PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced second quarter 2017 net
income attributable to EQT of $41.1 million, or $0.24 earnings per
diluted share (EPS), compared to second quarter 2016 net loss
attributable to EQT of $258.6 million, or $1.55 loss per share. Net cash
provided by operating activities was $294.2 million, $85.7 million
higher than the second quarter 2016. Earnings and cash flow were higher
primarily as a result of increases in commodity prices and produced
volumes.
Adjusted net income attributable to EQT was $10.1 million for the
quarter, compared to an adjusted net loss attributable to EQT of $63.2
million in the second quarter 2016. Adjusted EPS was $0.06, compared to
a $0.38 loss per share in the second quarter of 2016 – primarily due to
an increase in natural gas prices. Adjusted operating cash flow
attributable to EQT was $223.3 million this quarter, which was
$118.0 million higher than the same period last year. The Non-GAAP
Disclosures section of this news release provides reconciliations of
non-GAAP financial measures to the most comparable GAAP financial
measure, as well as important disclosures regarding certain projected
non-GAAP financial measures.
Steve Schlotterbeck, president and chief executive officer, stated,
"Significant sales volume growth and an increase in the average realized
price contributed to our strong second quarter results. We were also
able to ramp up execution of our consolidation strategy by entering into
an agreement to acquire Rice Energy.”
Schlotterbeck continued, "Rice is an outstanding strategic and
operational fit for us and we anticipate the combined entities will
capture significant operating efficiencies, improve overall well
economics, and deliver stronger returns to our shareholders. With our
asset position in one of the most prolific natural gas basins in the
world, we remain confident in our ability to drive both near- and
long-term value creation."
Second Quarter Highlights:
-
Announced an agreement to acquire Rice Energy
-
Production sales volume was 7% higher than second quarter 2016
-
Average realized price was 36% higher than second quarter 2016
-
Distributions payable to EQT from EQGP totaled $50 million
RESULTS BY BUSINESS
EQT PRODUCTION
EQT Production achieved sales volume of 198.1 Bcfe in the second quarter
2017, representing a 7% increase over the second quarter last year.
EQT Production’s operating income totaled $52.8 million for the quarter,
compared to an operating loss of $447.7 million in the second quarter
2016. The $500.5 million increase was primarily attributable to
increases in gains on derivatives not designated as hedges, an increase
in the average realized price, and an increase in production sales
volume, partly offset by increased operating expenses. Operating revenue
totaled $631.1 million for the second quarter 2017, which was $554.1
million higher than the second quarter 2016.
EQT Production’s adjusted operating loss, a non-GAAP financial measure,
totaled $4.2 million for the quarter, compared to an adjusted operating
loss of $118.1 million in 2016. Adjusted operating revenue, a non-GAAP
financial measure, was $566.1 million for the quarter, which was $176.0
million higher than the same period last year, primarily due to a higher
average realized sales price and increased production sales volume.
Average realized price for the second quarter 2017 was $2.86 per Mcfe,
36% higher than the $2.11 per Mcfe realized in the same period last
year. Pipeline and net marketing services revenue totaled $8.1 million
in the quarter.
EQT Production’s operating expenses for the quarter were $578.3 million,
$53.6 million higher than the same period last year. Transmission
expenses were $37.7 million higher, primarily due to volumes transported
on the Rockies Express Pipeline and the Ohio Valley Connector (OVC);
processing expenses were $17.7 million higher, consistent with higher
wet gas volumes; depreciation, depletion, and amortization expense
(DD&A) was $10.4 million higher; gathering expense was $6.9 million
higher; and production tax was $1.8 million higher consistent with
higher volumes; while LOE, excluding production tax, was $3.3 million
lower as a result of consolidating Kentucky operations, and selling,
general and administrative expense (SG&A) was $1.0 million lower,
excluding $9.4 million of pension settlement charges and $7.1 million of
legal reserves charges recorded in the second quarter 2016.
The Company drilled (spud) 66 gross wells during the second quarter
2017, including 43 Marcellus wells, with an average expected
length-of-pay of 8,200 feet; and 23 Upper Devonian wells, with an
average expected length-of-pay of 8,300 feet. The Company turned-in-line
17 wells during the second quarter 2017, including 15 Marcellus wells,
and 2 Upper Devonian wells.
In anticipation of the merger with Rice Energy, EQT has suspended its
Utica test program as improved returns on Marcellus wells resulting from
longer laterals made possible by the Rice acquisition are higher than
the return expected on the average Utica well today. The Company’s 2017
sales volume guidance has been reduced by 10 – 15 Bcfe as a result of
the suspension of the Company’s Utica test program.
EQT GATHERING
EQT Gathering second quarter 2017 operating income was $83.3 million,
$10.1 million higher than the second quarter 2016. Operating revenue was
$112.1 million, a $12.0 million increase over 2016, primarily driven by
production development in the Marcellus Shale. Firm reservation fee
revenue was $101.9 million in the second quarter 2017, an $18.3 million
increase over the same quarter last year.
EQT Gathering operating expenses were $28.8 million, a $1.9 million
increase over the same period last year consistent with higher
throughput. Specifically, depreciation and amortization expense was $2.0
million higher; operating and maintenance expense (O&M) was $1.3 million
higher; and SG&A was $1.4 million lower.
EQT TRANSMISSION
EQT Transmission second quarter 2017 operating income was $57.8 million,
$1.9 million higher than the second quarter 2016. Firm reservation fee
revenue was $79.5 million in 2017, a $19.2 million increase over 2016,
which was primarily a result of affiliates contracting for additional
firm capacity on the OVC. Operating revenue was $86.8 million, an $8.9
million increase over 2016.
Operating expenses were $29.0 million, $7.0 million higher than last
year. Depreciation and amortization was $4.9 million higher; O&M was
$2.9 million higher; and SG&A was $0.8 million lower.
OTHER BUSINESS
Rice Energy Acquisition
On June 19, 2017, the Company announced that it had entered into a
definitive merger agreement under which EQT will acquire all of the
outstanding shares of Rice Energy common stock in exchange for 0.37
shares of EQT stock and $5.30 cash per share of Rice stock. EQT will
also assume or refinance approximately $1.5 billion of net debt and
preferred equity. The transaction is expected to close in the fourth
quarter of 2017, subject to customary closing conditions.
EQT Midstream Partners, LP (NYSE: EQM) / EQT GP Holdings, LP (NYSE:
EQGP)
On July 25, 2017, EQM announced a cash distribution to its unitholders
of $0.935 per unit for the second quarter. EQGP also announced a cash
distribution to its unitholders of $0.21 per unit for the second quarter
2017.
The second quarter 2017 financial results for EQM and EQGP were released
today and provide operational results, as well as updates on significant
midstream projects under development by EQM. This news release is
available at www.eqtmidstreampartners.com.
