PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced financial and operational
performance results for the third quarter 2018.
Highlights:
-
Increase of 125% in net cash provided by operating activities
-
Increase of 160% in adjusted operating cash flow
-
Decrease of 23% in Production’s per unit cash operating costs
-
Completion of the sale of the Company’s non-core Huron assets
|
Financial Results
|
|
Three Months Ended
September 30,
|
|
|
|
|
($ millions, except EPS)
|
|
2018
|
|
|
2017
|
|
Difference
|
|
Net (loss) income attributable to EQT
|
|
$
|
(39.7
|
)
|
|
$
|
23.3
|
|
$
|
(63.0
|
)
|
|
Adjusted net income attributable to EQT (a non-GAAP measure)
|
|
$
|
90.9
|
|
|
$
|
17.4
|
|
$
|
73.5
|
|
|
Diluted earnings per share (EPS)
|
|
$
|
(0.15
|
)
|
|
$
|
0.13
|
|
$
|
(0.28
|
)
|
|
Adjusted EPS (a non-GAAP measure)
|
|
$
|
0.35
|
|
|
$
|
0.10
|
|
$
|
0.25
|
|
|
Net cash provided by operating activities
|
|
$
|
904.3
|
|
|
$
|
402.4
|
|
$
|
501.9
|
|
|
Adjusted operating cash flow attributable to EQT (a non-GAAP measure)
|
|
$
|
560.3
|
|
|
$
|
215.7
|
|
$
|
344.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT reported a net loss attributable to EQT for the third quarter 2018
compared to net income attributable to EQT for the same period 2017,
primarily due to higher operating costs, including a charge of $259.3
million on capacity contracts related to the sale of the Huron assets,
and higher interest expense – all of which were partly offset by higher
revenue from an 82.5% increase in sales volume. Net cash from operating
activities was higher in the quarter compared to the same quarter last
year due to an increase in revenue, partly offset by an increase in cash
operating costs. The increases in volumes and revenue were primarily a
result of the acquisition of Rice Energy Inc. (Rice).
Adjusted net income attributable to EQT, which excludes non-cash
derivatives, asset and lease impairments, and transaction-related
expenses, increased $73.5 million for the 2018 quarter. Adjusted
operating cash flow attributable to EQT, which includes
transaction-related expenses and excludes the non-controlling interests
in EQM Midstream Partners, LP (EQM), increased 160%.
The Non-GAAP Disclosures section of this news release provides
reconciliations of non-GAAP financial measures to the most comparable
GAAP financial measures, as well as important disclosures regarding
certain projected non-GAAP financial measures.
RESULTS BY BUSINESS
EQT PRODUCTION
|
Financial Results
|
|
Three Months Ended
September 30,
|
|
|
|
($ millions, except average realized price)
|
|
2018
|
|
2017
|
|
Difference
|
|
Sales volume (Bcfe)
|
|
|
374.2
|
|
|
|
205.1
|
|
|
|
169.1
|
|
|
Pipeline and net marketing services
|
|
$
|
6.1
|
|
|
$
|
9.1
|
|
|
$
|
(3.0
|
)
|
|
Operating revenue
|
|
$
|
1,050.0
|
|
|
$
|
597.7
|
|
|
$
|
452.3
|
|
|
Adjusted operating revenue (a non-GAAP measure)
|
|
$
|
1,032.7
|
|
|
$
|
566.8
|
|
|
$
|
465.9
|
|
|
Operating expenses
|
|
$
|
1,171.7
|
|
|
$
|
585.5
|
|
|
$
|
586.2
|
|
|
Operating (loss) income
|
|
$
|
(121.7
|
)
|
|
$
|
12.2
|
|
|
$
|
(133.9
|
)
|
|
Adjusted operating income (loss) (a non-GAAP measure)
|
|
$
|
138.5
|
|
|
$
|
(8.6
|
)
|
|
$
|
147.1
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
|
$
|
2.76
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The $133.9 million decrease in operating income in the third quarter
2018 compared to 2017 was primarily due to higher operating expenses,
including a charge of $259.3 million on capacity contracts related to
the sale of the Huron assets, and a loss on derivatives not designated
as hedges in the current quarter, partly offset by higher revenue from
an increase in sales volume. The volume increase resulted from the Rice
acquisition and the company’s drilling program.
