PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced 2014 net income attributable
to EQT of $387.0 million, or $2.54 per diluted share (EPS), comparable
to the 2013 earnings of $390.6 million, or $2.57 per diluted share. To
better compare year-over-year earnings, several items should be
considered, including $188.3 million of after-tax impairment charges
recorded on the Company’s Ohio Utica and Texas Permian assets in the
fourth quarter that negatively impacted 2014 results; and earnings
attributable to EQT’s sold distribution business, that positively
impacted 2013 results. Adjusted net income was $518.6 million in 2014,
74% higher than the $298.7 million in 2013; while 2014 adjusted EPS was
$3.40. Adjusted operating cash flow attributable to EQT was
$1,424.0 million in 2014, 19% higher. The non-GAAP financial measures
are detailed and reconciled in the Non-GAAP Disclosures section in this
news release.
Highlights for 2014:
-
Production sales volume was 26% higher
-
Midstream gathered volume was 27% higher
-
Transmission throughput was 57% higher
-
Cash balance at year-end was $950 million (excluding EQM)
-
A $1.5 billion undrawn, unsecured revolver
Operational results excluding the impairment were higher due to
increased production sales volume, increased gathered volume, and
increased firm transmission capacity sales and throughput, which were
partially offset by lower realized commodity prices. Net operating
revenues increased 32% to $2,267.5 million, while net operating expenses
excluding impairments increased 10% to $1,180.9 million, in support of
the Company’s growth.
Fourth quarter 2014 net loss attributable to EQT was $14.7 million,
compared to net income of $115.2 million in 2013. To better compare
year-over-year earnings, certain items should be considered, including
the impairment charges; and earnings attributable to EQT’s sold
distribution business, that positively impacted 2013 results. Fourth
quarter 2014 adjusted net income was $145.8 million, 143% higher than
2013; and adjusted EPS was $0.96, up from $0.39. Adjusted operating cash
flow attributable to EQT was $390.0 million, versus $313.6 million in
2013, a 24% increase.
Higher operating revenue, due to increases in production, gathering, and
transmission volumes, was partially offset by higher operating expenses
related to the increased volumes. Net operating revenue rose 43% to
$647.0 million in the quarter, while net operating expenses were 15%
higher at $335.7 million, excluding impairment charges -- consistent
with the growth of the EQT Production and EQT Midstream businesses.
RESULTS BY BUSINESS
EQT PRODUCTION
With its continued focus on the Marcellus shale, EQT Production achieved
record production sales volume of 476.3 Bcfe for 2014, representing a
26% increase over 2013. Approximately 79% of total production sales
volume was from horizontally drilled Marcellus wells.
Production operating income totaled $745.9 million in 2014, excluding
the impairment charges and a gain on the Nora / Permian asset exchange,
101% higher than 2013. EQT Production adjusted net operating revenue (a
non-GAAP financial measure), which also excludes the non-cash impact of
derivatives, was $1,540.6 million, 29% higher than the previous year as
a result of sales volume growth and higher average realized price.
Consistent with the significant growth in sales volume and increased
drilling activity, EQT Production’s 2014 operating expenses, excluding
the impairment charges, were $866.8 million, 9% higher than the previous
year. Selling, general and administrative (SG&A) was $26.6 million
higher; production taxes were $16.6 million higher; depreciation,
depletion, and amortization (DD&A) was $14.2 million higher; lease
operating expense (LOE), excluding production taxes, was $8.8 million
higher; and exploration expense was $3.2 million higher. Per unit LOE,
including production taxes, was flat year-over-year.
Production sales volume totaled 136.7 Bcfe in the fourth quarter 2014;
33% higher than the fourth quarter 2013, and 11% higher sequentially.
Operating income for the quarter was $116.9 million higher excluding the
impairment charges. EQT Production adjusted net operating revenue for
the quarter was $393.6 million, which was 21% higher than the previous
year due to the increase in sales volume, partially offset by a lower
average realized sales price. Operating expenses for the quarter,
excluding the impairment charges, were $244.8 million, which was 15%
million higher than 2013.
The Company drilled (spud) 345 gross wells during 2014, including 196
Marcellus wells, with an average length-of-pay of 5,850 feet; 103 Huron
wells, with an average length-of-pay of 5,885 feet; and 41 Upper
Devonian wells, with an average length-of-pay of 6,370 feet.
Realized Price
In 2014, the Company’s average realized price was $4.16 per Mcfe, 1%
lower than the $4.20 per Mcfe realized in 2013 – with $3.23 per Mcfe
allocated to EQT Production and $0.93 per Mcfe allocated to EQT
Midstream. During the year, average differentials were a negative $0.19
per Mcf compared to a positive $0.21 per Mcf in 2013. The average
differentials include the impact of local basis, recoveries received by
selling some natural gas to higher-priced markets, recoveries from the
resale of unused capacity, and the impact of cash settled basis swaps.
The decrease in average differentials more-than-offset the impact of
higher NYMEX pricing net of cash settled derivatives.
In the fourth quarter, the Company’s average realized price was $3.79
per Mcfe, 9% lower than the $4.17 per Mcfe realized in 2013 – with $2.88
per Mcfe allocated to EQT Production and $0.91 per Mcfe allocated to EQT
Midstream.
Impairment Charges
In the fourth quarter 2014, the Company recognized pre-tax impairment
charges on oil and gas properties of $267.3 million; $162.1 million on
its Ohio Utica shale properties; and $105.2 million on its Permian Basin
properties.
Guidance
The Company reiterates its production sales volume for 2015 of 575 – 600
Bcfe; and liquids volume of 9,000 – 10,000 MBBls. Production sales
volume for the first quarter 2015 is projected to be 140 – 145 Bcfe; and
liquids volume is expected to be 2,200 – 2,400 MBBls. Average
differential to the NYMEX price is forecast to be negative $0.40 –
negative $0.50 per Mcf for 2015; and positive $0.10 – positive $0.15 per
Mcf for the first quarter of 2015.
EQT MIDSTREAM
EQT Midstream’s 2014 operating income was $384.3 million, a 22% increase
over 2013, excluding gains on the sales of assets in both periods. EQT
Midstream net operating revenue was $655.1 million, a 20% increase over
2013. Net gathering revenue was $397.9 million in 2014, up 13% from
2013, due to a 27% increase in gathered volume, partly offset by lower
gathering rates. Net transmission revenue increased by 41% to $226.5
million, mainly driven by an increase in firm transmission contracted
capacity.