Calculation of Net Income Attributable to Noncontrolling Interest
The results of EQGP and EQM are consolidated in EQT’s results. For the
second quarter 2017, EQT’s results reflected earnings of $81.5 million,
or $0.47 per diluted share, attributable to the publicly held
partnership interests in EQGP and EQM.
|
|
|
|
|
|
|
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Three Months Ended
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|
(thousands)
|
|
|
June 30, 2017
|
|
EQM net income
|
|
|
$
|
139,139
|
|
|
Less: General Partner interest (including incentive distribution
rights)
|
|
|
|
36,598
|
|
|
Limited Partner interest in net income
|
|
|
$
|
102,541
|
|
|
|
|
|
|
|
EQM LP units
|
|
|
|
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Publicly owned (73.4%)
|
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$
|
75,224
|
|
|
EQGP owned (26.6%)
|
|
|
|
27,317
|
|
|
Limited Partner interest in net income
|
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|
$
|
102,541
|
|
|
|
|
|
|
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EQGP net income
|
|
|
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|
EQM LP unit ownership
|
|
|
$
|
27,317
|
|
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EQM GP unit ownership (including incentive distribution rights)
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|
|
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36,598
|
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|
EQGP incremental expenses
|
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(585
|
)
|
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Limited Partner interest in net income
|
|
|
$
|
63,330
|
|
|
|
|
|
|
|
EQGP units
|
|
|
|
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Publicly owned LP (9.9%)
|
|
|
$
|
6,295
|
|
|
EQT owned LP (90.1%)
|
|
|
|
57,035
|
|
|
Limited Partner interest in net income
|
|
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$
|
63,330
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|
|
|
|
|
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|
Noncontrolling interest in EQT earnings
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|
|
|
|
EQM publicly-owned LP units
|
|
|
$
|
75,224
|
|
|
EQGP publicly-owned LP units
|
|
|
|
6,295
|
|
|
Net income attributable to noncontrolling interest
|
|
|
$
|
81,519
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|
|
|
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Hedging
As of July 25, 2017, the approximate volumes and prices of the Company’s
derivative commodity instruments hedging sales of produced gas for 2017
through 2019 were:
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2017
(a)
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2018
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2019
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NYMEX Swaps
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Total Volume (Bcf)
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249
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|
|
|
|
|
189
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19
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|
Average Price per Mcf (NYMEX)
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$
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3.35
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$
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3.18
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$
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3.12
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Collars
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Total Volume (Bcf)
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12
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18
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−
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Average Floor Price per Mcf (NYMEX)
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$
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3.06
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$
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3.16
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$
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−
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Average Cap Price per Mcf (NYMEX)
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$
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3.93
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$
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3.63
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$
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−
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(a)
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July through December 31
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•
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The Company also sold calendar year 2017 and 2018 calls/swaptions
for approximately 16 Bcf and 33 Bcf, respectively, at strike prices
of $3.53 per Mcf and $3.47 per Mcf, respectively
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•
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For 2017 and 2018, the Company sold puts for approximately 2 Bcf and
3 Bcf, respectively, at a strike price of $2.63 per Mcf
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•
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The average price is based on a conversion rate of 1.05 MMBtu/Mcf
|
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|
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Operating Income (Loss)
The Company reports operating income (loss) 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 following table reconciles operating income (loss) 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
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Six Months Ended
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June 30,
|
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June 30,
|
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(thousands)
|
|
2017
|
|
2016
|
|
2017
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2016
|
|
Operating income (loss):
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|
|
|
|
|
|
|
|
EQT Production
|
|
$
|
52,765
|
|
|
$
|
(447,735
|
)
|
|
$
|
310,195
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|
|
$
|
(453,213
|
)
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|
EQT Gathering
|
|
|
83,310
|
|
|
|
73,175
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|
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156,899
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|
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145,779
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EQT Transmission
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57,782
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55,854
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|
|
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129,306
|
|
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120,370
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Unallocated expense
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|
|
(4,063
|
)
|
|
|
(5,786
|
)
|
|
|
(15,962
|
)
|
|
|
(10,227
|
)
|
|
Operating income (loss)
|
|
$
|
189,794
|
|
|
$
|
(324,492
|
)
|
|
$
|
580,438
|
|
|
$
|
(197,291
|
)
|
|
|
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|
|
|
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Unallocated expenses consist primarily of compensation expense and Rice
Energy acquisition costs.
Marcellus Horizontal Well Status (cumulative since inception)
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As of
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As of
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As of
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As of
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As of
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6/30/17
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3/31/17**
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12/31/16*
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9/30/16*
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6/30/16*
|
|
Wells drilled (spud)
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|
1,259
|
|
|
|
1,216
|
|
|
|
1,046
|
|
|
|
949
|
|
|
|
896
|
|
Wells online
|
|
1,028
|
|
|
|
1,013
|
|
|
|
875
|
|
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816
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|
|
|
774
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|
Wells complete, not online
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|
15
|
|
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20
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21
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|
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32
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|
|
|
34
|
|
Wells drilled, uncompleted
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|
216
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|
|
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183
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|
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|
150
|
|
|
|
101
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|
|
|
88
|
*Includes wells acquired in 2016
**Includes wells
acquired in Q1 2017
NON-GAAP DISCLOSURES
Adjusted Net Income (Loss) Attributable to EQT and Adjusted EPS
Adjusted net income (loss) attributable to EQT and adjusted EPS 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 attributable to EQT
and adjusted EPS should not be considered as alternatives to net income
attributable to EQT or EPS presented in accordance with GAAP. Adjusted
net income (loss) attributable to EQT as presented excludes the revenue
impact of changes in the fair value of derivative instruments prior to
settlement, pension settlement charges and Rice Energy acquisition
costs. Management utilizes adjusted net income (loss) attributable to
EQT to evaluate earnings trends because the measure reflects only the
impact of settled derivative contracts; thus, the income from natural
gas sales is not impacted by the often volatile fluctuations in the fair
value of derivatives prior to settlement. The measure also excludes
other items that affect the comparability of results. Management
believes that adjusted net income (loss) attributable to EQT as
presented provides useful information for investors for evaluating
period-over-period earnings.
The table below reconciles adjusted net income (loss) attributable to
EQT and adjusted EPS with net income (loss) attributable to EQT and EPS
as derived from the statements of consolidated operations to be included
in EQT’s report on Form 10-Q for the quarter ended June 30, 2017.