Compared to the same quarter last year, the realized price for natural
gas during the quarter was flat at $2.76 per Mcfe, as a decrease in the
average NYMEX natural gas price net of cash settled derivatives was
offset by an improvement in the average natural gas differential.
Operating expenses for the quarter were $586.2 million higher than the
same period last year. In addition to the loss associated with the sale
of the Huron assets – depreciation and depletion expense increased
$167.0 million; gathering expense increased $82.6 million; and
transmission expense increased $63.2 million, all consistent with an
increase in production volume. Exploration expense increased
$13.3 million, primarily due to an increase in the number of leases
expiring in the third quarter of 2018. Per unit cash operating expenses
decreased 23%.
Adjusted operating income for the quarter, which excludes impairment
charges and non-cash derivatives, was $147.1 million higher, primarily
due to an increase in revenue that was partially offset by higher
expenses.
Estimated well development capital expenditures for 2018 increased by
$300 million to $2.5 billion. This was driven by inefficiencies
resulting from higher activity levels, the learning curve on ultra-long
laterals and service cost increases.
EQT is committed to producing volumes in the most capital efficient
manner. As a result of the Company’s decision to work at a more moderate
and efficient pace, the Company changed certain operating activities in
October of 2018 that will result in turned-in-line wells coming online
later than planned in the fourth quarter. This change is expected to
result in a 30 Bcfe reduction of production volumes for 2018.
Approximately 10 Bcfe of this production would have been sold in the
first half of October at an average local price of approximately $2.00.
The Company entered into firm sales agreements to sell this 10 Bcfe in
the first quarter 2019, at an average price of approximately $2.90.
To reflect these decisions, the sales volume guidance 2018 was reduced
to 1460-1480 Bcfe.
EQM MIDSTREAM PARTNERS, LP (EQM)
The third quarter 2018 financial results for EQM were released today and
provide operational results, as well as updates on significant midstream
projects under development by EQM. EQM’s news release is available at www.eqm-midstreampartners.com.
The summary results are:
Acquisition of Rice Midstream Partners (RMP) by EQM
On July 23, 2018, EQM completed its acquisition of RMP and RMP’s general
partner (the Midstream Mergers), with each RMP unitholder receiving
0.3319 common units of EQM for each common unit of RMP held by each RMP
unitholder immediately prior to closing. In connection with closing the
transaction, the issued and outstanding incentive distributions rights
of RMP were canceled.
EQM Gathering Financial Results
|
|
|
Three Months Ended
September 30,
|
|
|
|
($ millions)
|
|
2018
|
|
2017
|
|
Difference
|
|
Operating revenue
|
|
$
|
252.9
|
|
$
|
116.5
|
|
$
|
136.4
|
|
Operating expenses
|
|
$
|
75.0
|
|
$
|
30.6
|
|
$
|
44.4
|
|
Operating income
|
|
$
|
177.9
|
|
$
|
85.9
|
|
$
|
92.0
|
|
|
|
|
|
|
|
|
|
|
Operating income increased 107% in the third quarter 2018 compared to
third quarter 2017, driven by higher revenue from the Midstream Mergers,
the acquisition of EQT’s retained midstream assets that was completed in
May 2018 and production development in the Marcellus and Utica Shales,
which was partly offset by higher operating costs. Revenue from firm
reservation fees represented 45% of total revenue during the quarter.
Operating expenses were $44.4 million higher in the third quarter 2018
compared to the third quarter 2017 resulting from the Midstream Mergers
and the acquisition of EQT’s retained midstream assets, as well as
higher system throughput and additional assets placed in-service, which
is consistent with the growth in the business.
EQM Transmission Financial Results
|
|
|
Three Months Ended
September 30,
|
|
|
|
($ millions)
|
|
2018
|
|
2017
|
|
Difference
|
|
Operating revenue
|
|
$
|
89.4
|
|
$
|
89.8
|
|
$
|
(0.4
|
)
|
|
Operating expenses
|
|
$
|
30.7
|
|
$
|
30.0
|
|
$
|
0.7
|
|
|
Operating income
|
|
$
|
58.7
|
|
$
|
59.8
|
|
$
|
(1.1
|
)
|
|
|
|
|
|
|
|
|
|
|
Revenue from firm reservation fees represented 93% of total revenue
during the quarter.