Total operating expenses were $277.6 million, 17% higher than in 2013.
This increase was due to the growth of the EQT Midstream business and
reflects the costs of operating the expanded gathering and transmission
infrastructure, which includes higher operating and maintenance costs,
labor, and depreciation. On a per-unit basis, year-over-year gathering
and compression expenses were 22% lower in 2014.
EQT Midstream’s fourth quarter 2014 operating income was $119.1 million;
42% higher than the fourth quarter of 2013, excluding a gain on the sale
of assets in 2013. Net gathering revenue was $114.9 million, a 27%
increase. Net transmission revenue totaled $67.1 million, a 51%
increase, primarily due to an increase in firm transmission contracted
capacity, as well as higher throughput. Operating expenses for the
quarter were $68.5 million, 12% higher, consistent with the growth of
the business.
OTHER BUSINESS
2015 Capital Budget
EQT has revised its 2015 capital expenditure (CAPEX) budget to $2.05
billion to reflect a reduction in commodity prices experienced after the
initial $2.5 billion capital plan was announced in December. This
revised CAPEX forecast includes $1.85 billion for EQT Production, and
$200-$225 million for EQT Midstream, excluding capital invested at EQT
Midstream Partners.
Reflected in the reduction outlined above, the Company’s current plan is
to reduce its Marcellus drilling plan by 59 wells to 122 wells; and
reduce its Permian drilling plan by 10 wells to 5 wells to hold acreage.
2014 Capital Expenditures
EQT invested $2.7 billion in capital projects during 2014, excluding
$245 million of capital expenditures at EQT Midstream Partners. This
included $1.7 billion for EQT Production well development; $724 million
for well and lease acreage acquisitions, including $516 million recorded
as a result of the Nora / Permian asset exchange; plus $210 million for
EQT Midstream.
2014 Reserves Report
In a separate news release, EQT reported its 2014 reserves. Proved
reserves at December 31, 2014, totaled 10.7 Tcfe, a 29% increase over
2013. Proved, probable, and possible (3P) reserves totaled 42.8 Tcfe,
18% higher.
Charitable Contribution
EQT established a charitable foundation in 2003 that contributes money
to non-profit organizations in EQT’s operating territory. In the fourth
quarter 2014, EQT made a $20 million cash contribution to the foundation
endowment to pre-fund approximately four years of foundation
contributions.
Nora / Permian Asset Exchange
In June 2014, the Company completed the Nora / Permian asset exchange
with Range Resources Corporation. EQT received approximately 73,000 net
acres and more than 900 producing wells in the Permian Basin of Texas.
Range received approximately 138,000 net acres, approximately 2,000
producing wells, and the remaining interest in a supporting gathering
system in the Nora Field of Virginia, plus $167.3 million cash.
EQT Midstream Partners, LP (NYSE:EQM)
As of December 31, 2014, EQT owned a 34.4% limited partner interest and
a 2% general partner (GP) interest in EQT Midstream Partners, LP, whose
results are consolidated in EQT’s results. For the fourth quarter 2014,
EQT Corporation recorded $44.2 million of earnings, or $0.29 per diluted
share, attributable to noncontrolling interests. EQT Midstream Partners’
results were released today and are available at www.eqtmidstreampartners.com.
On January 22, 2015, EQT Midstream Partners announced a cash
distribution to its unit holders of $0.58 per unit for the fourth
quarter of 2014. EQT will receive $18.3 million in cash distributions,
including $6.0 million related to its GP interest.
Jupiter
In May 2014, EQT sold its Jupiter natural gas gathering system to EQT
Midstream Partners for $1.2 billion. In conjunction with the sale, EQT
Midstream Partners completed a public offering of 12.4 million common
units.
Ohio Valley Connector
In July 2014, EQT Midstream Partners announced that it will construct
and operate the Ohio Valley Connector (OVC) pipeline. The OVC will
connect EQT Midstream Partners’ transmission and storage system from
Wetzel County, West Virginia to Clarington, Ohio, where the pipeline
will interconnect with the Texas Eastern and Rockies Express pipelines.
The pipeline will provide approximately 1 Bcf per day of transmission
capacity, of which 650 MMcf per day is contracted for 20 years. In
December 2014, EQT Midstream Partners submitted the OVC certificate
application, which also includes related transmission expansion
projects, to the FERC and anticipates receiving the certificate in the
second half of 2015. The OVC is expected to be in-service by mid-year
2016.
Mountain Valley Pipeline
In July 2014, EQT completed a non-binding open season for the proposed
Mountain Valley Pipeline (MVP) project. EQT Midstream Partners will
assume EQT’s interest in Mountain Valley Pipeline, LLC, a joint venture
with a subsidiary of NextEra Energy, Inc. The MVP will extend from EQT
Midstream Partners’ existing transmission and storage system in Wetzel
County, West Virginia to Transco Station 165 in Pittsylvania County,
Virginia. EQT Midstream Partners expects to hold the largest ownership
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.
During the fourth quarter, Mountain Valley Pipeline, LLC began the FERC
pre-filing process and plans to submit the MVP certificate application
to the FERC in the fourth quarter 2015. The pipeline is expected to be
in-service during the fourth quarter of 2018.