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|
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Three Months Ended
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|
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June 30,
|
|
(thousands, except per share information)
|
|
2017
|
|
2016
|
|
Net income (loss) attributable to EQT, as reported
|
|
$
|
41,126
|
|
|
$
|
(258,645
|
)
|
|
Add back / (deduct):
|
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|
|
|
|
Pension settlement charges
|
|
|
–
|
|
|
|
9,403
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|
|
Rice Energy acquisition costs
|
|
|
5,054
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|
|
–
|
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(46,326
|
)
|
|
|
234,693
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|
|
Net cash settlements (paid) received on derivatives not designated
as hedges
|
|
|
(11,191
|
)
|
|
|
86,097
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|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
532
|
|
|
|
(553
|
)
|
|
Tax impact of non-GAAP items*
|
|
|
20,876
|
|
|
|
(134,163
|
)
|
|
Adjusted net income (loss) attributable to EQT
|
|
$
|
10,071
|
|
|
$
|
(63,168
|
)
|
|
Diluted weighted average common shares outstanding
|
|
|
173,582
|
|
|
|
166,801
|
|
|
Diluted EPS, as adjusted
|
|
$
|
0.06
|
|
|
$
|
(0.38
|
)
|
|
*
|
|
A tax rate of 40.2% and 40.7% for the three month periods ended
June 30, 2017 and 2016, respectively, was applied to the items
under the caption “Add back (deduct)”. This represents the
incremental deferred tax benefit (expense) that would have been
incurred had these items been excluded from net income (loss)
attributable to EQT.
|
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|
|
Operating Cash Flow, Adjusted Operating Cash Flow Attributable to EQT
and Adjusted Operating Cash Flow Attributable to EQT Production
Operating cash flow, adjusted operating cash flow attributable to EQT
and adjusted operating cash flow attributable to EQT Production are
non-GAAP supplemental financial measures that are presented as
indicators 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.
Adjusted operating cash flow attributable to EQT excludes the
noncontrolling interest portion of EQT Midstream Partners (EQM) adjusted
EBITDA (a non-GAAP supplemental financial measure reconciled below).
Management believes that removing the impact on operating cash flows of
the public unitholders of EQGP and EQM that is otherwise required to be
consolidated in EQT’s results provides useful information to an EQT
investor. As used in this news release, adjusted operating cash flow
attributable to EQT Production means the EQT Production segment’s total
operating revenues less the EQT Production segment’s cash operating
expense, less gains (losses) on derivatives not designated as hedges,
plus net cash settlements received (paid) on derivatives not designated
as hedges, plus premiums received (paid) for derivatives that settled
during the period, plus EQT Production asset impairments (if
applicable). Operating cash flow, adjusted operating cash flow
attributable to EQT and adjusted operating cash flow attributable to EQT
Production should not be considered as alternatives to net cash provided
by operating activities presented in accordance with GAAP. The table
below reconciles operating cash flow and adjusted operating cash flow
attributable to EQT with net cash provided by operating activities, as
derived from the statements of condensed consolidated cash flows to be
included in EQT’s report on Form 10-Q for the quarter ended June 30,
2017.
|
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|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
(thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net cash provided by operating activities
|
|
$
|
294,177
|
|
|
$
|
208,487
|
|
|
$
|
808,994
|
|
|
$
|
493,404
|
|
|
Add back / (deduct)
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
43,994
|
|
|
|
(1,000
|
)
|
|
|
(25,630
|
)
|
|
|
40,818
|
|
|
Operating cash flow (a non-GAAP measure)
|
|
|
338,171
|
|
|
|
207,487
|
|
|
|
783,364
|
|
|
|
534,222
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
EQT Midstream Partners adjusted EBITDA(1)
|
|
|
(165,238
|
)
|
|
|
(138,136
|
)
|
|
|
(333,902
|
)
|
|
|
(279,707
|
)
|
|
Cash distribution payable to EQT(2)
|
|
|
50,340
|
|
|
|
35,957
|
|
|
|
96,126
|
|
|
|
68,079
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
223,273
|
|
|
$
|
105,308
|
|
|
$
|
545,588
|
|
|
$
|
322,594
|
|
|
(1)
|
|
EQT Midstream Partners adjusted EBITDA is a non-GAAP supplemental
financial measure reconciled in this section
|
|
(2)
|
|
Cash distribution payable to EQT for the three and six months ended
June 30, 2017 and 2016, represents the distribution payable from
EQGP to EQT
|
|
|
|
|
EQT has not provided projected net cash provided by operating activities
or reconciliations of projected adjusted operating cash flow
attributable to EQT or EQT Production to projected net cash provided by
operating activities, the most comparable financial measure calculated
in accordance with GAAP. EQT is unable to project net cash provided by
operating activities because this metric includes the impact of changes
in operating assets and liabilities related to the timing of cash
receipts and disbursements that may not relate to the period in which
the operating activities occurred. EQT is unable to project these timing
differences with any reasonable degree of accuracy without unreasonable
efforts such as predicting the timing of its and customers’ payments,
with accuracy to a specific day, three or more months in advance.
Therefore, EQT is unable to provide projected net cash provided by
operating activities, or the related reconciliations of projected
adjusted operating cash flow attributable to EQT and EQT Production to
projected net cash provided by operating activities, without
unreasonable effort.
EQT Production Adjusted Operating Revenues
The table below reconciles EQT Production adjusted operating revenues, a
non-GAAP supplemental financial measure, to EQT Production total
operating revenues, as reported in the EQT Production Results of
Operations, its most directly comparable financial measure calculated in
accordance with GAAP. Refer to Financial Information by Business Segment
footnote to be included in EQT’s report on Form 10-Q for the quarter
ended June 30, 2017 for a reconciliation of EQT Production total
operating revenues to EQT Corporation total operating revenues, as
reported.
EQT Production adjusted operating revenues (also referred to as total
natural gas & liquids sales, including cash settled derivatives) is
presented because it is an important measure used by the Company’s
management to evaluate period-over-period comparisons of earnings
trends. EQT Production adjusted operating revenues as presented excludes
the revenue impact of changes in the fair value of derivative
instruments prior to settlement and the revenue impact of certain
pipeline and net marketing services. Management utilizes EQT Production
adjusted operating revenues to evaluate earnings trends because the
measure reflects only the impact of settled derivative contracts and
thus does not impact the revenue from natural gas sales with the often
volatile fluctuations in the fair value of derivatives prior to
settlement. EQT Production adjusted operating revenues also excludes
"Pipeline and net marketing services" because management considers these
revenues to be unrelated to the revenues for its natural gas and liquids
production. "Pipeline and net marketing services" includes revenues for
gathering services provided to third-parties, as well as both the cost
of and recoveries on third-party pipeline capacity not used for EQT
Production sales volume. Management further believes that EQT Production
adjusted operating revenues, as presented, provide useful information to
investors for evaluating period-over-period earnings trends.
|
|
|
|
|
|
|
Calculation of EQT Production Adjusted
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Operating Revenue
|
|
June 30,
|
|
June 30,
|
|
$ in thousands (unless noted)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
EQT Production total operating revenues, as reported on segment page
|
|
$
|
631,101
|
|
|
$
|
76,953
|
|
|
$
|
1,459,763
|
|
|
$
|
560,660
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(46,326
|
)
|
|
|
234,693
|
|
|
|
(187,068
|
)
|
|
|
125,698
|
|
|
Net cash settlements (paid) received on derivatives not designated
as hedges
|
|
|
(11,191
|
)
|
|
|
86,097
|
|
|
|
(20,158
|
)
|
|
|
195,229
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
532
|
|
|
|
(553
|
)
|
|
|
1,058
|
|
|
|
(1,016
|
)
|
|
Pipeline and net marketing services
|
|
|
(8,061
|
)
|
|
|
(7,114
|
)
|
|
|
(22,516
|
)
|
|
|
(17,399
|
)
|
|
EQT Production adjusted operating revenue, a non-GAAP measure
|
|
$
|
566,055
|
|
|
$
|
390,076
|
|
|
$
|
1,231,079
|
|
|
$
|
863,172
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales volumes (MMcfe)
|
|
|
198,080
|
|
|
|
184,548
|
|
|
|
388,014
|
|
|
|
364,483
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.86
|
|
|
$
|
2.11
|
|
|
$
|
3.17
|
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production Adjusted Operating Income (Loss)
The table below reconciles EQT Production adjusted operating income
(loss), a non-GAAP supplemental financial measure, to EQT Production
operating income (loss), as reported in the EQT Production Results of
Operations. Refer to the Operating Income (Loss) section in this news
release for a reconciliation of EQT Production total operating income
(loss) to EQT Corporation total operating income (loss), as reported.
