PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced financial and operational
performance results for the first quarter 2018.
Highlights:
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Announced plan to separate midstream and upstream businesses
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Announced midstream streamlining transaction details
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Recorded $2.3 billion non-cash impairment charge for Huron and Permian
Plays
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Increase in adjusted operating cash flow of 116%
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Decrease of 26% in Production’s per unit cash operating costs
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Financial Results
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Three Months Ended
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March 31,
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($ millions, except EPS)
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2018
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2017
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Difference
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Net (loss) income attributable to EQT
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$
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(1,586.0)
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$
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164.0
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$ (1,750.0)
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Adjusted net income attributable to EQT (a non-GAAP measure)
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$
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268.3
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$
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75.9
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$ 192.4
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Diluted earnings per share (EPS)
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$
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(5.99)
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$
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0.95
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$ (6.94)
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Adjusted earnings per diluted share (EPS) (a non-GAAP measure)
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$
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1.01
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$
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0.44
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$ 0.57
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Net cash provided by operating activities
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$
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904.4
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$
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514.8
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$ 389.6
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Adjusted operating cash flow attributable to EQT (a non-GAAP measure)
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$
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718.4
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$
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332.4
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$ 386.0
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Net loss attributable to EQT for the first quarter 2018 was impacted by
an impairment charge of $2.3 billion associated with the Huron and
Permian Plays; increases in other operating costs; lower gains on
derivatives not designated as hedges; and higher interest expense, which
more than offset higher revenue from an 88% increase in sales volume,
lower corporate income taxes, and higher pipeline and net marketing
services revenue. Net cash provided by operating activities was higher
as a result of an increase in sales volume, partly offset by an increase
in cash operating costs.
Adjusted net income attributable to EQT increased 253% for the first
quarter 2018, excluding the impairment charge, non-cash derivative
gains, and approximately $35.7 million of transaction-related expenses.
Adjusted operating cash flow attributable to EQT increased 116%,
including the transaction-related expenses and excluding the
non-controlling interests in EQT Midstream Partners, LP (EQM) and Rice
Midstream Partners LP (RMP).
The Non-GAAP Disclosures section of this news release provides
reconciliations of non-GAAP financial measures to the most comparable
GAAP financial measure, as well as important disclosures regarding
certain projected non-GAAP financial measures.
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RESULTS BY BUSINESS
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EQT PRODUCTION
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Financial Results
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Three Months Ended
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March 31,
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($ millions, except average realized price)
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2018
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2017
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Difference
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Sales volume (Bcfe)
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357.0
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189.9
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167.1
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Pipeline and net marketing services
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$
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59.6
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$
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14.5
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$ 45.1
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Operating revenue
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$
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1,348.6
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$
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828.7
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$ 519.9
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Adjusted operating revenue (a non-GAAP measure)
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$
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1,188.0
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$
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665.0
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$ 523.0
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Operating expenses
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$
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3,242.4
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$
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571.1
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$ 2,671.3
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Operating (loss) income
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$
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(1,893.8)
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$
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257.5
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$ (2,151.3)
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Adjusted operating income (a non-GAAP measure)
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$
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338.1
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$
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110.2
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$ 227.9
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Average realized price ($/Mcfe)
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$
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3.33
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$
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3.50
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$ (0.17)
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The $2,151.3 million decrease in operating income in the quarter was
primarily due to a recorded impairment charge of $2,329.0 million
associated with non-core production assets and retained pipeline assets
in the Huron and Permian plays; lower gains on derivatives not
designated as hedges; a lower average realized price; and higher
operating expenses, partially offset by increased sales volume of
produced natural gas and NGLs. The increase in sales of natural gas, oil
and NGLs was primarily a result of the acquisition of Rice, in addition
to increased production from the 2016 and 2017 drilling programs.
The decrease in the average realized price for the quarter was primarily
due to a decrease in the average NYMEX natural gas price, partly offset
by an increase in the average natural gas differential and higher
liquids prices.
Operating expenses for the quarter were $2,671.3 million higher than the
same period last year. In addition to the impairment, depreciation,
depletion and amortization expense (DD&A) increased $189.0 million;
gathering expense increased $69.6 million; transmission expense
increased $59.4 million; and processing expense increased $2.3 million,
primarily due to increased produced volumes. Per unit cash operating
expenses decreased 26%.
Wells Drilled (spud)
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Marcellus
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Upper Devonian
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Ohio Utica (net)
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Q1 2018
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24
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2
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6
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2018 Forecast
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134
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16
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25
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Q2 2018 Forecast
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35 – 40
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3 – 5
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8 – 10
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Q1 2018 average lateral lengths: Marcellus 14,000; Upper Devonian
16,800; Ohio Utica 11,700
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2018 forecasted average lateral lengths: Marcellus 12,600; Upper
Devonian 15,800; Ohio Utica 11,000
Wells Turned-in-line (TIL)
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Marcellus
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Upper Devonian
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Ohio Utica (net)
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Q1 2018
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25
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5
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4
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2018 Forecast
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160 – 170
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20 – 25
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20 – 25
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Q2 2018 Forecast
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48 – 53
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3 – 5
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4 – 6
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Q1 2018 average lateral lengths: Marcellus 7,900; Upper Devonian
11,300; Ohio Utica 10,000
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2018 forecasted average lateral lengths: Marcellus 8,700; Upper
Devonian 11,300; Ohio Utica 11,500
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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3/31/18**
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12/31/17**
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9/30/17
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6/30/17
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3/31/17
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Wells drilled (spud)
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1,763
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1,743
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1,288
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1,259
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1,216
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Wells online
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1,444
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1,424
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1,060
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1,028
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1,013
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Wells complete, not online
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35
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21
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21
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15
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20
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Wells drilled, uncompleted
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284
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298
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207
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216
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183
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*These totals may differ from previous presentations to account
for purchases, dispositions, wells plugged, or that have had a
change in target formation to/from Marcellus.
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**Includes 77 wells acquired in 2016 and 570 wells acquired in
2017.
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EQT MIDSTREAM PARTNERS, LP (EQM)
The first quarter 2018 financial results for EQM 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.
