PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced third quarter 2017 results.
Highlights:
-
Production sales volume was 5% higher than third quarter 2016
-
Average realized price was 26% higher than third quarter 2016
-
Received FERC Certificate for Mountain Valley Pipeline
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Financial Results
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Three Months Ended
|
|
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|
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September 30,
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($ millions, except EPS)
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2017
|
|
2016
|
|
Difference
|
|
Net Income/(Loss) Attributable to EQT
|
|
$
|
23.3
|
|
$
|
(8.0
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)
|
|
$
|
31.3
|
|
Adjusted Net Income/(Loss) Attributable to EQT (a non-GAAP measure)
|
|
$
|
20.8
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|
$
|
(47.9
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)
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|
$
|
68.7
|
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Diluted Earnings Per Share (EPS)
|
|
$
|
0.13
|
|
$
|
(0.05
|
)
|
|
$
|
0.18
|
|
Adjusted Earnings Per Diluted Share (EPS) (a non-GAAP measure)
|
|
$
|
0.12
|
|
$
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(0.28
|
)
|
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$
|
0.40
|
|
Net Cash Provided by Operating Activities
|
|
$
|
402.4
|
|
$
|
274.3
|
|
|
$
|
128.1
|
|
Adjusted Operating Cash Flow Attributable to EQT(a non-GAAP measure)
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|
$
|
205.9
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|
$
|
166.5
|
|
|
$
|
39.4
|
Earnings and cash flow were higher primarily as a result of increases in
commodity prices and sales volume. Net income and adjusted net income
attributable to EQT for the three months ended September 30, 2017, were
favorably impacted by a decrease in the estimated effective annual
income tax rate and discrete items together totaling $29.7 million that
resulted in an income tax benefit for the quarter.
The Non-GAAP Disclosures section of this news release provides
reconciliations of non-GAAP financial measures to the most comparable
GAAP financial measure, as well as important disclosures regarding
certain projected non-GAAP financial measures.
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RESULTS BY BUSINESS
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EQT PRODUCTION
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Financial Results
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Three Months Ended
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|
|
|
|
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September 30,
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($ millions, except average realized price)
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2017
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2016
|
|
Difference
|
|
|
|
|
|
|
|
|
|
|
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Sales volume (Bcfe)
|
|
|
205.1
|
|
|
|
196.1
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|
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9.0
|
|
|
|
|
|
|
|
|
|
|
|
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Operating income / (loss)
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$
|
12.1
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|
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$
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(15.5
|
)
|
|
$
|
27.6
|
|
|
Adjusted operating income / (loss) (a non-GAAP measure)
|
|
|
(9.7
|
)
|
|
|
(82.1
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)
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|
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72.4
|
|
|
|
|
|
|
|
|
|
|
|
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Operating revenue
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$
|
597.7
|
|
|
$
|
508.1
|
|
|
$
|
89.6
|
|
|
Adjusted operating revenue (a non-GAAP measure)
|
|
|
566.8
|
|
|
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430.7
|
|
|
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136.1
|
|
|
|
|
|
|
|
|
|
|
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Average realized price ($/Mcfe)
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$
|
2.76
|
|
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$
|
2.20
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
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Pipeline and net marketing services
|
|
$
|
9.1
|
|
|
$
|
10.8
|
|
|
$
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
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Operating expenses
|
|
$
|
585.6
|
|
|
$
|
523.6
|
|
|
$
|
62.0
|
|
The increase in operating income in the quarter was primarily due to a
higher average realized price and increased sales volumes of produced
natural gas and NGLs, partly offset by increased operating expenses and
lower gains on derivatives not designated as hedges.
The increase in the average realized price for the quarter was primarily
due to an improvement in the average natural gas differential of $0.36
per Mcf, higher liquids prices, and an increase in the average NYMEX
natural gas price net of cash settled derivatives.
Operating expenses for the quarter were $62.0 million higher than the
same period last year. Transmission expense increased $38.3 million,
gathering expense increased $13.7 million, processing expense increased
$10.8 million, and depreciation, depletion and amortization expense
(DD&A) increased $3.3 million, consistent with increased activity and
access to premium markets. Selling, general and administrative expense
(SG&A) was $4.5 million lower due to a decrease in a legal reserve.
The Company drilled (spud) 35 gross wells in the third quarter 2017,
including 29 Marcellus wells, with an average expected length-of-pay of
7,500 feet; and 6 Upper Devonian wells, with an average expected
length-of-pay of 7,000 feet. The Company turned-in-line 49 wells during
the third quarter 2017, including 32 Marcellus wells, and 16 Upper
Devonian wells.
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EQT GATHERING
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Financial Results
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Three Months Ended
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|
|
|
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September 30,
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|
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($ millions)
|
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2017
|
|
2016
|
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Difference
|
|
|
|
|
|
|
|
|
|
|
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Operating income
|
|
$
|
85.8
|
|
$
|
72.5
|
|
$
|
13.3
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$
|
116.5
|
|
$
|
99.1
|
|
$
|
17.4
|
|
Firm reservation fee revenues
|
|
$
|
104.8
|
|
$
|
83.6
|
|
$
|
21.2
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
30.7
|
|
$
|
26.6
|
|
$
|
4.1
|
EQT Gathering revenues increased primarily driven by production
development in the Marcellus Shale. Firm reservation fee revenues
increased primarily as a result of third parties and affiliates
contracting for additional firm gathering capacity.