EQT Production adjusted operating income (loss) is presented because it
is an important measure used by EQT’s management to evaluate
period-over-period comparisons of earnings trends. EQT Production
adjusted operating income (loss) should not be considered as an
alternative to EQT Corporation operating income presented in accordance
with GAAP. EQT Production adjusted operating income (loss) as presented
excludes the revenue impact of changes in the fair value of derivative
instruments prior to settlement. Management utilizes EQT Production
adjusted operating income (loss) to evaluate earnings trends because the
measure reflects only the impact of settled derivative contracts and
thus the income from natural gas sales is not impacted by the often
volatile fluctuations in the fair value of derivatives prior to
settlement. The measure also excludes other items that affect the
comparability of results. Management believes that EQT Production
adjusted operating income (loss) as presented provides useful
information for investors for evaluating period-over-period earnings.
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
(thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
EQT Production operating income (loss), as reported on segment page
|
|
$
|
52,765
|
|
|
$
|
(447,735
|
)
|
|
$
|
310,195
|
|
|
$
|
(453,213
|
)
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
(Gain) / loss on derivatives not designated as hedges
|
|
$
|
(46,326
|
)
|
|
|
234,693
|
|
|
|
(187,068
|
)
|
|
|
125,698
|
|
|
Net cash settlements (paid) received on derivatives not designated
as hedges
|
|
|
(11,191
|
)
|
|
|
86,097
|
|
|
|
(20,158
|
)
|
|
|
195,229
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
532
|
|
|
|
(553
|
)
|
|
|
1,058
|
|
|
|
(1,016
|
)
|
|
Pension settlement charges
|
|
|
−
|
|
|
|
9,403
|
|
|
|
−
|
|
|
|
9,403
|
|
|
EQT Production adjusted operating (loss) income
|
|
$
|
(4,220
|
)
|
|
$
|
(118,095
|
)
|
|
$
|
104,027
|
|
|
$
|
(123,899
|
)
|
|
|
|
|
|
|
|
|
|
|
EQT Midstream Partners Adjusted EBITDA
As used in this news release, EQT Midstream Partners adjusted EBITDA
means EQM’s net income plus EQM’s net interest expense, depreciation and
amortization expense, income tax expense (if applicable), preferred
interest payments received post-conversion, and non-cash long-term
compensation expense less EQM’s equity income, AFUDC-equity,
pre-acquisition capital lease payments for Allegheny Valley Connector,
LLC (AVC), and adjusted EBITDA of assets prior to acquisition. EQT
Midstream Partners adjusted EBITDA is a non-GAAP supplemental financial
measure that management and external users of EQT’s consolidated
financial statements, such as industry analysts, investors, lenders and
rating agencies, use to assess the effects of the noncontrolling
interests in relation to:
-
EQT's operating performance as compared to other companies in its
industry;
-
the ability of EQT's assets to generate sufficient cash flow to make
distributions to its investors;
-
EQT'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.
EQT believes that EQT Midstream Partners adjusted EBITDA provides useful
information to investors in assessing EQT's financial condition and
results of operations. EQT Midstream Partners adjusted EBITDA should not
be considered as an alternative to EQM’s net income, operating income,
or any other measure of financial performance or liquidity presented in
accordance with GAAP. EQT Midstream Partners adjusted EBITDA has
important limitations as an analytical tool because it excludes some,
but not all, items that affect EQM's net income. Additionally, because
EQT Midstream Partners adjusted EBITDA may be defined differently by
other companies in EQT's or EQM's industries, the definition of EQT
Midstream Partners adjusted EBITDA may not be comparable to similarly
titled measures of other companies, thereby diminishing the utility of
the measure. The table below reconciles EQT Midstream Partners adjusted
EBITDA with EQM’s net income, as derived from the statements of
consolidated operations to be included in EQM’s report on Form 10-Q for
the quarter ended June 30, 2017.
EQM is unable to provide a reconciliation of projected EQT Midstream
Partners adjusted EBITDA to projected EQM net income, the most
comparable financial measure calculated in accordance with GAAP, because
EQM does not provide guidance with respect to the intra-year timing of
its or Mountain Valley Pipeline, LLC’s capital spending, which impact
AFUDC-debt and equity as well as equity earnings, among other items,
that are reconciling items between EQT Midstream Partners adjusted
EBITDA and EQM net income. The timing of capital expenditures is
volatile as it depends on weather, regulatory approvals, contractor
availability, system performance and various other items. EQM provides a
range for the forecasts of EQM net income and EQT Midstream Partners
adjusted EBITDA to allow for the variability in the timing of capital
spending and the impact on the related reconciling items, many of which
interplay with each other. Therefore, the reconciliation of projected
EQT Midstream Partners adjusted EBITDA to projected EQM net income is
not available without unreasonable effort.
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
(thousands, unless noted)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
|
$
|
139,139
|
|
|
$
|
131,859
|
|
|
$
|
282,335
|
|
|
$
|
268,594
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
8,662
|
|
|
|
4,094
|
|
|
|
16,588
|
|
|
|
8,646
|
|
|
Depreciation and amortization expense
|
|
|
21,400
|
|
|
|
14,531
|
|
|
|
41,947
|
|
|
|
28,538
|
|
|
Income tax expense
|
|
|
−
|
|
|
|
3,485
|
|
|
|
−
|
|
|
|
6,920
|
|
|
Preferred interest payments received post conversion
|
|
|
2,746
|
|
|
|
−
|
|
|
|
5,492
|
|
|
|
−
|
|
|
Non-cash long-term compensation expense
|
|
|
−
|
|
|
|
−
|
|
|
|
225
|
|
|
|
195
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Equity income
|
|
|
(5,111
|
)
|
|
|
(1,850
|
)
|
|
|
(9,388
|
)
|
|
|
(3,439
|
)
|
|
AFUDC - equity
|
|
|
(1,598
|
)
|
|
|
(5,793
|
)
|
|
|
(3,297
|
)
|
|
|
(8,730
|
)
|
|
Pre-acquisition capital lease payments for AVC
|
|
|
−
|
|
|
|
(4,036
|
)
|
|
|
−
|
|
|
|
(13,400
|
)
|
|
Adjusted EBITDA attributable to the assets prior to acquisition
|
|
|
−
|
|
|
|
(4,154
|
)
|
|
|
−
|
|
|
|
(7,617
|
)
|
|
EQT Midstream Partners Adjusted EBITDA
|
$
|
$
|
165,238
|
|
|
$
|
138,136
|
|
|
$
|
333,902
|
|
|
$
|
279,707
|
|
|
|
|
|
|
|
|
|
|
|
Second quarter 2017 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 www.eqt.com,
and on the investor information page of the Company’s web site at ir.eqt.com,
with a replay available for seven days following the call.