The summary results are:
EQM Gathering Financial Results
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Three Months Ended
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March 31,
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($ millions)
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2018
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2017
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Difference
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Operating revenue
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$
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125.9
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$
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102.3
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$ 23.6
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Operating expenses
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$
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27.0
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$
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28.6
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$ (1.6)
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Operating income
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$
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98.9
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$
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73.7
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$ 25.2
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Operating income increased 34% in the first quarter 2018 compared to
first quarter 2017, primarily due to higher revenues driven by
production development in the Marcellus Shale. Revenue from firm
reservation fees represented 87% of total revenue during the quarter.
Operating expenses were $1.6 million lower, primarily as a result of
decreased SG&A due to lower personnel costs, partly offset by increased
depreciation and amortization expense due to additional assets placed
in-service.
EQM Transmission Financial Results
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Three Months Ended
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March 31,
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($ millions)
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2018
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2017
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Difference
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Operating revenue
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$
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106.9
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$
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97.7
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$ 9.2
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Operating expenses
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$
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27.5
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$
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26.1
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$ 1.4
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Operating income
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$
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79.4
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$
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71.6
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$ 7.8
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The increase in operating income in the first quarter 2018 compared to
first quarter 2017 was primarily due to higher contractual rates on
existing contracts with third parties and affiliates, third parties
contracting for additional firm capacity and increased seasonal
storage-related services. Revenue from firm reservation fees represented
91% of total revenues during the quarter.
Operating expenses were $1.4 million higher primarily as a result of
increased operating and maintenance expense due to additional assets
placed in-service.
OTHER BUSINESS
NewCo
On February 21, 2018, the Company announced a plan to separate its
upstream and midstream businesses, creating a standalone publicly traded
corporation (NewCo) that will focus on midstream operations. The
separation is intended to qualify as tax-free to EQT shareholders for
U.S. federal income tax purposes and is expected to be completed by the
end of the third quarter 2018. Under the separation plan, EQT
shareholders will retain their shares of EQT stock and receive a
proportional share of the new independent midstream company.
Permian Sale
EQT entered into an agreement to sell its Permian Basin assets located
in Texas for $64 million. The sale, expected to close by end of June
2018, will reduce the Company’s 2018 production sales volume guidance by
5 Bcfe.
Streamlining Transaction
The Company also announced a plan of action for the midstream
streamlining transaction that includes:
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A drop-down of the Rice retained midstream assets to EQM for $1.52
billion -- $1.15 billion in cash plus approximately 5.9 million EQM
common units, and EQM’s acquisition of Gulfport’s 25% ownership in the
Strike Force Gathering System for $175 million in cash
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A merger of EQM and Rice Midstream Partners LP in a unit-for-unit
transaction at an exchange ratio of 0.3319x, which implies a
transaction value of $2.4 billion, including $325 million of assumed
RMP debt
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The sale of RMP’s Incentive Distribution Rights to EQT GP Holdings, LP
(NYSE: EQGP) for 36.3 million EQGP common units, which is equivalent
to $937 million
Please see the associated news release on the EQM-EQGP website at www.eqtmidstreampartners.com,
or on the RMP website at www.ricemidstream.com.
EQM / EQGP / RMP Distributions
On April 24, 2018, EQM approved a cash distribution to its unitholders
of $1.065 per unit for the first quarter. EQGP approved a cash
distribution to its unitholders of $0.258 per unit for the first quarter
2018. RMP also approved a cash distribution to its unitholders of
$0.3049 per unit for the first quarter 2018.
Calculation of Net Income Attributable to Non-controlling Interest
(NCI)
The results of EQGP, EQM, RMP and Strike Force Midstream LLC (Strike
Force) are consolidated in EQT’s results. For the first quarter 2018,
EQT’s results reflected earnings of $141.0 million, or $0.53 per diluted
share, attributable to the publicly held partnership interests and the
minority interest in Strike Force.
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Three Months Ended March 31, 2018
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Unitholder interest in net
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Non-controlling
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NCI interest in
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(millions)
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income
(a)
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interest (NCI)
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EQT earnings
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EQM
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$
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133.1
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71.65
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%
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$
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95.3
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EQGP
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$
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80.7
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9.94
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%
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$
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8.0
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RMP
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$
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49.2
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71.89
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%
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$
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35.3
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Strike Force
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$
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9.9
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25.00
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%
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$
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2.4
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Total
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$
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141.0
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(a)
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Excludes incentive distribution rights
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Hedging
As of April 24, 2018, the approximate volumes and prices of the
Company’s derivative commodity instruments hedging sales of produced gas
for 2018 through 2020 were:
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2018
(a)
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2019
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2020
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NYMEX Swaps
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Total Volume (Bcf)
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496
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445
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|
313
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Average Price per Mcf (NYMEX)
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$
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3.08
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$
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2.99
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$
|
3.01
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|
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Collars
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Total Volume (Bcf)
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85
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|
74
|
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−
|
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Average Floor Price per Mcf (NYMEX)
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$
|
3.28
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|
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$
|
3.12
|
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$
|
−
|
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Average Cap Price per Mcf (NYMEX)
|
|
$
|
3.79
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|
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$
|
3.60
|
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$
|
−
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Puts (Long)
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Total Volume (Bcf)
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5
|
|
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|
3
|
|
|
−
|
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Average Floor Price per Mcf (NYMEX)
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$
|
2.98
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$
|
3.15
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$
|
−
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(a)April-December 2018
-
The Company sold calendar 2018, 2019, and 2020 calls for approximately
76, 97, and 103 Bcf at a strike price of $3.47, $3.55, and $3.47 per
Mcf, respectively. The Company also purchased calendar year 2018, 2019
and 2020 calls for approximately 26, 42, and 35 Bcf at strike prices
of $3.34, $3.36, and $3.36 per Mcf, respectively.
-
The Company sold calendar 2018 and 2019 puts for approximately 3 Bcf
at a strike price of $2.66 and $3.15 per Mcf, respectively.
-
The average price is based on a conversion rate of 1.05 MMBtu/Mcf.
Operating (Loss) Income
The Company reports operating (loss) income by segment in this news
release. Interest, income taxes, and unallocated expense are controlled
on a consolidated, corporate-wide basis and are not allocated to the
segments.