Operating expenses were $0.7 million higher, primarily as a result of
increased operating and maintenance expense.
EQM Water Financial Results
The Company acquired the water assets on November 13, 2017, as part of
the Rice Merger; as a result, there is no comparative period for these
operations.
Mountain Valley Pipeline Update
Mountain Valley Pipeline, LLC (MVP JV) has modified its construction
schedule for the Mountain Valley Pipeline (MVP) and now anticipates a
fourth quarter 2019 in-service date. The 303-mile, 42-inch diameter
pipeline is estimated to cost $4.6 billion, with EQM funding
approximately $2.2 billion.
OTHER BUSINESS
Non-Core Huron Assets Sale
On July 18, 2018, EQT completed the sale of its non-core Huron assets
located in Southern Appalachia to Diversified Gas and Oil PLC, for $575
million in cash, subject to customary purchase price adjustments. The
transaction also relieved EQT of approximately $200 million of plugging
and other liabilities associated with the assets. EQT retained the deep
drilling rights across the acreage. EQT recognized a $259.3 million
charge on capacity contracts related to this sale in the third quarter
2018.
Share Repurchase Program
During the third quarter 2018, the Company repurchased 9,946,382 shares
at an average price of $50.29. This completed the Company’s previously
announced $500 million share repurchase program.
EQM and EQGP Distributions
On October 23, 2018, EQM approved a cash distribution to its unitholders
of $1.115 per unit for the third quarter 2018. The quarterly
distribution is 2% higher than the second quarter 2018 and 14% higher
than the third quarter 2017.
EQGP Holdings, LP (EQGP) approved a cash distribution to its unitholders
of $0.315 per unit for the third quarter 2018. The quarterly
distribution is 3% higher than the second quarter 2018 and 38% higher
than the third quarter 2017.
Calculation of Net Income Attributable to Non-controlling Interest
(NCI)
The results of EQGP and EQM are consolidated in EQT’s results. For the
third quarter 2018, EQT’s results reflected earnings of $103.1 million,
or $0.40 per diluted share, attributable to the publicly held
partnership interests.
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
|
|
|
Unitholder interest in net
|
|
|
|
Non-controlling
|
|
|
|
NCI interest in
|
|
(millions)
|
|
|
|
income
(a)
|
|
|
|
interest (NCI)
(b)
|
|
|
|
EQT earnings
|
|
EQM
|
|
|
|
$
|
130.5
|
|
|
|
68.0%
|
|
|
|
$
|
88.7
|
|
EQGP
|
|
|
|
$
|
95.1
|
|
|
|
8.7%
|
|
|
|
$
|
8.3
|
|
RMP (b)
|
|
|
|
$
|
8.5
|
|
|
|
71.9%
|
|
|
|
$
|
6.1
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
103.1
|
|
a)
|
|
Excludes pre-acquisition net income allocated to EQT and incentive
distribution rights.
|
|
b)
|
|
On July 23, 2018, RMP was acquired by EQM and became a wholly owned
subsidiary of EQM. Therefore, RMP includes activity through July 23,
2018, only.
|
|
|
|
|
Hedging
As of October 23, 2018, the approximate volumes and prices of the
Company’s derivative commodity instruments hedging sales of produced gas
for 2018 through 2020 were:
|
|
|
|
2018
(a)
|
|
|
|
2019
|
|
|
|
2020
|
|
NYMEX Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
|
186
|
|
|
|
|
600
|
|
|
|
|
393
|
|
Average Price per Mcf (NYMEX)
|
|
|
$
|
3.10
|
|
|
|
$
|
2.99
|
|
|
|
$
|
2.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
|
31
|
|
|
|
|
73
|
|
|
|
|
−
|
|
Average Floor Price per Mcf (NYMEX)
|
|
|
$
|
3.28
|
|
|
|
$
|
3.12
|
|
|
|
$
|
−
|
|
Average Cap Price per Mcf (NYMEX)
|
|
|
$
|
3.79
|
|
|
|
$
|
3.60
|
|
|
|
$
|
−
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Puts (Long)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
−
|
|
Average Floor Price per Mcf (NYMEX)
|
|
|
$
|
3.02
|
|
|
|
$
|
3.15
|
|
|
|
$
|
−
|
|
(a)
|
|
October-December 2018
|
|
•
|
|
The Company sold calendar year 2018, 2019, and 2020 calls for
approximately 28, 145, and 127 Bcf, at strike prices of $3.45,
$3.41, and $3.46 per Mcf, respectively. The Company purchased
calendar year 2018, 2019, and 2020 calls for approximately 16, 56,
and 35 Bcf at strike prices of $3.34, $3.38, and $3.36 per Mcf,
respectively.