EQT Midstream Partners, LP and EQT GP Holdings, LP, for which EQT
Corporation is the parent company, will also host a joint conference
call with security analysts today, beginning at 11:30 a.m. ET. The call
will be broadcast live via 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.
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.
EQT also owns a 90% limited partner interest in EQT GP Holdings, LP. EQT
GP Holdings, LP owns the general partner interest, all of the incentive
distribution rights, and a portion of the limited partner interests in
EQT Midstream Partners, LP.
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, is
available via the Company’s investor relations website at http://ir.eqt.com.
About EQT Midstream Partners:
EQT Midstream Partners, LP is a growth-oriented limited partnership
formed by EQT Corporation to own, operate, acquire, and develop
midstream assets in the Appalachian Basin. The Partnership provides
midstream services to EQT Corporation and third-party companies through
its strategically located transmission, storage, and gathering systems
that service the Marcellus and Utica regions. The Partnership owns
approximately 950 miles of FERC-regulated interstate pipelines; and also
owns approximately 1,800 miles of high- and low-pressure gathering lines.
Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com.
About EQT GP Holdings:
EQT GP Holdings, LP is a limited partnership that owns the general
partner interest, all of the incentive distribution rights, and a
portion of the limited partner interests in EQT Midstream Partners, LP.
EQT Corporation owns a 90% limited partner interest in EQT GP Holdings,
LP.
Visit EQT GP Holdings, LP at www.eqtmidstreampartners.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).
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, Upper Devonian, Utica, and other
reserves; drilling plans and programs (including the number, type,
average length-of-pay or lateral length and location of wells to be
drilled and number and type of drilling rigs); projected natural gas
prices, basis and average differential; total resource potential,
reserves and EUR; projected Company and third party production sales
volume and growth rates (including liquids sales volume and growth
rates); projected unit costs and well costs; projected pipeline and net
marketing services revenues; projected gathering and transmission volume
and growth rates; the Company’s access to, and timing of, capacity on
pipelines; infrastructure programs (including the timing, cost and
capacity of the transmission and gathering expansion projects); the
cost, timing of regulatory approvals and anticipated in-service date of
the Mountain Valley Pipeline (MVP) project; the ultimate terms, partners
and structure of the MVP joint venture; technology (including drilling
and completion techniques); acquisition transactions; the Company’s
ability to complete, the timing of, and the Company’s financing of the
funds required for, the Company’s acquisition of Rice Energy, and the
Company’s ability to achieve the anticipated synergies from the
transaction; monetization transactions, including asset sales, joint
ventures or other transactions involving the Company’s assets; the
projected cash flows resulting from the Company’s limited partner
interests in EQGP; internal rate of return (IRR) and returns per well;
projected capital contributions and expenditures; potential future
impairments of the Company’s assets; liquidity and financing
requirements, including funding sources and availability; changes in the
Company’s or EQM’s credit ratings; projected net income attributable to
noncontrolling interests, adjusted operating cash flow attributable to
EQT, adjusted operating cash flow attributable to EQT Production,
EBITDA, revenues and cash-on-hand; hedging strategy; the effects of
government regulation and litigation; projected dividend and
distribution amounts and rates; and tax position and projected effective
tax rate. 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. The 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, 2016 as 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 EQGP and its subsidiaries,
including EQM, is derived from publicly available information published
by the partnerships.
Important Additional Information
In connection with the proposed transaction, EQT will file with the SEC
a Registration Statement on Form S-4 that will include a Joint Proxy
Statement of EQT and Rice and a Prospectus of EQT, as well as other
relevant documents concerning the proposed transaction. The proposed
transaction involving EQT and Rice will be submitted to EQT’s
shareholders and Rice’s stockholders for their consideration. This
communication does not constitute an offer to sell or the solicitation
of an offer to buy any securities or a solicitation of any vote or
approval. SHAREHOLDERS OF EQT AND STOCKHOLDERS OF RICE ARE URGED TO READ
THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS
REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors will be able to obtain a free copy of the
definitive joint proxy statement/prospectus, as well as other filings
containing information about EQT and Rice, without charge, at the SEC’s
website (http://www.sec.gov).
Copies of the joint proxy statement/prospectus and the filings with the
SEC that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by directing
a request to Investor Relations, EQT Corporation, EQT Plaza, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3111, Tel. No. (412) 553-5700 or
to Investor Relations, Rice Energy Inc., 2200 Rice Drive, Canonsburg,
Pennsylvania 15317, Tel. No. (724) 271-7200.
Participants in the Solicitation
EQT, Rice, and certain of their respective directors, executive officers
and employees may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding
EQT’s directors and executive officers is available in its definitive
proxy statement, which was filed with the SEC on February 17, 2017, and
certain of its Current Reports on Form 8-K. Information regarding Rice’s
directors and executive officers is available in its definitive proxy
statement, which was filed with the SEC on April 17, 2017, and certain
of its Current Reports on Form 8-K. Other information regarding the
participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other relevant
materials filed with the SEC. Free copies of this document may be
obtained as described in the preceding paragraph.
2017 GUIDANCE
See the Non-GAAP Disclosures section for important information regarding
the non-GAAP financial measures included in this news release, including
reasons why EQT is unable to provide projections of its 2017 net cash
provided by operating activities, the most comparable financial measure
to adjusted operating cash flow attributable to EQT and EQT Production,
calculated in accordance with GAAP.