The following table reconciles operating (loss) income by segment, as
reported in this news release, to the consolidated operating (loss)
income reported in the Company’s financial statements:
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|
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Three Months Ended
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|
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March 31,
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(thousands)
|
|
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2018
|
|
2017
|
|
Operating (loss) income:
|
|
|
|
|
|
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EQT Production
|
|
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$
|
(1,893,807
|
)
|
|
$
|
257,549
|
|
|
EQM Gathering
|
|
|
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98,891
|
|
|
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73,704
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EQM Transmission
|
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79,451
|
|
|
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71,604
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RMP Gathering
|
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44,095
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|
|
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−
|
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RMP Water
|
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11,370
|
|
|
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−
|
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Unallocated expense and intersegment eliminations
|
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|
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(63,516
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)
|
|
|
(11,880
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)
|
|
Operating (loss) income
|
|
|
$
|
(1,723,516
|
)
|
|
$
|
390,977
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated expenses consist primarily of compensation expense and
administrative costs, including transaction costs of $35.7 million.
Intersegment eliminations include water services that are provided to
EQT Production and capitalized as part of development costs.
NON-GAAP DISCLOSURES
Adjusted Net Income Attributable to EQT and Adjusted Earnings per
Diluted Share (Adjusted EPS)
Adjusted net income 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 (loss)
income attributable to EQT or earnings per diluted share (EPS) presented
in accordance with GAAP. Adjusted net income attributable to EQT as
presented excludes the revenue impact of changes in the fair value of
derivative instruments prior to settlement, asset and lease impairments,
transaction costs and certain other items that impact comparability
between periods. Management utilizes adjusted net income 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 or that are not
indicative of trends in the ongoing business. Management believes that
adjusted net income attributable to EQT as presented provides useful
information for investors for evaluating period-over-period earnings.
The table below reconciles adjusted net income attributable to EQT and
adjusted EPS with net (loss) income attributable to EQT and EPS as
derived from the statements of consolidated operations.
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|
|
|
|
|
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Three Months Ended
|
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|
|
March 31,
|
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(thousands, except per share information)
|
|
2018
|
|
2017
|
|
Net (loss) income attributable to EQT, as reported
|
|
$
|
(1,585,994
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)
|
|
$
|
163,992
|
|
|
Add back / (deduct):
|
|
|
|
|
|
Asset and lease impairments
|
|
|
2,332,924
|
|
|
|
1,837
|
|
|
Transaction costs
|
|
|
35,711
|
|
|
|
−
|
|
|
Gain on derivatives not designated as hedges
|
|
|
(62,592
|
)
|
|
|
(140,742
|
)
|
|
Net cash settlements paid on derivatives not designated as hedges
|
|
|
(38,629
|
)
|
|
|
(8,967
|
)
|
|
Premiums received for derivatives that settled during the period
|
|
|
234
|
|
|
|
526
|
|
|
Tax impact of non-GAAP items*
|
|
|
(413,306
|
)
|
|
|
59,233
|
|
|
Adjusted net income attributable to EQT
|
|
$
|
268,348
|
|
|
$
|
75,879
|
|
|
Diluted weighted average common shares outstanding
|
|
|
265,169
|
|
|
|
173,511
|
|
|
Diluted EPS, as adjusted
|
|
$
|
1.01
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
*Blended tax rates of 18.23% and 40.2% were applied to the items
under the caption “Add back (deduct)” for the three months ended
March 31, 2018 and 2017, respectively. This represents the
incremental tax (expense) benefit that would have been incurred had
these items been excluded from net (loss) income 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 is EQT’s net cash
provided by operating activities, less changes in other assets and
liabilities, adjusted to exclude EQM and RMP adjusted EBITDA, plus EQM
and RMP interest expense plus the EQGP and RMP cash distributions
payable to EQT. Prior to EQT’s 2018 operational forecast announcement in
December 2017, the Company’s calculation of adjusted operating cash flow
attributable to EQT did not include the addition of EQM’s and RMP’s
interest expense. The Company believes it is preferable to present this
non-GAAP supplemental financial measure with this adjustment as it
better reflects EQT’s cash flows by excluding the cost of debt for EQM
and RMP. EQT has recast all periods presented to be consistent with this
change in the definition of adjusted operating cash flow attributable to
EQT. Management believes that removing the impact on operating cash
flows of the public unitholders of EQGP, EQM and RMP 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 consolidated
cash flows to be included in EQT’s report on Form 10-Q for the three
months ended March 31, 2018.
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
Net cash provided by operating activities
|
|
$
|
904,412
|
|
|
$
|
514,817
|
|
|
Add back / (deduct)
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
240
|
|
|
|
(67,485
|
)
|
|
Operating cash flow (a non-GAAP measure)
|
|
|
904,652
|
|
|
|
447,332
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
EQM adjusted EBITDA(1)
|
|
|
(204,431
|
)
|
|
|
(168,664
|
)
|
|
RMP adjusted EBITDA(1)
|
|
|
(69,534
|
)
|
|
|
–
|
|
|
EQM net interest expense
|
|
|
10,833
|
|
|
|
7,926
|
|
|
RMP net interest expense
|
|
|
1,954
|
|
|
|
–
|
|
|
Cash distribution payable to EQT from EQGP(2)
|
|
|
61,846
|
|
|
|
45,786
|
|
|
Cash distribution payable to EQT from RMP(3)
|
|
|
13,121
|
|
|
|
–
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
718,441
|
|
|
$
|
332,380
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
EQM adjusted EBITDA and RMP adjusted EBITDA are non-GAAP
supplemental financial measures reconciled in this section.
|
|
(2)
|
|
Cash distribution payable to EQT for the three months ended March
31, 2018 and 2017, represents the distribution payable from EQGP to
EQT related to the respective period.
|
|
(3)
|
|
Cash distribution payable to EQT for the three months ended March
31, 2018 represents the distribution payable from RMP to EQT related
to the respective period.
|
|
|
|
|
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.
Furthermore, EQT does not provide guidance with respect to its average
realized price, among other items, that impact reconciling items between
net cash provided by operating activities and adjusted operating cash
flow attributable to EQT and EQT Production, as applicable. Natural gas
prices are volatile and out of EQT’s control, and the timing of
transactions and the income tax effects of future transactions and other
items are difficult to accurately predict. 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 Revenue
The table below reconciles EQT Production adjusted operating revenues, a
non-GAAP supplemental financial measure, to EQT Production total
operating revenue, 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
three months ended March 31, 2018, for a reconciliation of EQT
Production total operating revenue to EQT Corporation total operating
revenue.