Operating expenses increased primarily as a result of higher
depreciation and amortization expense of $2.3 million, due to additional
assets placed in-service including those associated with the Range
Resources Header Pipeline project and a Northern West Virginia Marcellus
gathering system expansion project, and higher personnel costs.
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EQT TRANSMISSION
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Financial Results
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Three Months Ended
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|
|
|
|
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September 30,
|
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|
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($ millions)
|
|
2017
|
|
2016
|
|
Difference
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
59.7
|
|
$
|
53.7
|
|
$
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$
|
90.7
|
|
$
|
77.6
|
|
$
|
13.1
|
|
Firm reservation fee revenues
|
|
$
|
84.4
|
|
$
|
59.6
|
|
$
|
24.8
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
31.0
|
|
$
|
23.9
|
|
$
|
7.1
|
EQT Transmission revenues increased primarily driven by production
development in the Marcellus Shale. Firm reservation fee revenues
increased primarily due to affiliates contracting for firm capacity on
the Ohio Valley Connector (OVC).
Operating expenses were $7.1 million higher than last year driven
primarily by increased depreciation and amortization expense of $5.3
million and higher operating and maintenance expense of $1.9 million
resulting from the OVC project placed in-service in the fourth quarter
of 2016.
OTHER BUSINESS
Acquisition of Rice Energy Update
On June 19, 2017, EQT announced that it entered into a definitive
agreement to acquire Rice Energy Inc. (Rice). Completion of the
transaction is subject to the approval of both EQT and Rice
shareholders, as well as certain other customary closing conditions. The
special meetings of EQT and Rice shareholders are scheduled to be held
for these purposes on November 9, 2017.
Notes Issuance
On October 4, 2017, the Company completed the public offering of Senior
Notes and Floating Rate Notes totaling $3.0 billion. The Company expects
to use the net proceeds from the sale of the notes to fund a portion of
the cash consideration for the Rice acquisition, to pay expenses related
to the Rice acquisition and related transactions, to redeem or repay
certain Company indebtedness due in 2018 and for other general corporate
purposes.
Mountain Valley Pipeline
On October 13, 2017, the Federal Energy Regulatory Commission issued the
Certificate of Public Convenience and Necessity for the Mountain Valley
Pipeline (MVP) project. The Certificate follows more than three years of
project planning, development, and review. Mountain Valley Pipeline, LLC
(MVP JV) expects to receive the remaining permits and approvals in the
fourth quarter this year, with construction to commence soon after. MVP
JV has secured a total of 2 Bcf per day of firm capacity commitments at
20-year terms and continues to target a late 2018 in-service date.
EQT Midstream Partners, LP (NYSE: EQM) / EQT GP Holdings, LP (NYSE:
EQGP)
On October 24, 2017, EQM announced a cash distribution to its
unitholders of $0.98 per unit for the third quarter. EQGP also announced
a cash distribution to its unitholders of $0.228 per unit for the third
quarter 2017.
The third 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
third quarter 2017, EQT’s results reflected earnings of $82.1 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)
|
|
|
September 30, 2017
|
|
EQM net income
|
|
|
$
|
142,938
|
|
|
Less: General Partner interest (including incentive distribution
rights)
|
|
|
|
40,130
|
|
|
Limited Partner interest in net income
|
|
|
$
|
102,808
|
|
|
|
|
|
|
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EQM LP units
|
|
|
|
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Publicly owned (73.4%)
|
|
|
$
|
75,463
|
|
|
EQGP owned (26.6%)
|
|
|
|
27,345
|
|
|
Limited Partner interest in net income
|
|
|
$
|
102,808
|
|
|
|
|
|
|
|
EQGP net income
|
|
|
|
|
EQM LP unit ownership
|
|
|
$
|
27,345
|
|
|
EQM GP unit ownership (including incentive distribution rights)
|
|
|
|
40,130
|
|
|
EQGP incremental expenses
|
|
|
|
(531
|
)
|
|
Limited Partner interest in net income
|
|
|
$
|
66,944
|
|
|
|
|
|
|
|
EQGP units
|
|
|
|
|
Publicly owned LP (9.9%)
|
|
|
$
|
6,654
|
|
|
EQT owned LP (90.1%)
|
|
|
|
60,290
|
|
|
Limited Partner interest in net income
|
|
|
$
|
66,944
|
|
|
|
|
|
|
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Noncontrolling interest in EQT earnings
|
|
|
|
|