|
|
|
|
|
|
|
|
|
PRODUCTION
|
|
Q3 2017
|
|
|
2017
|
|
|
Total production sales volume (Bcfe)
|
|
205 – 210
|
|
|
825 – 840
|
|
|
Liquids sales volume, excluding ethane (Mbbls)
|
|
3,240 – 3,260
|
|
|
13,200 – 13,600
|
|
|
Ethane sales volume (Mbbls)
|
|
1,565 – 1,575
|
|
|
5,850 – 6,050
|
|
|
Total liquids sales volume (Mbbls)
|
|
4,805 – 4,835
|
|
|
19,050 – 19,650
|
|
|
|
|
|
|
|
|
|
|
Marcellus / Utica Rigs
|
|
|
|
|
6 – 9
|
|
|
Top-hole rigs
|
|
|
|
|
5 – 7
|
|
|
|
|
|
|
|
|
|
|
Unit Costs ($ / Mcfe)
|
|
|
|
|
|
|
|
Gathering to EQT Gathering
|
|
|
|
|
$ 0.45 – 0.47
|
|
|
Transmission to EQT Transmission
|
|
|
|
|
$ 0.20 – 0.22
|
|
|
Third-party gathering and transmission
|
|
|
|
|
$ 0.44 – 0.46
|
|
|
Processing
|
|
|
|
|
$ 0.21 – 0.23
|
|
|
LOE, excluding production taxes
|
|
|
|
|
$ 0.12 – 0.14
|
|
|
Production taxes
|
|
|
|
|
$ 0.08 – 0.10
|
|
|
SG&A
|
|
|
|
|
$ 0.18 – 0.20
|
|
|
DD&A
|
|
|
|
|
$ 1.03 – 1.05
|
|
|
|
|
|
|
|
|
|
|
Average differential ($ / Mcf)
|
|
$ (0.85) – (0.75
|
)
|
|
$ (0.55) – (0.45
|
)
|
|
|
|
|
|
|
|
|
|
Pipeline and net marketing services ($MM)
|
|
$ 0 – 10
|
|
|
$ 35 – 45
|
|
|
FINANCIAL ($MM)
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest ($MM)
|
|
$ 80 – 82
|
|
|
$ 335 – 345
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING CASH FLOW ($MM)
|
|
|
|
|
|
|
|
Adjusted operating cash flow attributable to EQT Production
|
|
|
|
|
$ 1,100
|
|
|
Distributions from EQGP
|
|
|
|
|
200
|
|
|
Interest, taxes, and other items
|
|
|
|
|
(100
|
)
|
|
Adjusted operating cash flow attributable to EQT
|
|
|
|
|
$ 1,200
|
|
Based on current NYMEX natural gas prices of $3.18
All
guidance, forecasts and projections included in this news release do not
reflect the pro forma impact of the Company’s pending acquisition of
Rice Energy
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
Statements of Consolidated Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(Thousands except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
576,714
|
|
$
|
304,532
|
|
|
$
|
1,250,179
|
|
$
|
668,959
|
|
|
Pipeline and net marketing services
|
|
|
67,853
|
|
|
57,692
|
|
|
|
151,169
|
|
|
129,339
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
46,326
|
|
|
(234,693
|
)
|
|
|
187,068
|
|
|
(125,698
|
)
|
|
Total operating revenues
|
|
|
690,893
|
|
|
127,531
|
|
|
|
1,588,416
|
|
|
672,600
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
134,818
|
|
|
84,207
|
|
|
|
268,524
|
|
|
161,400
|
|
|
Operation and maintenance
|
|
|
20,581
|
|
|
16,353
|
|
|
|
40,867
|
|
|
33,489
|
|
|
Production
|
|
|
44,393
|
|
|
45,891
|
|
|
|
90,182
|
|
|
87,093
|
|
|
Exploration
|
|
|
3,481
|
|
|
3,591
|
|
|
|
6,603
|
|
|
6,714
|
|
|
Selling, general and administrative
|
|
|
57,009
|
|
|
77,352
|
|
|
|
129,067
|
|
|
135,335
|
|
|
Depreciation, depletion and amortization
|
|
|
240,817
|
|
|
224,629
|
|
|
|
472,735
|
|
|
445,860
|
|
|
Total operating expenses
|
|
|
501,099
|
|
|
452,023
|
|
|
|
1,007,978
|
|
|
869,891
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
189,794
|
|
|
(324,492
|
)
|
|
|
580,438
|
|
|
(197,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
6,638
|
|
|
7,644
|
|
|
|
10,019
|
|
|
12,484
|
|
|
Interest expense
|
|
|
44,078
|
|
|
36,305
|
|
|
|
86,733
|
|
|
72,485
|
|
|
Income (loss) before income taxes
|
|
|
152,354
|
|
|
(353,153
|
)
|
|
|
503,724
|
|
|
(257,292
|
)
|
|
Income tax expense (benefit)
|
|
|
29,709
|
|
|
(172,346
|
)
|
|
|
130,374
|
|
|
(164,910
|
)
|
|
Net income (loss)
|
|
|
122,645
|
|
|
(180,807
|
)
|
|
|
373,350
|
|
|
(92,382
|
)
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
81,519
|
|
|
77,838
|
|
|
|
168,232
|
|
|
160,627
|
|
|
Net income (loss) attributable to EQT Corporation
|
|
$
|
41,126
|
|
$
|
(258,645
|
)
|
|
$
|
205,118
|
|
$
|
(253,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
173,462
|
|
|
166,801
|
|
|
|
173,320
|
|
|
161,909
|
|
|
Net income (loss)
|
|
$
|
0.24
|
|
$
|
(1.55
|
)
|
|
$
|
1.18
|
|
$
|
(1.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
173,582
|
|
|
166,801
|
|
|
|
173,525
|
|
|
161,909
|
|
|
Net income (loss)
|
|
$
|
0.24
|
|
$
|
(1.55
|
)
|
|
$
|
1.18
|
|
$
|
(1.56
|
)
|
|
Dividends declared per common share
|
|
$
|
0.03
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
PRICE RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
in thousands (unless noted)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
NATURAL GAS
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcf)
|
|
|
167,682
|
|
|
|
167,741
|
|
|
|
332,146
|
|
|
|
333,015
|
|
|
NYMEX price ($/MMBtu) (a)
|
|
$
|
3.18
|
|
|
$
|
1.95
|
|
|
$
|
3.25
|
|
|
$
|
2.02
|
|
|
Btu uplift
|
|
|
0.26
|
|
|
|
0.16
|
|
|
|
0.27
|
|
|
|
0.17
|
|
|
Natural gas price ($/Mcf)
|
|
$
|
3.44
|
|
|
$
|
2.11
|
|
|
$
|
3.52
|
|
|
$
|
2.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis ($/Mcf) (b)
|
|
|
(0.60
|
)
|
|
|
(0.75
|
)
|
|
|
(0.39
|
)
|
|
|
(0.58
|
)
|
|
Cash settled basis swaps (not designated as hedges) ($/Mcf)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
|
-
|
|
|
|
0.08
|
|
|
Average differential, including cash settled basis swaps ($/Mcf)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.79
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.50
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Average adjusted price ($/Mcf)
|
|
$
|
2.80
|
|
|
$
|
1.32
|
|
|
$
|
3.13
|
|
|
$
|
1.69
|
|
|
Cash settled derivatives (cash flow hedges) ($/Mcf)
|
|
|
0.02
|
|
|
|
0.16
|
|
|
|
0.01
|
|
|
|
0.14
|
|
|
Cash settled derivatives (not designated as hedges) ($/Mcf)
|
|
|
(0.02
|
)
|
|
|
0.55
|
|
|
|
(0.05
|
)
|
|
|
0.50
|
|
|
Average natural gas price, including cash settled derivatives ($/Mcf)
|
|
$
|
2.80
|
|
|
$
|
2.03
|
|
|
$
|
3.09
|
|
|
$
|
2.33
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas sales, including cash settled derivatives
|
|
$
|
469,165
|
|
|
$
|
342,561
