acreage and Marcellus wells from Chesapeake Energy Corporation
and its partners during the nine months ended September 30, 2013.
|
|
|
|
|
|
|
|
EQT MIDSTREAM
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathered volume (BBtu)
|
|
|
|
|
|
155,139
|
|
|
125,139
|
|
|
|
417,097
|
|
|
342,502
|
|
Average gathering fee ($/MMBtu)
|
|
|
|
|
$
|
0.66
|
|
$
|
0.73
|
|
|
$
|
0.68
|
|
$
|
0.76
|
|
Gathering and compression expense ($/MMBtu)
|
|
|
|
|
$
|
0.14
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
$
|
0.18
|
|
Transmission pipeline throughput (BBtu)
|
|
|
|
|
|
167,150
|
|
|
111,309
|
|
|
|
464,031
|
|
|
297,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating revenues (thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
|
|
|
$
|
102,437
|
|
$
|
91,825
|
|
|
$
|
283,017
|
|
$
|
260,631
|
|
Transmission
|
|
|
|
|
|
55,795
|
|
|
39,962
|
|
|
|
159,424
|
|
|
116,105
|
|
Storage, marketing and other
|
|
|
|
|
|
8,245
|
|
|
8,165
|
|
|
|
25,085
|
|
|
23,426
|
|
Total net operating revenues
|
|
|
|
|
$
|
166,477
|
|
$
|
139,952
|
|
|
$
|
467,526
|
|
$
|
400,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands)
|
|
|
|
|
$
|
136,589
|
|
$
|
111,593
|
|
|
$
|
333,813
|
|
$
|
254,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
|
|
$
|
173,856
|
|
$
|
155,677
|
|
|
$
|
502,427
|
|
$
|
452,731
|
|
Purchased gas costs
|
|
|
|
|
|
7,379
|
|
|
15,725
|
|
|
|
34,901
|
|
|
52,569
|
|
Total net operating revenues
|
|
|
|
|
|
166,477
|
|
|
139,952
|
|
|
|
467,526
|
|
|
400,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
|
|
|
|
27,844
|
|
|
25,720
|
|
|
|
80,442
|
|
|
72,329
|
|
SG&A
|
|
|
|
|
|
23,324
|
|
|
16,769
|
|
|
|
64,803
|
|
|
47,239
|
|
DD&A
|
|
|
|
|
|
21,709
|
|
|
18,930
|
|
|
|
63,848
|
|
|
55,601
|
|
Total operating expenses
|
|
|
|
|
|
72,877
|
|
|
61,419
|
|
|
|
209,093
|
|
|
175,169
|
|
Gain on sale / exchange of assets
|
|
|
|
|
|
−
|
|
|
−
|
|
|
|
6,763
|
|
|
−
|
|
Operating income
|
|
|
|
|
$
|
93,600
|
|
$
|
78,533
|
|
|
$
|
265,196
|
|
$
|
224,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