Hedging
The Company’s total natural gas production hedge position for 2015
through December 2017 is:
|
|
|
|
2015
|
|
|
2016**
|
|
|
2017**
|
|
Fixed Price
|
|
|
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
|
265
|
|
|
|
148
|
|
|
|
31
|
|
Average Price per Mcf (NYMEX)*
|
|
|
$
|
4.17
|
|
|
$
|
4.27
|
|
|
$
|
4.27
|
|
|
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
|
42
|
|
|
|
–
|
|
|
|
–
|
|
Average Floor Price per Mcf (NYMEX)*
|
|
|
$
|
4.57
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Average Cap Price per Mcf (NYMEX)*
|
|
|
$
|
7.14
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
The average price is based on a conversion rate of 1.05 MMBtu/Mcf
|
|
**
|
For 2016 and 2017, 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 sold calendar year 2016 and 2017
calls/swaptions for approximately 25 Bcf at a strike price of
$4.38 per Mcf and approximately 6 Bcf at a strike price of $3.93
per Mcf, respectively.
|
|
|
|
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 (loss) income by segment, as
reported in this news release, to the consolidated operating income
reported in the Company’s financial statements:
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Operating (loss) income:
|
|
|
|
|
|
|
|
|
|
EQT Production
|
|
$
|
(55,980
|
)
|
|
$
|
94,492
|
|
|
$
|
505,950
|
|
|
$
|
371,245
|
|
|
EQT Midstream
|
|
|
119,113
|
|
|
|
103,789
|
|
|
|
384,309
|
|
|
|
328,782
|
|
|
Unallocated expense
|
|
|
(22,803
|
)
|
|
|
(17,200
|
)
|
|
|
(36,864
|
)
|
|
|
(45,423
|
)
|
|
Operating income
|
|
$
|
40,330
|
|
|
$
|
181,081
|
|
|
$
|
853,395
|
|
|
$
|
654,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated expense is primarily due to certain incentive compensation
and administrative costs in excess of budget that are not allocated to
the operating segments. Additionally, the Company made a $20 million
contribution to the EQT Foundation during the three months ended
December 31, 2014, which is included within unallocated expense in the
table above.
Marcellus Horizontal Well Status (cumulative since inception)
|
|
|
|
As of
12/31/14
|
|
|
As of
9/30/14
|
|
|
As of
6/30/14
|
|
|
As of
3/31/14
|
|
|
As of
12/31/13
|
|
Wells spud
|
|
|
722
|
|
|
670
|
|
|
628
|
|
|
573
|
|
|
526
|
|
Wells online
|
|
|
531
|
|
|
480
|
|
|
439
|
|
|
390
|
|
|
373
|
|
Wells complete, not online
|
|
|
23
|
|
|
31
|
|
|
44
|
|
|
42
|
|
|
34
|
|
Frac stages (spud wells)*
|
|
|
18,640
|
|
|
17,119
|
|
|
15,632
|
|
|
13,512
|
|
|
11,736
|
|
Frac stages online
|
|
|
12,408
|
|
|
10,762
|
|
|
9,289
|
|
|
8,012
|
|
|
7,559
|
|
Frac stages complete, not online
|
|
|
673
|
|
|
968
|
|
|
1,381
|
|
|
959
|
|
|
743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes planned stages for spud wells that have not yet been
hydraulically fractured.
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
report on Form 10-K for the year ended December 31, 2014.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands, except per share information)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Net (loss) income attributable to EQT, as reported
|
|
$
|
(14,704
|
)
|
|
$
|
115,205
|
|
|
$
|
386,965
|
|
|
$
|
390,572
|
|
|
Add back (deduct):
|
|
|
|
|
|
|
|
|
|
Impairment of long-lived assets
|
|
|
267,339
|
|
|
|
–
|
|
|
|
267,339
|
|
|
|
–
|
|
|
Charitable contribution
|
|
|
20,000
|
|
|
|
–
|
|
|
|
20,000
|
|
|
|
–
|
|
|
Hedging ineffectiveness (gain) loss
|
|
|
(11,699
|
)
|
|
|
16,817
|
|
|
|
(24,774
|
)
|
|
|
21,335
|
|
|
Derivative gain, less net cash from settlements (a non-GAAP measure
reconciled below)
|
|
|
(53,529
|
)
|
|
|
(1,179
|
)
|
|
|
(46,703
|
)
|
|
|
(1,719
|
)
|
|
Non-cash loss (gain) on sale / asset exchange
|
|
|
3,603
|
|
|
|
(19,618
|
)
|
|
|
(34,146
|
)
|
|
|
(19,618
|
)
|
|
Legal reserves
|
|
|
1,614
|
|
|
|
–
|
|
|
|
7,150
|
|
|
|
–
|
|
|
Tax impact*
|
|
|
(67,244
|
)
|
|
|
1,920
|
|
|
|
(55,867
|
)
|
|
|
1
|
|
|
Subtotal
|
|
|
145,380
|
|
|
|
113,145
|
|
|
|
519,964
|
|
|
|
390,571
|
|
|
Loss (income) from discontinued operations, net of tax
|
|
|
401
|
|
|
|
(53,272
|
)
|
|
|
(1,371
|
)
|
|
|
(91,843
|
)
|
|
Adjusted net income attributable to EQT
|
|
$
|
145,781
|
|
|
$
|
59,873
|
|
|
$
|
518,593
|
|
|
$
|
298,728
|
|
|
Diluted weighted average common shares outstanding
|
|
|
152,633
|
|
|
|
153,017
|
|
|
|
152,513
|
|
|
|
151,787
|
|
|
Diluted EPS, as adjusted
|
|
$
|
0.96
|
|
|
$
|
0.39
|
|
|
$
|
3.40
|
|
|
$
|
1.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The adjustments for the three months ended December 31, 2014
were tax effected at the full year continuing operations effective tax
rate of 29.58% due to the Company being in a pretax loss position for
the three months ended December 31, 2014, as a result of the non-cash
impairment charges in that period. The adjustments for all other periods
were tax effected at the continuing operations tax rate for those
respective periods.