|
|
|
$
|
1,028,364
|
|
|
$
|
777,414
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS
|
|
|
|
|
|
|
|
|
|
NGLs (excluding ethane):
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
18,895
|
|
|
|
14,442
|
|
|
|
36,035
|
|
|
|
28,094
|
|
|
Sales volume (Mbbls)
|
|
|
3,149
|
|
|
|
2,408
|
|
|
|
6,006
|
|
|
|
4,683
|
|
|
Price ($/Bbl)
|
|
$
|
24.03
|
|
|
$
|
16.12
|
|
|
$
|
27.54
|
|
|
$
|
15.52
|
|
|
Cash settled derivatives (not designated as hedges) ($/Bbl)
|
|
|
(0.32
|
)
|
|
|
-
|
|
|
|
(0.43
|
)
|
|
|
-
|
|
|
Average NGL price, including cash settled derivatives ($/Bbl)
|
|
$
|
23.71
|
|
|
$
|
16.12
|
|
|
$
|
27.11
|
|
|
$
|
15.52
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL sales
|
|
$
|
74,653
|
|
|
$
|
38,805
|
|
|
$
|
162,850
|
|
|
$
|
72,680
|
|
|
Ethane:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
9,771
|
|
|
|
1,177
|
|
|
|
16,744
|
|
|
|
1,177
|
|
|
Sales volume (Mbbls)
|
|
|
1,629
|
|
|
|
196
|
|
|
|
2,791
|
|
|
|
196
|
|
|
Price ($/Bbl)
|
|
$
|
6.76
|
|
|
$
|
8.28
|
|
|
$
|
6.72
|
|
|
$
|
8.28
|
|
|
Ethane sales
|
|
$
|
11,007
|
|
|
$
|
1,624
|
|
|
$
|
18,739
|
|
|
$
|
1,624
|
|
|
Oil:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
1,732
|
|
|
|
1,188
|
|
|
|
3,089
|
|
|
|
2,197
|
|
|
Sales volume (Mbbls)
|
|
|
289
|
|
|
|
198
|
|
|
|
515
|
|
|
|
366
|
|
|
Price ($/Bbl)
|
|
$
|
38.91
|
|
|
$
|
35.78
|
|
|
$
|
41.04
|
|
|
$
|
31.28
|
|
|
Oil sales
|
|
$
|
11,230
|
|
|
$
|
7,086
|
|
|
$
|
21,126
|
|
|
$
|
11,454
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liquids sales volume (MMcfe) (c )
|
|
|
30,398
|
|
|
|
16,807
|
|
|
|
55,868
|
|
|
|
31,468
|
|
|
Total liquids sales volume (Mbbls)
|
|
|
5,067
|
|
|
|
2,802
|
|
|
|
9,312
|
|
|
|
5,245
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquids sales
|
|
$
|
96,890
|
|
|
$
|
47,515
|
|
|
$
|
202,715
|
|
|
$
|
85,758
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PRODUCTION
|
|
|
|
|
|
|
|
|
|
Total natural gas & liquids sales, including cash settled
derivatives (d)
|
|
$
|
566,055
|
|
|
$
|
390,076
|
|
|
$
|
1,231,079
|
|
|
$
|
863,172
|
|
|
Total sales volume (MMcfe)
|
|
|
198,080
|
|
|
|
184,548
|
|
|
|
388,014
|
|
|
|
364,483
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.86
|
|
|
$
|
2.11
|
|
|
$
|
3.17
|
|
|
$
|
2.37
|
|
|
|
|
(a)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $3.18 and $1.95 for
the three months ended June 30, 2017 and 2016, respectively, and
$3.25 and $2.02 for the six months ended June 30, 2017 and 2016,
respectively).
|
|
(b)
|
|
Basis represents the difference between the ultimate sales price
for natural gas and the NYMEX natural gas price.
|
|
(c)
|
|
NGLs, ethane and crude oil were converted to Mcfe at the rate of
six Mcfe per barrel for all periods.
|
|
(d)
|
|
Also referred to in this report as EQT Production adjusted
operating revenues, a non-GAAP supplemental financial measure.
|
|
|
|
|
|
|
|
EQT PRODUCTION
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
Marcellus (a)
|
|
|
175,103
|
|
|
160,382
|
|
|
|
341,472
|
|
|
314,971
|
|
|
Other (b)
|
|
|
22,977
|
|
|
24,166
|
|
|
|
46,542
|
|
|
49,512
|
|
|
Total production sales volumes (c)
|
|
|
198,080
|
|
|
184,548
|
|
|
|
388,014
|
|
|
364,483
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
2,177
|
|
|
2,028
|
|
|
|
2,144
|
|
|
2,003
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.86
|
|
$
|
2.11
|
|
|
$
|
3.17
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering to EQT Gathering ($/Mcfe)
|
|
$
|
0.48
|
|
$
|
0.50
|
|
|
$
|
0.48
|
|
$
|
0.60
|
|
|
Transmission to EQT Transmission ($/Mcfe)
|
|
$
|
0.22
|
|
$
|
0.19
|
|
|
$
|
0.23
|
|
$
|
0.19
|
|
|
Third party gathering and transmission ($/Mcfe)
|
|
$
|
0.44
|
|
$
|
0.30
|
|
|
$
|
0.46
|
|
$
|
0.29
|
|
|
Processing ($/Mcfe)
|
|
$
|
0.24
|
|
$
|
0.16
|
|
|
$
|
0.23
|
|
$
|
0.15
|
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$
|
0.13
|
|
$
|
0.16
|
|
|
$
|
0.13
|
|
$
|
0.15
|
|
|
Production taxes ($/Mcfe)
|
|
$
|
0.09
|
|
$
|
0.09
|
|
|
$
|
0.10
|
|
$
|
0.08
|
|
|
Production depletion ($/Mcfe)
|
|
$
|
1.04
|
|
$
|
1.06
|
|
|
$
|
1.04
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (DD&A) (thousands):
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
$
|
205,524
|
|
$
|
195,293
|
|
|
$
|
402,986
|
|
$
|
387,288
|
|
|
Other DD&A
|
|
|
13,687
|
|
|
13,516
|
|
|
|
27,322
|
|
|
27,197
|
|
|
Total DD&A
|
|
$
|
219,211
|
|
$
|
208,809
|
|
|
$
|
430,308
|
|
$
|
414,485
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands) (d)
|
|
|
455,721
|
|
|
234,325
|
|
|
|
1,401,179
|
|
|
471,891
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
576,714
|
|
$
|
304,532
|
|
|
$
|
1,250,179
|
|
|
668,959
|
|
|
Pipeline and net marketing services
|
|
|
8,061
|
|
|
7,114
|
|
|
|
22,516
|
|
|
17,399
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
46,326
|
|
|
(234,693
|
)
|
|
|
187,068
|
|
|
(125,698
|
)
|
|
Total operating revenues
|
|
|
631,101
|
|
|
76,953
|
|
|
|
1,459,763
|
|
|
560,660
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
|
110,965
|
|
|
104,035
|
|
|
|
217,880
|
|
|
204,451
|
|
|
Transmission
|
|
|
116,209
|
|
|
78,556
|
|
|
|
234,805
|
|
|
153,740
|
|
|
Processing
|
|
|
46,819
|
|
|
29,082
|
|
|
|
89,579
|
|
|
55,097
|
|
|
LOE, excluding production taxes
|
|
|
26,034
|
|
|
29,312
|
|
|
|
51,345
|
|
|
56,207
|
|
|
Production taxes
|
|
|
18,359
|
|
|
16,579
|
|
|
|
38,837
|
|
|
30,886
|
|
|
Exploration
|
|
|
3,481
|
|
|
3,591
|
|
|
|
6,603
|
|
|
6,714
|
|
|
Selling, general and administrative (SG&A)
|
|
|
37,258
|
|
|
54,724
|
|
|
|
80,211
|
|
|
92,293
|
|
|
DD&A
|
|
|
219,211
|
|
|
208,809
|
|
|
|
430,308
|
|
|
414,485
|
|
|
Total operating expenses
|
|
|
578,336
|
|
|
524,688
|
|
|
|
1,149,568
|
|
|
1,013,873
|
|
|
Operating income (loss)
|
|
$
|
52,765
|
|
$
|
(447,735
|
)
|
|
$
|
310,195
|
|
$
|
(453,213
|
)
|
|
(a)
|
|
Includes Upper Devonian wells.