EQT Production adjusted operating revenue (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 revenue 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 revenue 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 revenue also excludes
"Pipeline and net marketing services" because management considers this
revenue to be unrelated to the revenue for its natural gas and liquids
production. EQT Production "Pipeline and net marketing services"
includes revenue 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 revenue, as presented, provides
useful information to investors for evaluating period-over-period
earnings trends.
|
|
|
|
|
Calculation of EQT Production Adjusted Operating Revenue
|
|
Three Months Ended
March 31,
|
|
$ in thousands (unless noted)
|
|
2018
|
|
2017
|
|
EQT Production total operating revenue, as reported on segment page
|
|
$
|
1,348,602
|
|
|
$
|
828,662
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
Gain on derivatives not designated as hedges
|
|
|
(62,592
|
)
|
|
|
(140,742
|
)
|
|
Net cash settlements paid on derivatives not designated as hedges
|
|
|
(38,629
|
)
|
|
|
(8,967
|
)
|
|
Premiums received for derivatives that settled during the period
|
|
|
234
|
|
|
|
526
|
|
|
Pipeline and net marketing services
|
|
|
(59,636
|
)
|
|
|
(14,455
|
)
|
|
EQT Production adjusted operating revenue, a non-GAAP measure
|
|
$
|
1,187,979
|
|
|
$
|
665,024
|
|
|
Total sales volumes (MMcfe)
|
|
|
357,005
|
|
|
|
189,934
|
|
|
Average realized price ($/Mcfe)
|
|
|
3.33
|
|
|
|
3.50
|
|
|
|
|
|
|
|
|
|
|
|
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 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 should not be considered as an alternative to
EQT Corporation operating (loss) income presented in accordance with
GAAP. EQT Production adjusted operating income excludes the revenue
impact of changes in the fair value of derivative instruments prior to
settlement and asset and lease impairments. Management utilizes EQT
Production adjusted operating 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 certain other items that affect
the comparability of results and are not indicative of trends in the
ongoing business. Management believes that EQT Production adjusted
operating income as presented provides useful information for investors
for evaluating period-over-period earnings.
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
EQT Production operating (loss) income, as reported on segment page
|
|
$
|
(1,893,807
|
)
|
|
$
|
257,549
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
Gain on derivatives not designated as hedges
|
|
|
(62,592
|
)
|
|
|
(140,742
|
)
|
|
Net cash settlements received (paid) on derivatives not designated
as hedges
|
|
|
(38,629
|
)
|
|
|
(8,967
|
)
|
|
Premiums received for derivatives that settled during the period
|
|
|
234
|
|
|
|
526
|
|
|
Asset and lease impairments
|
|
|
2,332,924
|
|
|
|
1,837
|
|
|
EQT Production adjusted operating income
|
|
$
|
338,130
|
|
|
$
|
110,203
|
|
|
|
|
|
|
|
|
|
|
|
EQM Adjusted EBITDA
As used in this news release, EQM adjusted EBITDA means EQM’s net income
plus EQM’s net interest expense, depreciation and amortization expense,
preferred interest payments and non-cash long-term compensation expense
less EQM’s equity income and AFUDC-equity. EQM 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 EQM EBITDA provides useful information to investors in
assessing the impact of the noncontrolling interest in EQM on EQT's
financial condition and results of operations. EQM 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. EQM 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
adjusted EBITDA may be defined differently by other companies in EQT's
or EQM's industries, the definition of EQM adjusted EBITDA may not be
comparable to similarly titled measures of other companies, thereby
diminishing the utility of the measure. The table below reconciles EQM
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 three months ended March 31, 2018.
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
Net income
|
|
$
|
177,218
|
|
|
$
|
143,196
|
|
|
Add back:
|
|
|
|
|
|
Net interest expense
|
|
|
10,833
|
|
|
|
7,926
|
|
|
Depreciation and amortization expense
|
|
|
23,179
|
|
|
|
20,547
|
|
|
Preferred interest payments
|
|
|
2,746
|
|
|
|
2,746
|
|
|
Non-cash long-term compensation expense
|
|
|
331
|
|
|
|
225
|
|
|
Less:
|
|
|
|
|
|
Equity income
|
|
|
(8,811
|
)
|
|
|
(4,277
|
)
|
|
AFUDC – equity
|
|
|
(1,065
|
)
|
|
|
(1,699
|
)
|
|
EQM Adjusted EBITDA
|
|
$
|
204,431
|
|
|
$
|
168,664
|
|
|
|
|
|
|
|
|
|
|
|
RMP Adjusted EBITDA
RMP adjusted EBITDA means RMP’s net income plus RMP’s net interest
expense, depreciation expense, and non-cash compensation expense. RMP
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 RMP adjusted EBITDA provides useful information to
investors in assessing the impact of the noncontrolling interest in RMP
on EQT's financial condition and results of operations. RMP adjusted
EBITDA should not be considered as an alternative to RMP’s net income,
operating income, or any other measure of financial performance or
liquidity presented in accordance with GAAP. RMP adjusted EBITDA has
important limitations as an analytical tool because it excludes some,
but not all, items that affect RMP's net income. Additionally, because
adjusted EBITDA may be defined differently by other companies in EQT's
or RMP's industries, the definition of RMP adjusted EBITDA may not be
comparable to similarly titled measures of other companies, thereby
diminishing the utility of the measure. The table below reconciles RMP
adjusted EBITDA with RMP’s net income, as derived from the statements of
consolidated operations to be included in RMP’s report on Form 10-Q for
the three months ended March 31, 2018.