EQM publicly-owned LP units
|
|
|
$
|
75,463
|
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EQGP publicly-owned LP units
|
|
|
|
6,654
|
|
|
Net income attributable to noncontrolling interest
|
|
|
$
|
82,117
|
|
Hedging
As of October 24, 2017, the approximate volumes and prices of the
Company’s derivative commodity instruments hedging sales of produced gas
for 2017 through 2019 were:
|
|
|
2017
(a)
|
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2018
|
|
2019
|
|
NYMEX Swaps
|
|
|
|
|
|
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Total Volume (Bcf)
|
|
|
120
|
|
|
|
189
|
|
|
19
|
|
Average Price per Mcf (NYMEX)
|
|
$
|
3.35
|
|
|
$
|
3.18
|
|
$
|
3.12
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
|
|
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Total Volume (Bcf)
|
|
|
6
|
|
|
|
18
|
|
|
−
|
|
Average Floor Price per Mcf (NYMEX)
|
|
$
|
3.06
|
|
|
$
|
3.16
|
|
$
|
−
|
|
Average Cap Price per Mcf (NYMEX)
|
|
$
|
3.93
|
|
|
$
|
3.63
|
|
$
|
−
|
(a)October through December 31
-
The Company also sold calendar year 2017 and 2018 calls/swaptions for
approximately 8 Bcf and 33 Bcf, respectively, at strike prices of
$3.53 per Mcf and $3.47 per Mcf, respectively
-
For 2017 and 2018, the Company sold puts for approximately 1 Bcf and 3
Bcf, respectively, at a strike price of $2.63 per Mcf
-
The average price is based on a conversion rate of 1.05 MMBtu/Mcf
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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Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
EQT Production
|
|
$
|
12,082
|
|
|
$
|
(15,465
|
)
|
|
$
|
322,277
|
|
|
$
|
(468,678
|
)
|
|
EQT Gathering
|
|
|
85,817
|
|
|
|
72,495
|
|
|
|
242,716
|
|
|
|
218,274
|
|
|
EQT Transmission
|
|
|
59,689
|
|
|
|
53,715
|
|
|
|
188,995
|
|
|
|
174,085
|
|
|
Unallocated expense
|
|
|
(19,894
|
)
|
|
|
(2,288
|
)
|
|
|
(35,856
|
)
|
|
|
(12,515
|
)
|
|
Operating income (loss)
|
|
$
|
137,694
|
|
|
$
|
108,457
|
|
|
$
|
718,132
|
|
|
$
|
(88,834
|
)
|
Unallocated expenses consist primarily of compensation and
administrative expenses, including Rice Energy acquisition-related costs.
Marcellus Horizontal Well Status (cumulative since inception)
|
|
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
|
|
9/30/17
|
|
6/30/17
|
|
3/31/17**
|
|
12/31/16*
|
|
9/30/16*
|
|
Wells drilled (spud)
|
|
1,288
|
|
1,259
|
|
1,216
|
|
1,046
|
|
949
|
|
Wells online
|
|
1,060
|
|
1,028
|
|
1,013
|
|
875
|
|
816
|
|
Wells complete, not online
|
|
21
|
|
15
|
|
20
|
|
21
|
|
32
|
|
Wells drilled, uncompleted
|
|
207
|
|
216
|
|
183
|
|
150
|
|
101
|
*Includes wells acquired in 2016
**Includes wells
acquired in Q1 2017
NON-GAAP DISCLOSURES
Adjusted Net Income (Loss) Attributable to EQT and Adjusted Earnings
per Diluted Share (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 (loss) attributable
to EQT and adjusted EPS should not be considered as alternatives to net
income (loss) attributable to EQT or earnings per diluted share (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 September 30, 2017.
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
(thousands, except per share information)
|
|
2017
|
|
|
2016
|
|
Net income (loss) attributable to EQT, as reported
|
|
$
|
23,340
|
|
|
|
$
|
(8,016
|
)
|
|
Add back / (deduct):
|
|
|
|
|
|
|
Rice Energy acquisition costs
|
|
|
17,593
|
|
|
|
|
−
|
|
|
Gain on derivatives not designated as hedges
|
|
|
(35,625
|
)
|
|
|
|
(93,356
|
)
|
|
Net cash settlements received on derivatives not designated as hedges
|
|
|
13,321
|
|
|
|
|
27,287
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
537
|
|
|
|
|
(558
|
)
|
|
Tax impact of non-GAAP items*
|
|
|
1,678
|
|
|
|
|
26,784
|
|
|
Adjusted net income (loss) attributable to EQT**
|
|
$
|
20,844
|
|
|
|
$
|
(47,859
|
)
|
|
Diluted weighted average common shares outstanding
|
|
|
173,675
|
|
|
|
|
172,867
|
|
|
Diluted EPS, as adjusted
|
|
$
|
0.12
|
|
|
|
$
|
(0.28
|
)
|
|
*
|
|
A tax rate of 40.2% was applied to the items under the caption “Add
back (deduct)” for the three month periods ended September 30, 2017
and 2016. 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.
|
|
**
|
|
Adjusted net income attributable to EQT includes favorable items
impacting income tax expense for the three months ended September
30, 2017, of $29.7 million. This includes the favorable impact of
the decrease in the estimated effective annual tax rate from 23.0%
at June 30, 2017, to 19.5% at September 30, 2017, on pre-tax income
attributable to the six months ended June 30, 2017, and $12.4
million of discrete benefit recorded in the three months ended
September 30, 2017, related to refined estimates on the 2016 income
tax return.