|
|
•
|
|
The Company sold calendar year 2018 and 2019 puts for approximately
8 and 27 Bcf at strike prices of $2.99 and $2.88 per Mcf,
respectively.
|
|
•
|
|
The average price is based on a conversion rate of 1.05 MMBtu/Mcf.
|
|
|
|
|
Well Statistics
Wells Drilled (spud)
|
|
|
|
|
Marcellus
|
|
|
|
Upper Devonian
|
|
|
|
Ohio Utica (net)
|
|
Q3 2018
|
|
|
|
30
|
|
|
|
0
|
|
|
|
4
|
|
2018 Forecast
|
|
|
|
115 - 120
|
|
|
|
5
|
|
|
|
21
|
|
Q4 2018 Forecast
|
|
|
|
30 - 35
|
|
|
|
0
|
|
|
|
2
|
|
•
|
|
Q3 2018 average lateral lengths: Marcellus 10,900; Ohio Utica 15,000
|
|
•
|
|
2018 forecasted average lateral lengths: Marcellus 12,400; Upper
Devonian 14,700; Ohio Utica 12,300
|
|
|
|
|
Wells Turned-in-line (TIL)
|
|
|
|
|
Marcellus
|
|
|
|
Upper Devonian
|
|
|
|
Ohio Utica (net)
|
|
Q3 2018
|
|
|
|
70
|
|
|
|
4
|
|
|
|
11
|
|
2018 Forecast
|
|
|
|
170 - 175
|
|
|
|
18 - 20
|
|
|
|
20 - 23
|
|
Q4 2018 Forecast
|
|
|
|
30 - 35
|
|
|
|
3 - 5
|
|
|
|
2 - 4
|
|
•
|
|
Q3 2018 average lateral lengths: Marcellus 8,800; Upper Devonian
12,600; Ohio Utica 12,600
|
|
•
|
|
2018 forecasted average lateral lengths: Marcellus 8,500; Upper
Devonian 11,300; Ohio Utica 11,500
|
|
|
|
|
Marcellus Horizontal Well Status (cumulative since inception)*
|
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
|
|
9/30/18
|
|
|
|
6/30/18
|
|
|
|
3/31/18
|
|
|
|
12/31/17
|
|
|
|
9/30/17
|
|
Wells drilled (spud)
|
|
|
|
1,812
|
|
|
|
1,791
|
|
|
|
1,763
|
|
|
|
1,743
|
|
|
|
1,288
|
|
Wells online
|
|
|
|
1,543
|
|
|
|
1,482
|
|
|
|
1,444
|
|
|
|
1,424
|
|
|
|
1,060
|
|
Wells complete, not online
|
|
|
|
22
|
|
|
|
40
|
|
|
|
35
|
|
|
|
21
|
|
|
|
21
|
|
Wells drilled, uncompleted
|
|
|
|
247
|
|
|
|
269
|
|
|
|
284
|
|
|
|
298
|
|
|
|
207
|
*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.
Ohio Utica Horizontal Well Status
|
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
|
|
9/30/18
|
|
|
|
6/30/18
|
|
|
|
3/31/18
|
|
|
|
12/31/17
|
|
Wells drilled (spud)
|
|
|
|
258
|
|
|
|
253
|
|
|
|
243
|
|
|
|
227
|
|
Wells online
|
|
|
|
225
|
|
|
|
205
|
|
|
|
203
|
|
|
|
189
|
|
Wells complete, not online
|
|
|
|
1
|
|
|
|
14
|
|
|
|
2
|
|
|
|
5
|
|
Wells drilled, uncompleted
|
|
|
|
32
|
|
|
|
34
|
|
|
|
38
|
|
|
|
33
|
*These totals may differ from previous presentations to account for
acquisitions, dispositions, or wells plugged.