|
|
(b)
|
|
Includes 2,510 and 3,842 MMcfe of Utica sales volume for the three
months ended June 30, 2017 and 2016, respectively, and 4,972 and
7,795 MMcfe of Utica sales volume for the six months ended June
30, 2017 and 2016, respectively.
|
|
(c)
|
|
NGLs, ethane and crude oil were converted to Mcfe at the rate of
six Mcfe per barrel for all periods.
|
|
(d)
|
|
Expenditures for segment assets in the EQT Production segment
included $49.6 million and $34.8 million for general leasing
activity during the three months ended June 30, 2017 and 2016,
respectively, and $94.9 million and $68.1 million for general
leasing activity during the six months ended June 30, 2017 and
2016, respectively. The three and six months ended June 30, 2017
also includes $141.7 million and $811.2 million of cash capital
expenditures for acquisitions, respectively. During the six months
ended June 30, 2017, the Company also incurred $9.7 million of
non-cash capital expenditures for acquisitions.
|
|
|
|
|
|
|
|
EQT GATHERING
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
Firm reservation fee revenues
|
|
$
|
101,858
|
|
$
|
83,560
|
|
$
|
196,129
|
|
$
|
165,567
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
6,479
|
|
|
11,039
|
|
|
11,300
|
|
|
21,491
|
|
Usage fees under interruptible contracts
|
|
|
3,808
|
|
|
5,556
|
|
|
7,045
|
|
|
11,106
|
|
Total volumetric based fee revenues
|
|
|
10,287
|
|
|
16,595
|
|
|
18,345
|
|
|
32,597
|
|
Total operating revenues
|
|
|
112,145
|
|
|
100,155
|
|
|
214,474
|
|
|
198,164
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
|
10,408
|
|
|
9,123
|
|
|
20,863
|
|
|
18,068
|
|
SG&A
|
|
|
8,872
|
|
|
10,263
|
|
|
18,297
|
|
|
19,460
|
|
Depreciation and amortization
|
|
|
9,555
|
|
|
7,594
|
|
|
18,415
|
|
|
14,857
|
|
Total operating expenses
|
|
|
28,835
|
|
|
26,980
|
|
|
57,575
|
|
|
52,385
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
83,310
|
|
$
|
73,175
|
|
$
|
156,899
|
|
$
|
145,779
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Gathered volumes (BBtu per day)
|
|
|
|
|
|
|
|
|
|
Firm capacity reservation
|
|
|
1,780
|
|
|
1,535
|
|
|
1,754
|
|
|
1,478
|
|
Volumetric based services (b)
|
|
|
281
|
|
|
462
|
|
|
253
|
|
|
469
|
|
Total gathered volumes
|
|
|
2,061
|
|
|
1,997
|
|
|
2,007
|
|
|
1,947
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
53,708
|
|
$
|
86,278
|
|
$
|
102,546
|
|
$
|
159,365
|
|
(a)
|
|
Includes fees on volumes gathered in excess of firm contracted
capacity
|
|
(b)
|
|
Includes volumes gathered under interruptible contracts and
volumes gathered in excess of firm contracted capacity.
|
|
|
|
|
|
|
|
EQT TRANSMISSION
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
Firm reservation fee revenues
|
|
$
|
79,512
|
|
$
|
60,284
|
|
$
|
171,786
|
|
$
|
130,393
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
3,503
|
|
|
14,245
|
|
|
6,360
|
|
|
27,674
|
|
Usage fees under interruptible contracts
|
|
|
3,806
|
|
|
3,358
|
|
|
9,772
|
|
|
7,597
|
|
Total volumetric based fee revenues
|
|
|
7,309
|
|
|
17,603
|
|
|
16,132
|
|
|
35,271
|
|
Total operating revenues
|
|
|
86,821
|
|
|
77,887
|
|
|
187,918
|
|
|
165,664
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
|
10,173
|
|
|
7,230
|
|
|
20,004
|
|
|
15,421
|
|
SG&A
|
|
|
7,021
|
|
|
7,866
|
|
|
15,076
|
|
|
16,192
|
|
Depreciation and amortization
|
|
|
11,845
|
|
|
6,937
|
|
|
23,532
|
|
|
13,681
|
|
Total operating expenses
|
|
|
29,039
|
|
|
22,033
|
|
|
58,612
|
|
|
45,294
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
57,782
|
|
$
|
55,854
|
|
$
|
129,306
|
|
$
|
120,370
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Transmission pipeline throughput (BBtu per day)
|
|
|
2,218
|
|
|
1,486
|
|
|
2,171
|
|
|
1,554
|
|
Firm capacity reservation
|
|
|
21
|
|
|
570
|
|
|
24
|
|
|
528
|
|
Volumetric based services (b)
|
|
|
2,239
|
|
|
2,056
|
|
|
2,195
|
|
|
2,082
|
|
Total transmission pipeline throughput
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average contracted firm transmission reservation
commitments
(BBtu per day)
|
|
|
|
|
|
|
|
|
|
|
|
3,341
|
|
|
2,401
|
|
|
3,542
|
|
|
2,703
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
29,978
|
|
$
|
115,946
|
|
$
|
51,367
|
|
$
|
176,017
|
|
(a)
|
|
Includes commodity charges and fees on all volumes transported
under firm contracts as well as transmission fees on volumes in
excess of firm contracted capacity.
|
|
(b)
|
|
Includes volumes transported under interruptible contracts and
volumes transported in excess of firm contracted capacity.
|