|
|
|
|
|
Operating Cash Flow and Adjusted Operating Cash Flow Attributable to
EQT
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
September 30, 2017.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net cash provided by operating activities
|
|
$
|
402,378
|
|
|
$
|
274,295
|
|
|
$
|
1,211,372
|
|
|
$
|
767,699
|
|
|
Add back / (deduct)
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
(80,627
|
)
|
|
|
(11,310
|
)
|
|
|
(106,257
|
)
|
|
|
29,508
|
|
|
Operating cash flow (a non-GAAP measure)
|
|
$
|
321,751
|
|
|
$
|
262,985
|
|
|
$
|
1,105,115
|
|
|
$
|
797,207
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
EQT Midstream Partners adjusted EBITDA(1)
|
|
|
(170,498
|
)
|
|
|
(136,036
|
)
|
|
|
(504,400
|
)
|
|
|
(415,743
|
)
|
|
Cash distribution payable to EQT(2)
|
|
|
54,655
|
|
|
|
39,553
|
|
|
|
150,781
|
|
|
|
107,632
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
205,908
|
|
|
$
|
166,502
|
|
|
$
|
751,496
|
|
|
$
|
489,096
|
|
|
(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 nine months ended
September 30, 2017 and 2016, represents the distribution payable
from EQGP to EQT related to the respective period.
|
|
|
|
|
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 the Financial Information by Business
Segment footnote to be included in EQT’s report on Form 10-Q for the
quarter ended September 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. EQT 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 Operating Revenue
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
$ in thousands (unless noted)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
EQT Production total operating revenues, as reported on segment page
|
|
$
|
597,718
|
|
|
$
|
508,092
|
|
|
$
|
2,057,481
|
|
|
$
|
1,068,752
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(35,625
|
)
|
|
|
(93,356
|
)
|
|
|
(222,693
|
)
|
|
|
32,342
|
|
|
Net cash settlements received (paid) on derivatives not designated
as hedges
|
|
|
13,321
|
|
|
|
27,287
|
|
|
|
(6,837
|
)
|
|
|
222,516
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
537
|
|
|
|
(558
|
)
|
|
|
1,595
|
|
|
|
(1,574
|
)
|
|
Pipeline and net marketing services
|
|
|
(9,140
|
)
|
|
|
(10,797
|
)
|
|
|
(31,656
|
)
|
|
|
(28,196
|
)
|
|
EQT Production adjusted operating revenue, a non-GAAP measure
|
|
$
|
566,811
|
|
|
$
|
430,668
|
|
|
$
|
1,797,890
|
|
|
$
|
1,293,840
|
|
|
Total sales volumes (MMcfe)
|
|
|
205,067
|
|
|
|
196,085
|
|
|
|
593,081
|
|
|
|
560,568
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
|
$
|
2.20
|
|
|
$
|
3.03
|
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production Adjusted Operating (Loss) Income
The table below reconciles EQT Production adjusted operating (loss)
income, 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 (loss) income 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 (loss) income should not be considered as an
alternative to EQT Corporation operating income (loss) presented in
accordance with GAAP. EQT Production adjusted operating (loss) income as
presented excludes the revenue impact of changes in the fair value of
derivative instruments prior to settlement. Management utilizes EQT
Production adjusted operating (loss) income 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 (loss) income as presented provides useful
information for investors for evaluating period-over-period earnings.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
EQT Production operating income (loss), as reported on segment page
|
|
$
|
12,082
|
|
|
$
|
(15,465
|
)
|
|
$
|
322,277
|
|
|
$
|
(468,678
|
)
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(35,625
|
)
|
|
|
(93,356
|
)
|
|
|
(222,693
|
)
|
|
|
32,342
|
|
|
Net cash settlements received (paid) on derivatives not designated
as hedges
|
|
|
13,321
|
|
|
|
27,287
|
|
|
|
(6,837
|
)
|
|
|
222,516
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
537
|
|
|
|
(558
|
)
|
|
|
1,595
|
|
|
|
(1,574
|
)
|
|
Pension settlement charges
|
|
|
−
|
|
|
|
−
|
|
|
|
−
|
|
|
|
9,403
|
|
|
Restructuring charges
|
|
|
−
|
|
|
|
−
|
|
|
|
−
|
|
|
|
4,360
|
|
|
EQT Production adjusted operating (loss) income
|
|
$
|
(9,685
|
)
|
|
$
|
(82,092
|
)
|
|
$
|
94,342
|
|
|
$
|
(201,631
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 September 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
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands, unless noted)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
|
$
|
142,938
|
|
|
$
|
133,660
|
|
|
$
|
425,273
|
|
|
$
|
402,254
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