Operating Income (Loss)
The Company reports operating income (loss) by segment in this news
release. Other income, 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
(loss) reported in the Company’s financial statements:
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
EQT Production (a)
|
|
$
|
(121,678
|
)
|
|
$
|
12,201
|
|
|
$
|
(2,127,323
|
)
|
|
$
|
322,634
|
|
|
EQM Gathering
|
|
|
177,902
|
|
|
|
85,932
|
|
|
|
510,755
|
|
|
|
243,061
|
|
|
EQM Transmission
|
|
|
58,691
|
|
|
|
59,770
|
|
|
|
198,784
|
|
|
|
189,237
|
|
|
EQM Water
|
|
|
(3,093
|
)
|
|
|
−
|
|
|
|
35,627
|
|
|
|
−
|
|
|
Unallocated expense and intersegment eliminations (b)
|
|
|
(39,998
|
)
|
|
|
(19,876
|
)
|
|
|
(169,566
|
)
|
|
|
(35,802
|
)
|
|
Operating income (loss)
|
|
$
|
71,824
|
|
|
$
|
138,027
|
|
|
$
|
(1,551,723
|
)
|
|
$
|
719,130
|
|
|
(a)
|
|
Impairment of long-lived assets of $0.3 billion and $2.7 billion are
included in EQT Production operating income for the three and nine
months ended September 30, 2018, respectively.
|
|
(b)
|
|
Unallocated expenses consist of compensation expense and
administrative costs, including transaction costs of $29.3 million
and $85.7 million for the three and nine months ended September 30,
2018, respectively. Amortization expense related to non-compete
agreements with former Rice executives of $10.4 million and $31.0
million for the three and nine months ended September 30, 2018,
respectively. Intersegment eliminations include the elimination of
profit on water services that are provided to EQT Production and
capitalized as part of development costs of $3.2 million and $50.7
million for the three and nine months ended September 30, 2018,
respectively.
|
|
|
|
|
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 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 income attributable to EQT and EPS as derived from
the statements of consolidated operations.
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
(thousands, except per share information)
|
|
2018
|
|
|
2017
|
|
Net (loss) income attributable to EQT, as reported
|
|
$
|
(39,693
|
)
|
|
|
$
|
23,340
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
Asset and lease impairments
|
|
|
271,455
|
|
|
|
|
952
|
|
|
Transaction costs
|
|
|
31,506
|
|
|
|
|
10,806
|
|
|
Loss (gain) on derivatives not designated as hedges
|
|
|
3,075
|
|
|
|
|
(35,625
|
)
|
|
Net cash settlements (paid) received on derivatives not designated
as hedges
|
|
|
(14,285
|
)
|
|
|
|
13,321
|
|
|
Premiums (paid) received for derivatives that settled during the
period
|
|
|
(18
|
)
|
|
|
|
537
|
|
|
Tax impact of non-GAAP items*
|
|
|
(71,183
|
)
|
|
|
|
4,024
|
|
|
Loss limitation impact on effective tax rate**
|
|
|
(89,995
|
)
|
|
|
|
–
|
|
|
Adjusted net income attributable to EQT
|
|
$
|
90,862
|
|
|
|
$
|
17,355
|
|
|
Diluted weighted average common shares outstanding
|
|
|
259,560
|
|
|
|
|
173,675
|
|
|
Diluted EPS, as adjusted
|
|
$
|
0.35
|
|
|
|
$
|
0.10
|
|
|
*
|
Blended tax rates of 24.4% and 40.2% were applied to the items under
the caption “Add back (deduct)” for the three months ended September
30, 2018 and 2017, respectively. This represents the incremental tax
(expense) benefit that would have been incurred had these items been
excluded from net income attributable to EQT.
|
|
**
|
The tax benefit that may be recorded in any quarter is limited to
the amount of benefit expected for the entire year. As a result,
the tax benefit recorded in the second quarter 2018 was the entire
benefit forecast for the year at June 30, 2018. At September 30,
2018, the forecast tax benefit for the year was higher than at
June 30, 2018, primarily due as a result of the charge related to
the sale of Huron assets. As a result, the Company recorded an
additional tax benefit in the third quarter.