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
Net income
|
|
$
|
53,517
|
|
$
|
–
|
|
Add back:
|
|
|
|
|
|
Net interest expense
|
|
|
1,954
|
|
|
–
|
|
Depreciation expense
|
|
|
13,895
|
|
|
–
|
|
Non-cash compensation expense
|
|
|
168
|
|
|
–
|
|
RMP Adjusted EBITDA
|
|
$
|
69,534
|
|
$
|
–
|
|
|
|
|
|
|
|
|
First Quarter 2018 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 nearly 130 years of experience and a long-standing history of good
corporate citizenship, EQT is the largest producer of natural gas in the
United States. As a leader in the use of advanced horizontal drilling
technology, EQT is committed to minimizing the impact of
drilling-related activities and reducing its overall environmental
footprint. Through safe and responsible operations, EQT is helping to
meet our nation’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 owns the general partner interest
and a 90% limited partner interest in EQT GP Holdings, LP, which owns
the general partner interest, all of the incentive distribution rights,
and a portion of the limited partner interest in EQT Midstream Partners,
LP. EQT also owns the general partner interest, all of the incentive
distribution rights, and a 28% limited partner interest in Rice
Midstream Partners LP.
Visit EQT Corporation at www.EQT.com;
and to learn more about EQT’s sustainability efforts, please visit https://csr.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 the general partner interest and a 90% limited
partner interest in EQT GP Holdings, LP.
Visit EQT GP Holdings, LP at www.eqtmidstreampartners.com.
About Rice Midstream Partners:
Rice Midstream Partners LP is a fee-based, growth-oriented limited
partnership formed to own, operate, develop and acquire midstream assets
in the Appalachian basin. RMP provides midstream services to EQT
Corporation and third-party companies through its natural gas gathering,
compression and water assets in the rapidly developing dry gas cores of
the Marcellus and Utica Shales.
Visit Rice Midstream Partners LP at www.ricemidstream.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 relationship website at http://ir.eqt.com.
Cautionary Statements
The United States Securities and Exchange Commission (SEC) permits oil
and gas companies, in their filings with the SEC, to disclose only
proved, probable and possible reserves that a company anticipates as of
a given date to be economically and legally producible and deliverable
by application of development projects to known accumulations. We use
certain terms, such as “EUR” (estimated ultimate recovery) and “3P”
(proved, probable and possible), that the SEC’s guidelines prohibit us
from including in filings with the SEC. These measures are by their
nature more speculative than estimates of reserves prepared in
accordance with SEC definitions and guidelines and accordingly are less
certain.
Total sales volume per day (or daily production) is an operational
estimate of the daily production or sales volume on a typical day
(excluding curtailments).
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; infrastructure programs (including
the timing, cost and capacity of the transmission and gathering
expansion projects); the cost, capacity, 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 projected general and administrative
savings, capital efficiency savings and other operating efficiencies and
synergies resulting from the Rice Merger, and the Company’s ability to
achieve the anticipated synergies and efficiencies; monetization
transactions, including asset sales, joint ventures or other
transactions involving the Company’s assets; whether the Company will
sell its Ohio midstream assets to EQM and the timing of such transaction
or transactions; the timing of the Company’s announcement of a decision
for addressing its sum-of-the-parts discount, and the impact of the
results of such review; the projected cash flows resulting from the
Company’s partnership interests in EQGP and RMP; 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,
projected effective tax rate and the impact of changes in tax laws.
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, 2017 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, and RMP is derived from publicly available information
published or to be published by the partnerships.
Additional Information and Where to Find It
In connection with their proposed business combination transaction, EQM
and RMP intend to file a registration statement on Form S-4, containing
a proxy statement/prospectus (the S-4) with the SEC. This communication
is not a substitute for the registration statement, definitive proxy
statement/prospectus or any other documents that EQM or RMP may file
with the SEC or send to RMP unitholders in connection with the proposed
transaction. UNITHOLDERS OF RMP ARE URGED TO READ ALL RELEVANT DOCUMENTS
FILED WITH THE SEC, INCLUDING THE FORM S-4 AND THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS INCLUDED THEREIN IF AND WHEN FILED, AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. When available,
investors and security holders will be able to obtain copies of these
documents, including the proxy statement/prospectus and the registration
statement, and any other documents that may be filed with the SEC with
respect to the proposed transaction free of charge at the SEC’s website, http://www.sec.gov
or as described in the following paragraph.
The documents filed with the SEC by EQT and its publicly traded
subsidiaries (including EQM, RMP and EQGP) may be obtained free of
charge at the applicable website (www.eqt.com
for EQT, www.eqtmidstreampartners.com
for EQGP and EQM, and www.ricemidstream.com
for RMP) or by requesting them by mail at EQT Corporation, 625 Liberty
Avenue, Suite 1700, Pittsburgh, PA 15222, Attention: Investor Relations,
or by telephone at (412) 553-5700.
Participants in the Solicitation
EQT, EQM, RMP and EQGP (EQM, RMP and EQGP collectively, the
Partnerships) and certain of their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies
from the unitholders of RMP in connection with the proposed transaction.
Information about the directors and executive officers of the general
partners of EQM, RMP and EQGP is set forth, respectively, in the Annual
Report on Form 10-K for the year ended December 31, 2017 filed by such
Partnership with the SEC on February 15, 2018 and certain of the
Partnerships’ respective Current Reports on Form 8-K. Information
regarding EQT’s executive officers is available in its Annual Report on
Form 10-K for the year ended December 31, 2017 filed by EQT with the SEC
on February 15, 2018, EQT’s definitive proxy statement for its 2017
annual meeting of shareholders filed with the SEC on February 17, 2017
and certain of EQT’s Current Reports on Form 8-K. These documents can be
obtained free of charge from the sources indicated above. 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 proxy statement/prospectus and
other relevant materials to be filed with the SEC when they become
available.