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 report
on Form 10-K for the year ended December 31, 2014.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Net Income
|
|
$
|
29,497
|
|
|
$
|
131,806
|
|
|
$
|
510,990
|
|
|
$
|
437,815
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
194,390
|
|
|
|
183,229
|
|
|
|
679,298
|
|
|
|
676,570
|
|
|
Impairment of long-lived assets
|
|
|
267,339
|
|
|
|
−
|
|
|
|
267,339
|
|
|
|
−
|
|
|
Deferred income taxes
|
|
|
(70,280
|
)
|
|
|
95,494
|
|
|
|
32,021
|
|
|
|
110,363
|
|
|
Hedging ineffectiveness (gain) loss
|
|
|
(11,699
|
)
|
|
|
16,817
|
|
|
|
(24,774
|
)
|
|
|
21,335
|
|
|
Derivative gain, less net cash from settlements
|
|
|
(53,529
|
)
|
|
|
(1,179
|
)
|
|
|
(46,703
|
)
|
|
|
(1,719
|
)
|
|
Non-cash incentive compensation
|
|
|
9,051
|
|
|
|
15,510
|
|
|
|
42,123
|
|
|
|
52,618
|
|
|
Non-cash loss (gain) on asset exchange and dispositions
|
|
|
4,303
|
|
|
|
(185,894
|
)
|
|
|
(37,044
|
)
|
|
|
(185,894
|
)
|
|
Other items, net
|
|
|
3,527
|
|
|
|
1,375
|
|
|
|
7,875
|
|
|
|
7,647
|
|
|
Operating cash flow:
|
|
$
|
372,599
|
|
|
$
|
257,158
|
|
|
$
|
1,431,125
|
|
|
$
|
1,118,735
|
|
|
|
|
|
|
|
|
|
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
(99,802
|
)
|
|
|
(62,405
|
)
|
|
|
(16,383
|
)
|
|
|
44,126
|
|
|
Net cash provided by operating activities
|
|
$
|
272,797
|
|
|
$
|
194,753
|
|
|
$
|
1,414,742
|
|
|
$
|
1,162,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2014, EQT had total cash-on-hand of $1.1 billion. EQT
cash, excluding that of EQT Midstream Partners, LP cash, was $950
million.
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 report on Form 10-K for the
year ended December 31, 2014.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Operating cash flow (a non-GAAP measure reconciled above)
|
|
$
|
372,599
|
|
|
$
|
257,158
|
|
|
$
|
1,431,125
|
|
|
$
|
1,118,735
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA*
|
|
|
(54,653
|
)
|
|
|
(20,105
|
)
|
|
|
(155,690
|
)
|
|
|
(58,082
|
)
|
|
Charitable contribution
|
|
|
20,000
|
|
|
|
−
|
|
|
|
20,000
|
|
|
|
−
|
|
|
Exploration expense (cash)
|
|
|
3,328
|
|
|
|
1,293
|
|
|
|
7,076
|
|
|
|
4,285
|
|
|
Cash taxes on transactions
|
|
|
48,695
|
|
|
|
70,460
|
|
|
|
121,483
|
|
|
|
127,224
|
|
|
Costs associated with sale of distribution business
|
|
|
−
|
|
|
|
4,796
|
|
|
|
−
|
|
|
|
8,051
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
389,969
|
|
|
$
|
313,602
|
|
|
$
|
1,423,994
|
|
|
$
|
1,200,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Adjusted EQT Midstream Partners EBITDA and noncontrolling interest
portion of adjusted EQT Midstream Partners EBITDA are non-GAAP financial
measures reconciled below.
EQT Production Adjusted Net Operating Revenues
The operational information in the EQT Corporation Price Reconciliation
table below presents an average realized price ($/Mcfe) to EQT
Production and EQT Corporation, which is based on EQT Production’s
adjusted net operating revenues, a non-GAAP supplemental financial
measure. EQT Production adjusted net operating revenues is presented
because it is an important measure used by the Company’s management to
evaluate period-to-period comparisons of earnings and cash flow trends.
EQT Production adjusted net operating revenues should not be considered
as an alternative to EQT Corporation operating revenues, the most
directly comparable GAAP financial measure, to be included in EQT’s
report on Form 10-K for the year ended December 31, 2014. The tables
below reconcile EQT Production adjusted net operating revenues, a
non-GAAP supplemental financial measure, to EQT Corporation operating
revenues.
The Company reports gain (loss) for hedging ineffectiveness and gain
(loss) on derivatives not designated as hedges within operating revenues.
The Company’s management reviews and reports the EQT Production segment
results with third-party transportation and processing costs reflected
as a deduction from operating revenues. Third-party costs incurred to
gather, process and transport gas produced by EQT Production to market
sales points are recorded as a portion of transportation and processing
costs in the Company’s Statements of Consolidated Income, to be included
in EQT’s report on Form 10-K for the year ended December 31, 2014. Some
transportation costs incurred by the Company are marketed for resale and
are not incurred to transport gas produced by EQT Production. These
transportation costs are reflected as a deduction from operating
revenues.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands, unless noted)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
EQT Production total net operating revenues, as reported on segment
page
|
|
$
|
459,759
|
|
|
$
|
307,783
|
|
|
$
|
1,612,730
|
|
|
$
|
1,168,657
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
(Gain) loss for hedging ineffectiveness
|
|
|
(11,699
|
)
|
|
|
16,817
|
|
|
|
(24,774
|
)
|
|
|
21,335
|
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(96,796
|
)
|
|
|
1,200
|
|
|
|
(83,760
|
)
|
|
|
301
|
|
|
Net cash settlements received (paid) on derivatives not designated
as hedges
|
|
|
42,348
|
|
|
|
(39
|
)
|
|
|
36,453
|
|
|
|
728
|
|
|
EQT Production adjusted net operating revenues, a non-GAAP measure
|
|
$
|
393,612
|
|
|
$
|
325,761
|
|
|
$
|
1,540,649
|
|
|
$
|
1,191,021
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales volumes (MMcfe)
|
|
|
136,659
|
|
|
|
103,000
|
|
|
|
476,260
|
|
|
|
378,173
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
2.88
|
|
|
$
|
3.16
|
|
|
$
|
3.23
|
|
|
$
|
3.15
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Gathering and Transmission to EQT Midstream ($/Mcfe)