9,426
|
|
|
|
2,802
|
|
|
|
26,014
|
|
|
|
11,448
|
|
|
Depreciation and amortization expense
|
|
|
22,244
|
|
|
|
14,639
|
|
|
|
64,191
|
|
|
|
43,177
|
|
|
Income tax expense
|
|
|
−
|
|
|
|
3,227
|
|
|
|
−
|
|
|
|
10,147
|
|
|
Preferred interest payments received post conversion
|
|
|
2,746
|
|
|
|
−
|
|
|
|
8,238
|
|
|
|
−
|
|
|
Non-cash long-term compensation expense
|
|
|
−
|
|
|
|
−
|
|
|
|
225
|
|
|
|
195
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Equity income
|
|
|
(6,025
|
)
|
|
|
(2,700
|
)
|
|
|
(15,413
|
)
|
|
|
(6,139
|
)
|
|
AFUDC - equity
|
|
|
(831
|
)
|
|
|
(8,003
|
)
|
|
|
(4,128
|
)
|
|
|
(16,733
|
)
|
|
Pre-acquisition capital lease payments for AVC
|
|
|
−
|
|
|
|
(3,786
|
)
|
|
|
−
|
|
|
|
(17,186
|
)
|
|
Adjusted EBITDA attributable to the assets prior to acquisition
|
|
|
−
|
|
|
|
(3,803
|
)
|
|
|
−
|
|
|
|
(11,420
|
)
|
|
EQT Midstream Partners Adjusted EBITDA
|
|
$
|
170,498
|
|
|
$
|
136,036
|
|
|
$
|
504,400
|
|
|
$
|
415,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third 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 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 the general partner interest and 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 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, and the timing of, 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 has filed with the SEC
a registration statement on Form S-4 that contains a joint proxy
statement of EQT and Rice Energy Inc. (Rice) and also constitutes a
prospectus of EQT. The registration statement was declared effective by
the SEC on October 12, 2017 and EQT and Rice commenced mailing the
definitive joint proxy statement/prospectus to their respective
shareholders on or about October 12, 2017. 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 DEFINITIVE JOINT
PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND ANY OTHER
RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN
OR WILL CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy
of the registration statement and the 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 documents filed with the SEC by EQT can 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. Copies of the documents filed with
the SEC by Rice can be obtained, without charge, by directing a request
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, is contained
in the definitive joint proxy statement/prospectus of EQT and Rice and
other relevant materials filed with the SEC. Free copies of this
document may be obtained as described in the preceding paragraph.
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
Statements of Consolidated Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(Thousands except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
552,953
|
|
|
$
|
403,939
|
|
|
$
|
1,803,132
|
|
$
|
1,072,898
|
|
|
Pipeline and net marketing services
|
|
|
71,735
|
|
|
|
59,431
|
|
|
|
222,904
|
|
|
188,770
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
35,625
|
|
|
|
93,356
|
|
|
|
222,693
|
|
|
(32,342
|
)
|
|
Total operating revenues
|
|
|
660,313
|
|
|
|
556,726
|
|
|
|
2,248,729
|
|
|
1,229,326
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
136,219
|
|
|
|
89,883
|
|
|
|
404,743
|
|
|
251,283
|
|
|
Operation and maintenance
|
|
|
20,604
|
|
|
|
18,198
|
|
|
|
61,471
|
|
|
51,687
|
|
|
Production
|
|
|
39,630
|
|
|
|
38,999
|
|
|
|
129,812
|
|
|
126,092
|
|
|
Exploration
|
|
|
2,436
|
|
|
|
2,671
|
|
|
|
9,039
|
|
|
9,385
|
|
|
Selling, general and administrative
|
|
|
77,170
|
|
|
|
61,430
|
|
|
|
206,237
|
|
|
196,765
|
|
|
Depreciation, depletion and amortization
|
|
|
246,560
|
|
|
|
237,088
|
|
|
|
719,295
|
|
|
682,948
|
|
|
Total operating expenses
|
|
|
522,619
|
|
|
|
448,269
|
|
|
|
1,530,597
|
|
|
1,318,160
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
137,694
|
|
|
|
108,457
|
|
|
|
718,132
|
|
|
(88,834
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
6,859
|
|
|
|
10,715
|
|
|
|
16,878
|
|
|
23,199
|
|
|
Interest expense
|
|
|
50,377
|
|
|
|
35,984
|
|
|
|
137,110
|
|
|
108,469
|
|
|
Income (loss) before income taxes
|
|
|
94,176
|
|
|
|
83,188
|
|
|
|
597,900
|
|
|
(174,104
|
)
|
|
Income tax (benefit) expense
|
|
|
(11,281
|
)
|
|
|
13,084
|
|
|
|
119,093
|
|
|
(151,826
|
)
|
|
Net income (loss)
|
|
|
105,457
|
|
|
|
70,104
|
|
|
|
478,807
|
|
|
(22,278
|
)
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
82,117
|
|
|
|
78,120
|
|
|
|
250,349
|
|
|
238,747
|
|
|
Net income (loss) attributable to EQT Corporation
|
|
$
|
23,340
|
|
|
$
|
(8,016
|
)