2018 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 2018 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
|
|
Q2 2018
|
|
2018
|
|
Total production sales volume (Bcfe)
|
|
|
360 – 370
|
|
|
1,520 – 1,550
|
|
Liquids sales volume, excluding ethane (Mbbls)
|
|
|
3,275 – 3,295
|
|
|
12,300 – 12,600
|
|
Ethane sales volume (Mbbls)
|
|
|
1,200 – 1,300
|
|
|
4,900 – 5,200
|
|
Total liquids sales volume (Mbbls)
|
|
|
4,475 – 4,595
|
|
|
17,200 – 17,800
|
|
|
|
|
|
|
|
Marcellus / Utica Rigs
|
|
|
|
|
8 – 10
|
|
Top-hole rigs
|
|
|
|
|
4 – 5
|
|
Frac Crews
|
|
|
|
|
9 – 11
|
|
|
|
|
|
|
|
Unit Costs ($ / Mcfe)
|
|
|
|
|
|
Gathering to EQM and RMP
|
|
|
|
$
|
0.48 – 0.50
|
|
Transmission to EQM
|
|
|
|
$
|
0.11 – 0.13
|
|
Third-party gathering and transmission
|
|
|
|
$
|
0.39 – 0.41
|
|
Processing
|
|
|
|
$
|
0.10 – 0.12
|
|
LOE, excluding production taxes
|
|
|
|
$
|
0.07 – 0.09
|
|
Production taxes
|
|
|
|
$
|
0.06 – 0.08
|
|
SG&A
|
|
|
|
$
|
0.10 – 0.12
|
|
DD&A
|
|
|
|
$
|
1.10 – 1.12
|
|
Development costs ($ / Mcfe)
|
|
|
|
$
|
0.41 – 0.43
|
|
Average differential ($ / Mcf)
|
|
$
|
(0.40) – (0.30)
|
|
$
|
(0.40) – (0.30)
|
|
Pipeline and net marketing services ($MM)
|
|
$
|
15 – 20
|
|
$
|
70 – 80
|
|
|
|
|
|
|
|
FINANCIAL ($MM)
|
|
|
|
|
|
Net income attributable to noncontrolling interest ($MM)
|
|
$
|
120 – 130
|
|
$
|
530 – 540
|
|
|
|
|
|
|
|
ADJUSTED OPERATING CASH FLOW ($MM)
|
|
|
|
|
|
Adjusted operating cash flow attributable to EQT Production
|
|
|
|
$
|
2,400 – 2,500
|
|
Distributions to EQT from EQM, EQGP and RMP
|
|
|
|
$
|
350 – 400
|
|
Interest, taxes, and other items
|
|
|
|
$
|
(25) – 25
|
|
Adjusted operating cash flow attributable to EQT
|
|
|
|
$
|
2,750 – 2,850
|
|
|
|
|
|
|
|
|
Based on current NYMEX natural gas prices of $2.88.
|
|
Adjusted operating cash flow does not include the proceeds, costs or
tax impacts of the separation.
|
|
|
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
Statements of Consolidated Operation
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
2017
|
|
Revenues:
|
|
(Thousands except per share amount)
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
1,226,374
|
|
|
$
|
673,465
|
|
Pipeline, water and net marketing services
|
|
|
144,617
|
|
|
|
79,962
|
|
Gain on derivatives not designated as hedges
|
|
|
62,592
|
|
|
|
140,742
|
|
Total operating revenues
|
|
|
1,433,583
|
|
|
|
894,169
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Transportation and processing
|
|
|
190,140
|
|
|
|
133,706
|
|
Operation and maintenance
|
|
|
25,740
|
|
|
|
16,817
|
|
Production
|
|
|
60,123
|
|
|
|
45,672
|
|
Exploration
|
|
|
5,104
|
|
|
|
3,122
|
|
Selling, general and administrative
|
|
|
52,615
|
|
|
|
71,957
|
|
Depreciation, depletion and amortization
|
|
|
437,893
|
|
|
|
231,918
|
|
Impairment of long-lived assets
|
|
|
2,329,045
|
|
|
|
–
|
|
Transaction costs
|
|
|
35,711
|
|
|
|
–
|
|
Amortization of intangible assets
|
|
|
20,728
|
|
|
|
–
|
|
Total operating expenses
|
|
|
3,157,099
|
|
|
|
503,192
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(1,723,516
|
)
|
|
|
390,977
|
|
|
|
|
|
|
|
Other income
|
|
|
9,585
|
|
|
|
3,048
|
|
|
|
|
|
|
|
Interest expense
|
|
|
70,013
|
|
|
|
42,655
|
|
(Loss) income before income taxes
|
|
|
(1,783,944
|
)
|
|
|
351,370
|
|
Income tax (benefit) expense
|
|
|
(338,965
|
)
|
|
|
100,665
|
|
Net (loss) income
|
|
|
(1,444,979
|
)
|
|
|
250,705
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
141,015
|
|
|
|
86,713
|
|
Net (loss) income attributable to EQT Corporation
|
|
$
|
(1,585,994
|
)
|
|
$
|
163,992
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
264,877
|
|
|
|
173,213
|
|
Net (loss) income
|
|
$
|
(5.99
|
)
|
|
$
|
0.95
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
264,877
|
|
|
|
173,511
|
|
Net (loss) income
|
|
$
|
(5.99
|
)
|
|
$
|
0.95
|
|
Dividends declared per common share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
PRICE RECONCILIATION
|
|
|
|
|
|
Three Months
|
|
|
|
Ended March 31,
|
|
in thousands (unless noted)
|
|
2018 (e)
|
|
2017
|
|
NATURAL GAS
|
|
|
|
|
|
Sales volume (MMcf)
|
|
|
329,404
|
|
|
|
164,464
|
|
|
NYMEX price ($/MMBtu) (a)
|
|
$
|
2.98
|
|
|
$
|
3.31
|
|
|
Btu uplift
|
|
|
0.20
|
|
|
|
0.28
|
|
|
Natural gas price ($/Mcf)
|
|
$
|
3.18
|
|
|
$
|
3.59
|
|
|
|
|
|
|
|
|
Basis ($/Mcf) (b)
|
|
|
0.13
|
|
|
|
(0.16
|
)
|
|
Cash settled basis swaps (not designated as hedges) ($/Mcf)
|
|
|
(0.15
|
)
|
|
|
0.03
|
|
|
Average differential, including cash settled basis swaps ($/Mcf)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
Average adjusted price ($/Mcf)
|
|
$
|
3.16
|
|
|
$
|
3.46
|
|
|
Cash settled derivatives (cash flow hedges) ($/Mcf)
|
|
|
–
|
|
|
|
0.01
|
|
|
Cash settled derivatives (not designated as hedges) ($/Mcf)
|
|
|
0.04
|
|
|
|
(0.07
|
)
|
|
Average natural gas price, including cash settled derivatives ($/Mcf)