|
|
$
|
0.91
|
|
|
$
|
1.01
|
|
|
$
|
0.93
|
|
|
$
|
1.05
|
|
|
Average realized price to EQT Corporation ($/Mcfe)
|
|
$
|
3.79
|
|
|
$
|
4.17
|
|
|
$
|
4.16
|
|
|
$
|
4.20
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production total net operating revenues, as reported on segment
page
|
|
$
|
459,759
|
|
|
$
|
307,783
|
|
|
$
|
1,612,730
|
|
|
$
|
1,168,657
|
|
|
EQT Midstream total operating revenues, as reported on segment page
|
|
|
196,656
|
|
|
|
161,311
|
|
|
|
699,083
|
|
|
|
614,042
|
|
|
Third-party transportation and processing costs
|
|
|
55,940
|
|
|
|
37,397
|
|
|
|
200,562
|
|
|
|
142,281
|
|
|
Less: intersegment revenues, net
|
|
|
(9,161
|
)
|
|
|
(13,062
|
)
|
|
|
(42,665
|
)
|
|
|
(62,969
|
)
|
|
EQT Corporation operating revenues, as reported in accordance with
GAAP
|
|
$
|
703,194
|
|
|
$
|
493,429
|
|
|
$
|
2,469,710
|
|
|
$
|
1,862,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 report on Form 10-K for the year ended December 31,
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. Effective December 31, 2014, the Company elected to
de-designate all cash flow hedges and to discontinue hedge accounting
prospectively. For the years ended December 31, 2014 and 2013,
settlement of cash flow hedges was recorded within operating revenues.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Operating revenues, excluding hedging ineffectiveness and derivative
gain (loss)
|
|
$
|
594,495
|
|
|
$
|
507,719
|
|
|
$
|
2,363,994
|
|
|
$
|
1,880,512
|
|
|
Gain (loss) for hedging ineffectiveness
|
|
|
11,699
|
|
|
|
(16,817
|
)
|
|
|
24,774
|
|
|
|
(21,335
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
97,000
|
|
|
|
2,527
|
|
|
|
80,942
|
|
|
|
2,834
|
|
|
Operating revenues, as reported
|
|
$
|
703,194
|
|
|
$
|
493,429
|
|
|
$
|
2,469,710
|
|
|
$
|
1,862,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on derivatives not designated as hedges
|
|
$
|
97,000
|
|
|
$
|
2,527
|
|
|
$
|
80,942
|
|
|
$
|
2,834
|
|
|
Net cash settlements received on derivative instruments not
designated as hedges
|
|
|
(43,471
|
)
|
|
|
(1,348
|
)
|
|
|
(34,239
|
)
|
|
|
(1,115
|
)
|
|
Derivative gain, less net cash from settlements
|
|
$
|
53,529
|
|
|
$
|
1,179
|
|
|
$
|
46,703
|
|
|
$
|
1,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 report on Form 10-K for the
year ended December 31, 2014.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Net operating revenues
|
|
$
|
647,010
|
|
$
|
452,982
|
|
$
|
2,267,507
|
|
$
|
1,713,303
|
|
Plus: transportation and processing
|
|
|
56,184
|
|
|
40,447
|
|
|
202,203
|
|
|
148,708
|
|
Operating revenues
|
|
$
|
703,194
|
|
$
|
493,429
|
|
$
|
2,469,710
|
|
$
|
1,862,011
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
$
|
603,077
|
|
$
|
291,519
|
|
$
|
1,448,258
|
|
$
|
1,078,317
|
|
Plus: transportation and processing
|
|
|
56,184
|
|
|
40,447
|
|
|
202,203
|
|
|
148,708
|
|
Total operating expenses
|
|
$
|
659,261
|
|
$
|
331,966
|
|
$
|
1,650,461
|
|
$
|
1,227,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 EQT Midstream Partners' (Partnership) 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 other Partnership 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 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;
-
the Company's ability to incur and service debt and fund capital
expenditures; and
-
the viability of acquisitions and other capital expenditure projects
and the returns on investment of various investment opportunities.
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 industries, the definition 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 report on
Form 10-K for the year ended December 31, 2014.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands, unless noted)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Net Income, EQT Midstream Partners
|
|
$
|
74,656
|
|
|
$
|
46,659
|
|
|
$
|
232,773
|
|
|
$
|
171,107
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
9,912
|
|
|
|
1,059
|
|
|
|
30,856
|
|
|
|
1,672
|
|
|
Depreciation, depletion and amortization
|
|
|
9,857
|
|
|
|
6,601
|
|
|
|
36,599
|
|
|
|
25,924
|
|
|
Income tax expense
|
|
|
–
|
|
|
|
9,731
|
|
|
|
12,456
|
|
|
|
41,572
|
|
|
Non-cash long-term compensation expense
|
|
|
784
|
|
|
|
209
|
|
|
|
3,368
|
|
|
|
981
|
|
|
Non-cash adjustments
|
|
|
(1,520
|
)
|
|
|
–
|
|
|
|
(1,520
|
)
|
|
|
(680
|
)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
(715
|
)
|
|
|
(397
|
)
|
|
|
(2,349
|
)
|
|
|
(1,242
|
)
|
|
Capital lease payments for AVC
|
|
|
(7,042
|
)
|
|
|
(1,030
|
)
|
|
|
(21,802
|
)
|
|
|
(1,030
|
)
|
|
Pre-merger capital lease payments (Sunrise)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(15,201
|
)
|
|
Adjusted EBITDA attributable to Jupiter prior to acquisition
|
|
|
–
|
|
|
|
(26,542
|
)
|
|
|
(34,733
|
)
|
|
|
(103,593
|
)
|
|
Adjusted EQT Midstream Partners EBITDA
|
|
$
|
85,932
|
|
|
$
|
36,290
|
|
|
$
|
255,648
|
|
|
$
|
119,510
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest ownership percentage (a)
|
|
|
63.6
|
%
|
|
|
55.4
|
%
|
|
|
60.9
|
%
|
|
|
48.6
|
%
|
|
Noncontrolling interest portion of Adjusted EQT Midstream Partners
EBITDA
|
|
$
|
54,653
|
|
|
$
|
20,105
|
|
|
$
|
155,690
|
|
|
$
|
58,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents weighted average noncontrolling interest ownership
percentage for the period.
Year-End and Q4 2014 Webcast Information
The Company's conference call with securities analysts begins at 10:30
a.m. ET today and 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.
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.