|
|
$
|
228,458
|
|
$
|
(261,025
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
173,476
|
|
|
|
172,867
|
|
|
|
173,368
|
|
|
165,197
|
|
|
Net income (loss)
|
|
$
|
0.13
|
|
|
$
|
(0.05
|
)
|
|
$
|
1.32
|
|
$
|
(1.58
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
173,675
|
|
|
|
172,867
|
|
|
|
173,572
|
|
|
165,197
|
|
|
Net income (loss)
|
|
$
|
0.13
|
|
|
$
|
(0.05
|
)
|
|
$
|
1.32
|
|
$
|
(1.58
|
)
|
|
Dividends declared per common share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
PRICE RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
in thousands (unless noted)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
NATURAL GAS
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcf)
|
|
|
176,311
|
|
|
|
175,191
|
|
|
|
508,457
|
|
|
|
508,206
|
|
|
NYMEX price ($/MMBtu) (a)
|
|
$
|
3.00
|
|
|
$
|
2.81
|
|
|
$
|
3.16
|
|
|
$
|
2.29
|
|
|
Btu uplift
|
|
|
0.30
|
|
|
|
0.27
|
|
|
|
0.28
|
|
|
|
0.21
|
|
|
Natural gas price ($/Mcf)
|
|
$
|
3.30
|
|
|
$
|
3.08
|
|
|
$
|
3.44
|
|
|
$
|
2.50
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis ($/Mcf) (b)
|
|
|
(0.81
|
)
|
|
|
(1.21
|
)
|
|
|
(0.53
|
)
|
|
|
(0.80
|
)
|
|
Cash settled basis swaps (not designated as hedges) ($/Mcf)
|
|
|
(0.04
|
)
|
|
|
–
|
|
|
|
(0.02
|
)
|
|
|
0.05
|
|
|
Average differential, including cash settled basis swaps ($/Mcf)
|
|
$
|
(0.85
|
)
|
|
$
|
(1.21
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
(0.75
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Average adjusted price ($/Mcf)
|
|
$
|
2.45
|
|
|
$
|
1.87
|
|
|
$
|
2.89
|
|
|
$
|
1.75
|
|
|
Cash settled derivatives (cash flow hedges) ($/Mcf)
|
|
|
0.01
|
|
|
|
0.14
|
|
|
|
0.01
|
|
|
|
0.14
|
|
|
Cash settled derivatives (not designated as hedges) ($/Mcf)
|
|
|
0.13
|
|
|
|
0.15
|
|
|
|
0.01
|
|
|
|
0.38
|
|
|
Average natural gas price, including cash settled derivatives ($/Mcf)
|
|
$
|
2.59
|
|
|
$
|
2.16
|
|
|
$
|
2.91
|
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas sales, including cash settled derivatives
|
|
$
|
456,347
|
|
|
$
|
378,484
|
|
|
$
|
1,484,711
|
|
|
$
|
1,155,898
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS
|
|
|
|
|
|
|
|
|
|
NGLs (excluding ethane):
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
19,054
|
|
|
|
16,803
|
|
|
|
55,089
|
|
|
|
44,897
|
|
|
Sales volume (Mbbls)
|
|
|
3,176
|
|
|
|
2,799
|
|
|
|
9,182
|
|
|
|
7,482
|
|
|
Price ($/Bbl)
|
|
$
|
29.81
|
|
|
$
|
14.82
|
|
|
$
|
28.33
|
|
|
$
|
15.26
|
|
|
Cash settled derivatives (not designated as hedges) ($/Bbl)
|
|
|
(0.44
|
)
|
|
|
–
|
|
|
|
(0.43
|
)
|
|
|
–
|
|
|
Average NGL price, including cash settled derivatives ($/Bbl)
|
|
$
|
29.37
|
|
|
$
|
14.82
|
|
|
$
|
27.90
|
|
|
$
|
15.26
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL sales
|
|
$
|
93,273
|
|
|
$
|
41,508
|
|
|
$
|
256,123
|
|
|
$
|
114,188
|
|
|
Ethane:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
8,226
|
|
|
|
2,967
|
|
|
|
24,970
|
|
|
|
4,144
|
|
|
Sales volume (Mbbls)
|
|
|
1,371
|
|
|
|
495
|
|
|
|
4,162
|
|
|
|
691
|
|
|
Price ($/Bbl)
|
|
$
|
5.92
|
|
|
$
|
8.02
|
|
|
$
|
6.45
|
|
|
$
|
8.09
|
|
|
Ethane sales
|
|
$
|
8,119
|
|
|
$
|
3,966
|
|
|
$
|
26,858
|
|
|
$
|
5,590
|
|
|
Oil:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
1,476
|
|
|
|
1,124
|
|
|
|
4,565
|
|
|
|
3,321
|
|
|
Sales volume (Mbbls)
|
|
|
246
|
|
|
|
188
|
|
|
|
761
|
|
|
|
554
|
|
|
Price ($/Bbl)
|
|
$
|
36.86
|
|
|
$
|
35.81
|
|
|
$
|
39.69
|
|
|
$
|
32.81
|
|
|
Oil sales
|
|
$
|
9,072
|
|
|
$
|
6,710
|
|
|
$
|
30,198
|
|
|
$
|
18,164
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liquids sales volume (MMcfe) (c )
|
|
|
28,756
|
|
|
|
20,894
|
|
|
|
84,624
|
|
|
|
52,362
|
|
|
Total liquids sales volume (Mbbls)
|
|
|
4,793
|
|
|
|
3,482
|
|
|
|
14,105
|
|
|
|
8,727
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquids sales
|
|
$
|
110,464
|
|
|
$
|
52,184
|
|
|
$
|
313,179
|
|
|
$
|
137,942
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PRODUCTION
|
|
|
|
|
|
|
|
|
|
Total natural gas & liquids sales, including cash settled
derivatives (d)
|
|
$
|
566,811
|
|
|
$
|
430,668
|
|
|
$
|
1,797,890
|
|
|
$
|
1,293,840
|
|
|
Total sales volume (MMcfe)
|
|
|
205,067
|
|
|
|
196,085
|
|
|
|
593,081
|
|
|
|
560,568
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
|
$
|
2.20
|
|
|
$
|
3.03
|
|
|
$
|
2.31
|
|
|
(a)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $3.00 and $2.81 for
the three months ended September 30, 2017 and 2016, respectively,
and $3.17 and $2.29 for the nine months ended September 30, 2017 and
2016, respectively).