|
|
$
|
3.20
|
|
|
$
|
3.40
|
|
|
|
|
|
|
|
|
Natural gas sales, including cash settled derivatives
|
|
$
|
1,055,065
|
|
|
$
|
559,199
|
|
|
|
|
|
|
|
|
LIQUIDS
|
|
|
|
|
|
NGLs (excluding ethane):
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
18,391
|
|
|
|
17,140
|
|
|
Sales volume (Mbbls)
|
|
|
3,065
|
|
|
|
2,857
|
|
|
Price ($/Bbl)
|
|
$
|
37.50
|
|
|
|
31.41
|
|
|
Cash settled derivatives (not designated as hedges) ($/Bbl)
|
|
|
(1.21
|
)
|
|
$
|
(0.54
|
)
|
|
Average NGL price, including cash settled derivatives ($/Bbl)
|
|
$
|
36.29
|
|
|
$
|
30.87
|
|
|
|
|
|
|
|
|
NGL sales
|
|
$
|
111,236
|
|
|
$
|
88,197
|
|
|
|
|
|
|
|
|
Ethane:
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
7,997
|
|
|
|
6,973
|
|
|
Sales volume (Mbbls)
|
|
|
1,333
|
|
|
|
1,162
|
|
|
Price ($/Bbl)
|
|
$
|
7.90
|
|
|
$
|
6.65
|
|
|
Ethane sales
|
|
|
10,532
|
|
|
|
7,732
|
|
|
Oil:
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
1,213
|
|
|
|
1,357
|
|
|
Sales volume (Mbbls)
|
|
|
202
|
|
|
|
226
|
|
|
Price ($/Bbl)
|
|
$
|
55.15
|
|
|
$
|
43.75
|
|
|
Oil sales
|
|
|
11,146
|
|
|
|
9,896
|
|
|
|
|
|
|
|
|
Total liquids sales volume (MMcfe) (c )
|
|
|
27,601
|
|
|
|
25,470
|
|
|
Total liquids sales volume (Mbbls)
|
|
|
4,600
|
|
|
|
4,245
|
|
|
|
|
|
|
|
|
Liquids sales
|
|
$
|
132,914
|
|
|
$
|
105,825
|
|
|
|
|
|
|
|
|
TOTAL PRODUCTION
|
|
|
|
|
|
Total natural gas & liquids sales, including cash settled
derivatives (d)
|
|
$
|
1,187,979
|
|
|
$
|
665,024
|
|
|
Total sales volume (MMcfe)
|
|
|
357,005
|
|
|
|
189,934
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
3.33
|
|
|
$
|
3.50
|
|
|
|
|
|
|
|
|
(a)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $3.00 and $3.32 for
the three months ended March 31, 2018 and 2017, respectively).
|
|
(b)
|
|
Basis represents the difference between the ultimate sales price for
natural gas and the NYMEX natural gas price.
|
|
(c)
|
|
NGLs, ethane and crude oil were converted to Mcfe at the rate of six
Mcfe per barrel for all periods.
|
|
(d)
|
|
Also referred to in this report as EQT Production adjusted operating
revenues, a non-GAAP supplemental financial measure.
|
|
(e)
|
|
EQT Production includes the results of production operations
acquired in the Rice Merger, which occurred on November 13, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
EQT PRODUCTION
|
|
RESULTS OF OPERATIONS
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018(a)
|
|
2017
|
|
OPERATIONAL DATA
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
Marcellus (b)
|
|
|
288,773
|
|
|
|
166,369
|
|
Ohio Utica
|
|
|
47,510
|
|
|
|
130
|
|
Other
|
|
|
20,722
|
|
|
|
23,435
|
|
Total production sales volumes (c)
|
|
|
357,005
|
|
|
|
189,934
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
3,967
|
|
|
|
2,110
|
|
Average realized price ($/Mcfe)
|
|
$
|
3.33
|
|
|
$
|
3.50
|
|
|
|
|
|
|
|
Gathering to EQM and RMP ($/Mcfe)
|
|
$
|
0.46
|
|
|
$
|
0.48
|
|
Transmission to EQM ($/Mcfe)
|
|
$
|
0.13
|
|
|
$
|
0.23
|
|
Third party gathering and transmission ($/Mcfe)
|
|
$
|
0.41
|
|
|
$
|
0.48
|
|
Processing ($/Mcfe)
|
|
$
|
0.13
|
|
|
$
|
0.23
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$
|
0.10
|
|
|
$
|
0.13
|
|
Production taxes ($/Mcfe)
|
|
$
|
0.07
|
|
|
$
|
0.11
|
|
Production depletion ($/Mcfe)
|
|
$
|
1.07
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (DD&A) (thousands):
|
|
|
|
|
|
Production depletion
|
|
$
|
380,464
|
|
|
$
|
197,462
|
|
Other DD&A
|
|
|
19,594
|
|
|
|
13,635
|
|
Total DD&A
|
|
$
|
400,058
|
|
|
$
|
211,097
|
|
|
|
|
|
|
|
Capital expenditures (thousands) (d)
|
|
$
|
675,028
|
|
|
$
|
945,458
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
1,226,374
|
|
|
$
|
673,465
|
|
Pipeline and net marketing services
|
|
|
59,636
|
|
|
|
14,455
|
|
Gain on derivatives not designated as hedges
|
|
|
62,592
|
|
|
|
140,742
|
|
Total operating revenues
|
|
|
1,348,602
|
|
|
|
828,662
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Gathering
|
|
|
176,465
|
|
|
|
106,915
|
|
Transmission
|
|
|
178,016
|
|
|
|
118,596
|
|
Processing
|
|
|
45,023
|
|
|
|
42,760
|
|
LOE, excluding production taxes
|
|
|
35,415
|
|
|
|
25,194
|
|
Production taxes
|
|
|
24,520
|
|
|
|
20,478
|
|
Exploration
|
|
|
5,104
|
|
|
|
3,122
|
|
Selling, general and administrative (SG&A)
|
|
|
38,376
|
|
|
|
42,951
|
|
DD&A
|
|
|
400,058
|
|
|
|
211,097
|
|
Amortization of intangible assets
|
|
|
10,387
|
|
|
|
–
|
|
Impairment of long-lived assets
|
|
|
2,329,045
|
|
|
|
–
|
|
Total operating expenses
|
|
|
3,242,409
|
|
|
|
571,113
|
|
Operating (loss) income
|
|
$
|
(1,893,807
|
)
|
|
$
|
257,549
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Operational Data for EQT Production includes results of operations
for production operations and retained midstream operations acquired
in the Rice Merger, which occurred on November 13, 2017.