Visit EQT Corporation at www.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, basis, recoveries and
average differential; 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 and midstream revenue deductions; 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; the Partnership's assumption of the Company's
interest in 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 the Company’s general partner and
limited partner interests and incentive distribution rights in the
Partnership; 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, many of which
are difficult to predict and beyond the Company’s control. 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 and in the Company's Form 10-K for the year ended December 31, 2014
to be filed with the SEC, 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
|
|
Years Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
(Thousands, except per share amounts)
|
|
Operating revenues
|
|
$
|
703,194
|
|
|
$
|
493,429
|
|
$
|
2,469,710
|
|
$
|
1,862,011
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
56,184
|
|
|
|
40,447
|
|
|
202,203
|
|
|
148,708
|
|
Operation and maintenance
|
|
|
27,531
|
|
|
|
24,560
|
|
|
108,283
|
|
|
97,762
|
|
Production
|
|
|
35,826
|
|
|
|
27,379
|
|
|
133,488
|
|
|
108,091
|
|
Exploration
|
|
|
9,239
|
|
|
|
3,359
|
|
|
21,716
|
|
|
18,483
|
|
Selling, general and administrative
|
|
|
68,752
|
|
|
|
58,071
|
|
|
238,134
|
|
|
200,849
|
|
Depreciation, depletion and amortization
|
|
|
194,390
|
|
|
|
178,150
|
|
|
679,298
|
|
|
653,132
|
|
Impairment of long-lived assets
|
|
|
267,339
|
|
|
|
−
|
|
|
267,339
|
|
|
−
|
|
Total operating expenses
|
|
|
659,261
|
|
|
|
331,966
|
|
|
1,650,461
|
|
|
1,227,025
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) gain on sale / exchange of assets
|
|
|
(3,603
|
)
|
|
|
19,618
|
|
|
34,146
|
|
|
19,618
|
|
Operating income
|
|
|
40,330
|
|
|
|
181,081
|
|
|
853,395
|
|
|
654,604
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
719
|
|
|
|
2,610
|
|
|
6,853
|
|
|
9,242
|
|
Interest expense
|
|
|
36,979
|
|
|
|
31,998
|
|
|
136,537
|
|
|
142,688
|
|
Income before income taxes
|
|
|
4,070
|
|
|
|
151,693
|
|
|
723,711
|
|
|
521,158
|
|
Income tax (benefit) provision
|
|
|
(25,828
|
)
|
|
|
73,159
|
|
|
214,092
|
|
|
175,186
|
|
Income from continuing operations
|
|
|
29,898
|
|
|
|
78,534
|
|
|
509,619
|
|
|
345,972
|
|
(Loss) income from discontinued operations, net of tax
|
|
|
(401
|
)
|
|
|
53,272
|
|
|
1,371
|
|
|
91,843
|
|
Net income
|
|
|
29,497
|
|
|
|
131,806
|
|
|
510,990
|
|
|
437,815
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
44,201
|
|
|
|
16,601
|
|
|
124,025
|
|
|
47,243
|
|
Net (loss) income attributable to EQT Corporation
|
|
$
|
(14,704
|
)
|
|
$
|
115,205
|
|
$
|
386,965
|
|
$
|
390,572
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(14,303
|
)
|
|
$
|
61,933
|
|
$
|
385,594
|
|
$
|
298,729
|
|
(Loss) income from discontinued operations
|
|
|
(401
|
)
|
|
|
53,272
|
|
|
1,371
|
|
|
91,843
|
|
Net (loss) income
|
|
$
|
(14,704
|
)
|
|
$
|
115,205
|
|
$
|
386,965
|
|
$
|
390,572
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
Basic:
|
|
|
|
Weighted average common stock outstanding
|
|
|
151,605
|
|
|
|
150,772
|
|
|
151,553
|
|
|
150,574
|
|
(Loss) income from continuing operations
|
|
$
|
(0.10
|
)
|
|
$
|
0.41
|
|
$
|
2.54
|
|
$
|
1.98
|
|
Income from discontinued operations
|
|
|
−
|
|
|
|
0.35
|
|
|
0.01
|
|
|
0.61
|
|
Net (loss) income
|
|
$
|
(0.10
|
)
|
|
$
|
0.76
|
|
$
|
2.55
|
|
$
|
2.59
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
152,633
|
|
|
|
153,017
|
|
|
152,513
|
|
|
151,787
|
|
(Loss) income from continuing operations
|
|
$
|
(0.10
|
)
|
|
$
|
0.40
|
|
$
|
2.53
|
|
$
|
1.97
|
|
Income from discontinued operations
|
|
|
−
|
|
|
|
0.35
|
|
|
0.01
|
|
|
0.60
|
|
Net (loss) income
|
|
$
|
(0.10
|
)
|
|
$
|
0.75
|
|
$
|
2.54
|
|
$
|
2.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Corporation
Price Reconciliation
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Years Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
in thousands (unless noted)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
LIQUIDS
|
|
|
|
|
|
|
|
|
|
Natural Gas Liquids (NGLs):
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMcfe) (a)
|
|
|
12,819
|
|
|