|
|
(b)
|
|
Basis represents the difference between the ultimate sales price for
natural gas and the NYMEX natural gas price.
|
|
(c)
|
|
NGLs, ethane and crude oil were converted to Mcfe at the rate of six
Mcfe per barrel for all periods.
|
|
(d)
|
|
Also referred to in this report as EQT Production adjusted operating
revenues, a non-GAAP supplemental financial measure.
|
|
|
|
|
|
|
|
EQT PRODUCTION
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
Marcellus (a)
|
|
|
181,650
|
|
|
171,468
|
|
|
|
523,122
|
|
|
486,439
|
|
|
Other (b)
|
|
|
23,417
|
|
|
24,617
|
|
|
|
69,959
|
|
|
74,129
|
|
|
Total production sales volumes (c)
|
|
|
205,067
|
|
|
196,085
|
|
|
|
593,081
|
|
|
560,568
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
2,229
|
|
|
2,131
|
|
|
|
2,172
|
|
|
2,046
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
$
|
2.20
|
|
|
$
|
3.03
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering to EQT Gathering ($/Mcfe)
|
|
$
|
0.47
|
|
$
|
0.46
|
|
|
$
|
0.48
|
|
$
|
0.49
|
|
|
Transmission to EQT Transmission ($/Mcfe)
|
|
$
|
0.23
|
|
$
|
0.19
|
|
|
$
|
0.23
|
|
$
|
0.19
|
|
|
Third party gathering and transmission ($/Mcfe)
|
|
$
|
0.45
|
|
$
|
0.29
|
|
|
$
|
0.46
|
|
$
|
0.29
|
|
|
Processing ($/Mcfe)
|
|
$
|
0.22
|
|
$
|
0.17
|
|
|
$
|
0.23
|
|
$
|
0.16
|
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$
|
0.13
|
|
$
|
0.14
|
|
|
$
|
0.13
|
|
$
|
0.15
|
|
|
Production taxes ($/Mcfe)
|
|
$
|
0.07
|
|
$
|
0.05
|
|
|
$
|
0.09
|
|
$
|
0.07
|
|
|
Production depletion ($/Mcfe)
|
|
$
|
1.03
|
|
$
|
1.06
|
|
|
$
|
1.03
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (DD&A) (thousands):
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
$
|
210,393
|
|
$
|
207,120
|
|
|
$
|
613,379
|
|
$
|
594,408
|
|
|
Other DD&A
|
|
|
13,710
|
|
|
13,648
|
|
|
|
41,032
|
|
|
40,845
|
|
|
Total DD&A
|
|
$
|
224,103
|
|
$
|
220,768
|
|
|
$
|
654,411
|
|
$
|
635,253
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands) (d)
|
|
|
449,303
|
|
|
622,856
|
|
|
|
1,850,482
|
|
|
1,094,747
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
552,953
|
|
$
|
403,939
|
|
|
$
|
1,803,132
|
|
$
|
1,072,898
|
|
|
Pipeline and net marketing services
|
|
|
9,140
|
|
|
10,797
|
|
|
|
31,656
|
|
|
28,196
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
35,625
|
|
|
93,356
|
|
|
|
222,693
|
|
|
(32,342
|
)
|
|
Total operating revenues
|
|
|
597,718
|
|
|
508,092
|
|
|
|
2,057,481
|
|
|
1,068,752
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
|
116,921
|
|
|
103,231
|
|
|
|
334,801
|
|
|
307,682
|
|
|
Transmission
|
|
|
119,729
|
|
|
81,456
|
|
|
|
354,534
|
|
|
235,196
|
|
|
Processing
|
|
|
44,166
|
|
|
33,332
|
|
|
|
133,745
|
|
|
88,429
|
|
|
LOE, excluding production taxes
|
|
|
26,177
|
|
|
28,303
|
|
|
|
77,522
|
|
|
84,510
|
|
|
Production taxes
|
|
|
13,453
|
|
|
10,696
|
|
|
|
52,290
|
|
|
41,582
|
|
|
Exploration
|
|
|
2,437
|
|
|
2,670
|
|
|
|
9,040
|
|
|
9,384
|
|
|
Selling, general and administrative (SG&A)
|
|
|
38,650
|
|
|
43,101
|
|
|
|
118,861
|
|
|
135,394
|
|
|
DD&A
|
|
|
224,103
|
|
|
220,768
|
|
|
|
654,411
|
|
|
635,253
|
|
|
Total operating expenses
|
|
|
585,636
|
|
|
523,557
|
|
|
|
1,735,204
|
|
|
1,537,430
|
|
|
Operating income (loss)
|
|
$
|
12,082
|
|
$
|
(15,465
|
)
|
|
$
|
322,277
|
|
$
|
(468,678
|
)
|
|
(a)
|
|
Includes Upper Devonian wells.