|
|
(b)
|
|
Includes Upper Devonian wells.
|
|
(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 $36.8 million and $42.7 million for fill-ins and bolt-ons
associated with legacy EQT acreage for the three months ended March
31, 2018 and 2017, respectively. Expenditures included $44.3 million
associated with retained midstream assets during the three months
ended March 31, 2018. The three months ended March 31, 2017 included
$669.5 million of cash and $15.4 million of non-cash capital
expenditures for acquisitions.
|
|
|
|
|
|
|
|
EQM GATHERING
|
|
RESULTS OF OPERATIONS
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
2017
|
|
FINANCIAL DATA
|
|
(Thousands, except per day amounts)
|
|
|
|
|
|
Firm reservation fee revenues
|
|
$
|
109,933
|
|
$
|
94,271
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
12,108
|
|
|
4,821
|
|
Usage fees under interruptible contracts
|
|
|
3,867
|
|
|
3,237
|
|
Total volumetric based fee revenues
|
|
|
15,975
|
|
|
8,058
|
|
Total operating revenues
|
|
|
125,908
|
|
|
102,329
|
|
Operating expenses:
|
|
|
|
|
|
Operating and maintenance
|
|
|
10,625
|
|
|
10,340
|
|
SG&A
|
|
|
5,654
|
|
|
9,425
|
|
Depreciation and amortization
|
|
|
10,738
|
|
|
8,860
|
|
Total operating expenses
|
|
|
27,017
|
|
|
28,625
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
98,891
|
|
$
|
73,704
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
Gathered volumes (BBtu per day)
|
|
|
|
|
|
Firm capacity reservation
|
|
|
1,964
|
|
|
1,728
|
|
Volumetric based services (b)
|
|
|
600
|
|
|
224
|
|
Total gathered volumes
|
|
|
2,564
|
|
|
1,952
|
|
Capital expenditures
|
|
$
|
68,933
|
|
$
|
48,838
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
EQM TRANSMISSION
|
|
RESULTS OF OPERATIONS
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
2017
|
|
FINANCIAL DATA
|
|
(Thousands, except per day amounts)
|
|
|
|
|
|
Firm reservation fee revenues
|
|
$
|
97,775
|
|
$
|
92,274
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
3,822
|
|
|
2,857
|
|
Usage fees under interruptible contracts
|
|
|
5,337
|
|
|
2,612
|
|
Total volumetric based fee revenues
|
|
|
9,159
|
|
|
5,469
|
|
Total operating revenues
|
|
|
106,934
|
|
|
97,743
|
|
Operating expenses:
|
|
|
|
|
|
Operating and maintenance
|
|
|
7,551
|
|
|
6,477
|
|
SG&A
|
|
|
7,491
|
|
|
7,975
|
|
Depreciation and amortization
|
|
|
12,441
|
|
|
11,687
|
|
Total operating expenses
|
|
|
27,483
|
|
|
26,139
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
79,451
|
|
$
|
71,604
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
Transmission pipeline throughput (BBtu per day)
|
|
|
|
|
|
Firm capacity reservation
|
|
|
2,815
|
|
|
2,119
|
|
Volumetric based services (b)
|
|
|
42
|
|
|
31
|
|
Total transmission pipeline throughput
|
|
|
2,857
|
|
|
2,150
|
|
|
|
|
|
|
|
Average contracted firm transmission reservation commitments (BBtu
per day)
|
|
|
4,140
|
|
|
3,743
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
18,929
|
|
$
|
21,389
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes fees on volumes transported in excess of firm contracted
capacity as well as commodity charges and fees on all volumes
transported under firm contracts.
|
|
(b)
|
|
Includes volumes transported under interruptible contracts and
volumes transported in excess of firm contracted capacity.
|
|
|
|
|
|
|
|
RMP GATHERING
|
|
RESULTS OF OPERATIONS
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
2017 (a)
|
|
FINANCIAL DATA
|
|
(Thousands, except per day amounts)
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
Gathering revenues
|
|
$
|
52,730
|
|
$
|
–
|
|
|
Compression revenues
|
|
|
8,771
|
|
|
–
|
|
|
Total operating revenues
|
|
|
61,501
|
|
|
–
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Operation and maintenance expense
|
|
|
3,189
|
|
|
–
|
|
|
General and administrative expense
|
|
|
6,093
|
|
|
–
|
|
|
Depreciation expense
|
|
|
8,124
|
|
|
–
|
|
|
Total operating expenses
|
|
|
17,406
|
|
|
–
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
44,095
|
|
$
|
–
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
Gathered volumes (BBtu/d)
|
|
|
1,697
|
|
|
–
|
|
|
Compression volumes (BBtu/d)
|
|
|
1,248
|
|
|
–
|
|
|
Capital expenditures
|
|
$
|
20,940
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
This table sets forth selected financial and operational data for
RMP Gathering. The Company acquired RMP Gathering on November 13,
2017 as part of the Rice Merger.
|
|
|
|
|
|
|
|
RMP WATER
|
|
RESULTS OF OPERATIONS
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2018
|
|
2017 (a)
|
|
|
|
|
|
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
|
|
|
|
Water services revenues
|
|
|
22,963
|
|
|
–
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Operation and maintenance expense
|
|
|
4,711
|
|
|
–
|
|
|
General and administrative expense
|
|
|
1,111
|
|
|
–
|
|
|
Depreciation expense
|
|
|
5,771
|
|
|
–
|
|
|
Total operating expenses
|
|
|
11,593
|
|
|
–
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
11,370
|
|
$
|
–
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
Water services volumes (MMgal)
|
|
|
434
|
|
|
–
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
2,375
|
|
$
|
–
|
|
|
(a)
|
|
This table sets forth selected financial and operational data for
RMP Water. The Company acquired RMP Water on November 13, 2017 as
part of the Rice Merger.
|