|
7,812
|
|
|
|
40,587
|
|
|
|
27,860
|
|
|
Sales Volume (Mbbls)
|
|
|
2,135
|
|
|
|
1,302
|
|
|
|
6,764
|
|
|
|
4,643
|
|
|
Gross Price ($/bbl)
|
|
$
|
32.16
|
|
|
$
|
51.58
|
|
|
$
|
41.94
|
|
|
$
|
45.58
|
|
|
Gross NGL sales
|
|
$
|
68,712
|
|
|
$
|
67,157
|
|
|
$
|
283,728
|
|
|
$
|
211,626
|
|
|
Third-party processing
|
|
|
(18,857
|
)
|
|
|
(11,866
|
)
|
|
|
(64,313
|
)
|
|
|
(40,754
|
)
|
|
Net NGL sales
|
|
$
|
49,855
|
|
|
$
|
55,291
|
|
|
$
|
219,415
|
|
|
$
|
170,872
|
|
|
Oil:
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMcfe) (a)
|
|
|
1,061
|
|
|
|
450
|
|
|
|
2,693
|
|
|
|
1,620
|
|
|
Sales Volume (Mbbls)
|
|
|
177
|
|
|
|
75
|
|
|
|
449
|
|
|
|
270
|
|
|
Net Price ($/bbl)
|
|
$
|
64.74
|
|
|
$
|
81.64
|
|
|
$
|
78.51
|
|
|
$
|
85.82
|
|
|
Net Oil sales
|
|
$
|
11,447
|
|
|
$
|
6,123
|
|
|
$
|
35,232
|
|
|
$
|
23,171
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Liquids sales
|
|
$
|
61,302
|
|
|
$
|
61,414
|
|
|
$
|
254,647
|
|
|
$
|
194,043
|
|
|
NATURAL GAS
|
|
|
|
|
|
|
|
|
|
Sales Volume (MMcf)
|
|
|
122,779
|
|
|
|
94,738
|
|
|
|
432,980
|
|
|
|
348,693
|
|
|
NYMEX Price ($/MMBtu) (b)
|
|
$
|
4.01
|
|
|
$
|
3.62
|
|
|
$
|
4.38
|
|
|
$
|
3.67
|
|
|
Btu uplift
|
|
$
|
0.39
|
|
|
$
|
0.29
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
Gross natural gas price ($/Mcf)
|
|
$
|
4.40
|
|
|
$
|
3.91
|
|
|
$
|
4.76
|
|
|
$
|
3.97
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis ($/Mcf)
|
|
|
(1.50
|
)
|
|
|
(0.28
|
)
|
|
|
(1.07
|
)
|
|
|
(0.16
|
)
|
|
Recoveries ($/Mcf) (c)
|
|
|
0.88
|
|
|
|
0.36
|
|
|
|
0.82
|
|
|
|
0.37
|
|
|
Cash settled basis swaps (not designated as hedges) ($/Mcf)
|
|
|
0.30
|
|
|
|
−
|
|
|
|
0.06
|
|
|
|
−
|
|
|
Average differential ($/Mcf)
|
|
$
|
(0.32
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
Average adjusted price - unhedged ($/Mcf)
|
|
$
|
4.08
|
|
|
$
|
3.99
|
|
|
$
|
4.57
|
|
|
$
|
4.18
|
|
|
Cash settled derivatives (cash flow hedges) ($/Mcf)
|
|
|
0.10
|
|
|
|
0.44
|
|
|
|
(0.06
|
)
|
|
|
0.42
|
|
|
Cash settled derivatives (not designated as hedges) ($/Mcf)
|
|
|
0.04
|
|
|
|
−
|
|
|
|
0.02
|
|
|
|
−
|
|
|
Average adjusted price, including cash settled derivatives ($/Mcf)
|
|
$
|
4.22
|
|
|
$
|
4.43
|
|
|
$
|
4.53
|
|
|
$
|
4.60
|
|
|
Net natural gas sales, including cash settled derivatives
|
|
$
|
518,446
|
|
|
$
|
418,796
|
|
|
$
|
1,962,667
|
|
|
$
|
1,603,891
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PRODUCTION
|
|
|
|
|
|
|
|
|
|
Total net natural gas & liquids sales, including cash settled
derivatives
|
|
$
|
579,748
|
|
|
$
|
480,210
|
|
|
$
|
2,217,314
|
|
|
$
|
1,797,934
|
|
|
Total Sales Volume (MMcfe)
|
|
|
136,659
|
|
|
|
103,000
|
|
|
|
476,260
|
|
|
|
378,173
|
|
|
|
|
|
|
|
|
|
|
|
|
Net natural gas & liquids price, including cash settled
derivatives ($/Mcfe)
|
|
$
|
4.24
|
|
|
$
|
4.66
|
|
|
$
|
4.66
|
|
|
$
|
4.75
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Revenue Deductions ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
Gathering to EQT Midstream
|
|
$
|
(0.71
|
)
|
|
$
|
(0.77
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(0.82
|
)
|
|
Transmission to EQT Midstream
|
|
|
(0.20
|
)
|
|
|
(0.24
|
)
|
|
|
(0.20
|
)
|
|
|
(0.23
|
)
|
|
Third-party gathering and transmission costs
|
|
|
(0.45
|
)
|
|
|
(0.49
|
)
|
|
|
(0.50
|
)
|
|
|
(0.55
|
)
|
|
Total midstream revenue deductions
|
|
|
(1.36
|
)
|
|
|
(1.50
|
)
|
|
$
|
(1.43
|
)
|
|
$
|
(1.60
|
)
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
2.88
|
|
|
$
|
3.16
|
|
|
$
|
3.23
|
|
|
$
|
3.15
|
|
|
Gathering and transmission to EQT Midstream ($/Mcfe)
|
|
$
|
0.91
|
|
|
$
|
1.01
|
|
|
$
|
0.93
|
|
|
$
|
1.05
|
|
|
Average realized price to EQT Corporation ($/Mcfe)
|
|
$
|
3.79
|
|
|
$
|
4.17
|
|
|
$
|
4.16
|
|
|
$
|
4.20
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods.
|
|
(b)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $4.00 and $3.60 for
the three months ended December 31, 2014 and 2013, respectively, and
$4.41 and $3.65 for the years ended December 31, 2014 and 2013,
respectively).
|
|
(c)
|
|
Includes approximately $0.21 and $0.17 per Mcf for the three months
ended December 31, 2014 and 2013, respectively, and $0.19 and $0.23
per Mcf for the years ended December 31, 2014 and 2013,
respectively, for the sale of unused capacity.