|
|
(b)
|
|
Includes 2,267 and 3,847 MMcfe of Utica sales volume for the three
months ended September 30, 2017 and 2016, respectively, and 7,239
and 11,641 MMcfe of Utica sales volume for the nine months ended
September 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 $52.1 million and $30.1 million for general leasing
activity during the three months ended September 30, 2017 and 2016,
respectively, and $147.0 million and $98.2 million for general
leasing activity during the nine months ended September 30, 2017 and
2016, respectively. The three and nine months ended September 30,
2017 includes $7.8 million and $819.0 million of cash capital
expenditures, respectively for acquisitions. The three and nine
months ended September 30, 2016 includes $412.3 million of cash
capital expenditures for acquisitions. During the nine months ended
September 30, 2017 and 2016, the Company also incurred $7.5 million
and $6.2 million of non-cash capital expenditures for acquisitions.
|
|
|
|
|
|
|
|
EQT GATHERING
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
Firm reservation fee revenues
|
|
$ 104,772
|
|
$ 83,560
|
|
$ 300,901
|
|
$ 249,127
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
7,873
|
|
10,024
|
|
19,173
|
|
31,515
|
|
Usage fees under interruptible contracts
|
|
3,877
|
|
5,557
|
|
10,922
|
|
16,663
|
|
Total volumetric based fee revenues
|
|
11,750
|
|
15,581
|
|
30,095
|
|
48,178
|
|
Total operating revenues
|
|
116,522
|
|
99,141
|
|
330,996
|
|
297,305
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
10,219
|
|
9,672
|
|
31,082
|
|
27,740
|
|
SG&A
|
|
10,503
|
|
9,311
|
|
28,800
|
|
28,771
|
|
Depreciation and amortization
|
|
9,983
|
|
7,663
|
|
28,398
|
|
22,520
|
|
Total operating expenses
|
|
30,705
|
|
26,646
|
|
88,280
|
|
79,031
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$ 85,817
|
|
$ 72,495
|
|
$ 242,716
|
|
$ 218,274
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Gathered volumes (BBtu per day)
|
|
|
|
|
|
|
|
|
|
Firm capacity reservation
|
|
1,838
|
|
1,563
|
|
1,783
|
|
1,506
|
|
Volumetric based services (b)
|
|
370
|
|
451
|
|
292
|
|
463
|
|
Total gathered volumes
|
|
2,208
|
|
2,014
|
|
2,075
|
|
1,969
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$ 48,182
|
|
$ 88,390
|
|
$ 150,728
|
|
$ 247,755
|
|
(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
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
Firm reservation fee revenues
|
|
$ 84,438
|
|
$ 59,610
|
|
$ 256,224
|
|
$ 190,003
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
3,427
|
|
14,600
|
|
9,787
|
|
42,274
|
|
Usage fees under interruptible contracts
|
|
2,806
|
|
3,421
|
|
12,578
|
|
11,018
|
|
Total volumetric based fee revenues
|
|
6,233
|
|
18,021
|
|
22,365
|
|
53,292
|
|
Total operating revenues
|
|
90,671
|
|
77,631
|
|
278,589
|
|
243,295
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
10,385
|
|
8,526
|
|
30,389
|
|
23,947
|
|
SG&A
|
|
8,336
|
|
8,414
|
|
23,412
|
|
24,606
|
|
Depreciation and amortization
|
|
12,261
|
|
6,976
|
|
35,793
|
|
20,657
|
|
Total operating expenses
|
|
30,982
|
|
23,916
|
|
89,594
|
|
69,210
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$ 59,689
|
|
$ 53,715
|
|
$ 188,995
|
|
$ 174,085
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Transmission pipeline throughput (BBtu per day)
|
|
2,517
|
|
1,440
|
|
2,288
|
|
1,515
|
|
Firm capacity reservation
|
|
21
|
|
610
|
|
22
|
|
556
|
|
Volumetric based services (b)
|
|
2,538
|
|
2,050
|
|
2,310
|
|
2,071
|
|
Total transmission pipeline throughput
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average contracted firm transmission reservation commitments (BBtu
per day)
|
|
|
|
|
|
|
|
|
|
|
3,474
|
|
2,365
|
|
3,519
|
|
2,591
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$ 22,312
|
|
$ 77,940
|
|
$ 73,679
|
|
$ 253,957
|
|
(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.
|