|
|
|
|
|
|
UNIT COSTS
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Production segment costs: ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
LOE
|
|
$
|
0.13
|
|
$
|
0.14
|
|
$
|
0.14
|
|
$
|
0.15
|
|
Production taxes
|
|
|
0.13
|
|
|
0.12
|
|
|
0.14
|
|
|
0.13
|
|
SG&A
|
|
|
0.21
|
|
|
0.23
|
|
|
0.25
|
|
|
0.24
|
|
|
|
$
|
0.47
|
|
$
|
0.49
|
|
$
|
0.53
|
|
$
|
0.52
|
|
Midstream segment costs: ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
Gathering and transmission
|
|
$
|
0.16
|
|
$
|
0.22
|
|
$
|
0.19
|
|
$
|
0.23
|
|
SG&A
|
|
|
0.11
|
|
|
0.13
|
|
|
0.14
|
|
|
0.14
|
|
|
|
$
|
0.27
|
|
$
|
0.35
|
|
$
|
0.33
|
|
$
|
0.37
|
|
Total ($/Mcfe)
|
|
$
|
0.74
|
|
$
|
0.84
|
|
$
|
0.86
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT PRODUCTION
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
Horizontal Marcellus Play (a)
|
|
|
111,360
|
|
|
|
77,636
|
|
|
|
378,195
|
|
|
275,029
|
|
|
Horizontal Huron Play
|
|
|
9,638
|
|
|
|
8,472
|
|
|
|
33,803
|
|
|
35,255
|
|
|
Other
|
|
|
15,661
|
|
|
|
16,892
|
|
|
|
64,262
|
|
|
67,889
|
|
|
Total production sales volumes (b)
|
|
|
136,659
|
|
|
|
103,000
|
|
|
|
476,260
|
|
|
378,173
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
1,485
|
|
|
|
1,120
|
|
|
|
1,305
|
|
|
1,036
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
2.88
|
|
|
$
|
3.16
|
|
|
$
|
3.23
|
|
$
|
3.15
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$
|
0.13
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
$
|
0.15
|
|
|
Production taxes ($/Mcfe)
|
|
$
|
0.13
|
|
|
$
|
0.12
|
|
|
$
|
0.14
|
|
$
|
0.13
|
|
|
Production depletion ($/Mcfe)
|
|
$
|
1.24
|
|
|
$
|
1.52
|
|
|
$
|
1.22
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
DD&A (thousands):
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
$
|
168,830
|
|
|
$
|
156,476
|
|
|
$
|
582,624
|
|
$
|
568,990
|
|
|
Other DD&A
|
|
|
2,504
|
|
|
|
2,546
|
|
|
|
10,231
|
|
|
9,651
|
|
|
Total DD&A (thousands)
|
|
$
|
171,334
|
|
|
$
|
159,022
|
|
|
$
|
592,855
|
|
$
|
578,641
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands) (c)
|
|
$
|
585,968
|
|
|
$
|
445,791
|
|
|
$
|
2,441,486
|
|
$
|
1,423,185
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Production sales
|
|
$
|
351,264
|
|
|
$
|
325,800
|
|
|
$
|
1,504,196
|
|
$
|
1,190,293
|
|
|
Gain (loss) for hedging ineffectiveness
|
|
|
11,699
|
|
|
|
(16,817
|
)
|
|
|
24,774
|
|
|
(21,335
|
)
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
96,796
|
|
|
|
(1,200
|
)
|
|
|
83,760
|
|
|
(301
|
)
|
|
Total net operating revenues
|
|
|
459,759
|
|
|
|
307,783
|
|
|
|
1,612,730
|
|
|
1,168,657
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
LOE, excluding production taxes
|
|
|
18,391
|
|
|
|
14,658
|
|
|
|
65,917
|
|
|
57,110
|
|
|
Production taxes
|
|
|
17,435
|
|
|
|
12,721
|
|
|
|
67,571
|
|
|
50,981
|
|
|
Exploration expense
|
|
|
9,221
|
|
|
|
3,359
|
|
|
|
21,665
|
|
|
18,483
|
|
|
SG&A
|
|
|
28,416
|
|
|
|
23,531
|
|
|
|
118,816
|
|
|
92,197
|
|
|
DD&A
|
|
|
171,334
|
|
|
|
159,022
|
|
|
|
592,855
|
|
|
578,641
|
|
|
Impairment of long-lived assets
|
|
|
267,339
|
|
|
|
−
|
|
|
|
267,339
|
|
|
−
|
|
|
Total operating expenses
|
|
|
512,136
|
|
|
|
213,291
|
|
|
|
1,134,163
|
|
|
797,412
|
|
|
(Loss) gain on sale / exchange of assets
|
|
|
(3,603
|
)
|
|
|
−
|
|
|
|
27,383
|
|
|
−
|
|
|
Operating (loss) income
|
|
$
|
(55,980
|
)
|
|
$
|
94,492
|
|
|
$
|
505,950
|
|
$
|
371,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
(c)
|
|
Includes $167.3 million of cash capital expenditures and $349.2
million of non-cash capital expenditures for the exchange of assets
with Range Resources Corporation during the year ended December 31,
2014 and $114.2 million of cash capital expenditures for the
purchase of acreage and Marcellus wells from Chesapeake Energy
Corporation and its partners during the year ended December 31, 2013.
|
|
|
|
|
|
EQT MIDSTREAM
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Gathered volume (BBtu)
|
|
|
173,395
|
|
|
123,903
|
|
|
590,492
|
|
|
466,405
|
|
Average gathering fee ($/MMBtu)
|
|
$
|
0.66
|
|
$
|
0.73
|
|
$
|
0.67
|
|
$
|
0.75
|
|
Gathering and compression expense ($/MMBtu)
|
|
$
|
0.12
|
|
$
|
0.17
|
|
$
|
0.14
|
|
$
|
0.18
|
|
Transmission pipeline throughput (BBtu)
|
|
|
190,754
|
|
|
121,234
|
|
|
654,785
|
|
|
418,360
|
|
|
|
|
|
|
|
|
|
|
|
Net operating revenues (thousands):
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
$
|
114,861
|
|
$
|
90,779
|
|
$
|
397,878
|
|
$
|
351,410
|
|
Transmission
|
|
|
67,073
|
|
|
44,516
|
|
|
226,497
|
|
|
160,621
|
|
Storage, marketing and other
|
|
|
5,644
|
|
|
10,129
|
|
|
30,729
|
|
|
33,555
|
|
Total net operating revenues
|
|
$
|
187,578
|
|
$
|
145,424
|
|
$
|
655,104
|
|
$
|
545,586
|
|
Capital expenditures (thousands)
|
|
$
|
121,546
|
|
$
|
115,194
|
|
$
|
455,359
|
|
$
|
369,399
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
$
|
196,656
|
|
$
|
161,311
|
|
$
|
699,083
|
|
$
|
614,042
|
|
Purchased gas costs
|
|
|
9,078
|
|
|
15,887
|
|
|
43,979
|
|
|
68,456
|
|
Total net operating revenues
|
|
|
187,578
|
|
|
145,424
|
|
|
655,104
|
|
|
545,586
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
|
27,917
|
|
|
25,211
|
|
|
108,359
|
|
|
97,540
|
|
SG&A
|
|
|
17,362
|
|
|
16,611
|
|
|
82,165
|
|
|
63,850
|
|
DD&A
|
|
|
23,186
|
|
|
19,431
|
|
|
87,034
|
|
|
75,032
|
|
Total operating expenses
|
|
|
68,465
|
|
|
61,253
|
|
|
277,558
|
|
|
236,422
|
|
Gain on sale / exchange of assets
|
|
|
−
|
|
|
19,618
|
|
|
6,763
|
|
|
19,618
|
|
Operating income
|
|
$
|
119,113
|
|
$
|
103,789
|
|
$
|
384,309
|
|
$
|
328,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