|
|
|
|
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 adjusted EBITDA and adjusted EBITDA
attributable to the Midstream Mergers, plus EQM interest expense plus
the EQGP, EQM 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 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. 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 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 (losses) gains on
derivatives not designated as hedges, plus net cash settlements (paid)
received on derivatives not designated as hedges, plus premiums (paid)
received 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 and
nine months ended September 30, 2018.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net cash provided by operating activities
|
|
$
|
904,266
|
|
|
$
|
402,378
|
|
|
$
|
2,445,390
|
|
|
$
|
1,211,372
|
|
|
Add back / (deduct)
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
(196,225
|
)
|
|
|
(80,294
|
)
|
|
|
(141,721
|
)
|
|
|
(105,259
|
)
|
|
Operating cash flow (a non-GAAP measure)
|
|
$
|
708,041
|
|
|
$
|
322,084
|
|
|
$
|
2,303,669
|
|
|
$
|
1,106,113
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
EQM adjusted EBITDA(1)
|
|
|
(280,069
|
)
|
|
|
(170,498
|
)
|
|
|
(695,934
|
)
|
|
|
(504,400
|
)
|
|
Adjusted EBITDA attributable to the Midstream Mergers
|
|
|
(12,825
|
)
|
|
|
−
|
|
|
|
(160,128
|
)
|
|
|
−
|
|
|
EQM net interest expense
|
|
|
41,005
|
|
|
|
9,426
|
|
|
|
76,740
|
|
|
|
26,014
|
|
|
Cash distribution payable to EQT from EQGP(2)
|
|
|
86,943
|
|
|
|
54,655
|
|
|
|
233,248
|
|
|
|
150,781
|
|
|
Cash distribution payable to EQT from EQM(3)
|
|
|
17,209
|
|
|
|
−
|
|
|
|
34,032
|
|
|
|
−
|
|
|
Cash distribution payable to EQT from RMP(4)
|
|
|
−
|
|
|
|
−
|
|
|
|
13,121
|
|
|
|
−
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
560,304
|
|
|
$
|
215,667
|
|
|
$
|
1,804,748
|
|
|
$
|
778,508
|
|
|
(1)
|
|
EQM adjusted EBITDA is a non-GAAP supplemental financial measure
reconciled in this section. Adjusted EBITDA attributable to the
Midstream Mergers for the period prior to July 23, 2018, was
excluded from EQM’s adjusted EBITDA calculations as these amounts
were generated by RMP prior to acquisition by EQM as part of the
Midstream Mergers. Adjusted EBITDA attributable to the Midstream
Mergers is also a non-GAAP supplemental financial measure reconciled
in this section as part of the reconciliation of EQM’s adjusted
EBITDA.
|
|
(2)
|
|
Cash distribution payable to EQT for the three and nine months ended
September 30, 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 and nine months ended
September 30, 2018, represents the distribution payable from EQM to
EQT.
|
|
(4)
|
|
Cash distribution payable to EQT for the nine months ended September
30, 2018, represents the cash distribution paid to EQT prior to the
completion of the Midstream Mergers on July 23, 2018. Due to the
timing of the Midstream Mergers, RMP did not declare a distribution
subsequent to the first quarter of 2018.
|
|
|
|
|
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 and nine months ended September 30, 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
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Adjusted Operating Revenue
|
|
September 30,
|
|
September 30,
|
|
(thousands, unless noted)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
EQT Production total operating revenue, as reported on segment page
|
|
$
|
1,050,046
|
|
|
$
|
597,718
|
|
|
$
|
3,312,730
|
|
|
$
|
2,057,481
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
|
|
|
Loss (gain) on derivatives not designated as hedges
|
|
|
3,075
|
|
|
|
(35,625
|
)
|
|
|
(5,620
|
)
|
|
|
(222,693
|
)
|
|
Net cash settlements (paid) received on derivatives not designated
as hedges
|
|
|
(14,285
|
)
|
|
|
13,321
|
|
|
|
(27,401
|
)
|
|
|
(6,837
|
)
|
|
Premiums (paid) received for derivatives that settled during the
period
|
|
|
(18
|
)
|
|
|
537
|
|
|
|
453
|
|
|
|
1,595
|
|
|
Pipeline and net marketing services
|
|
|
(6,132
|
)
|
|
|
(9,140
|
)
|
|
|
(42,382
|
)
|
|
|
(31,656
|
)
|
|
EQT Production adjusted operating revenue, a non-GAAP financial
measure
|
|
$
|
1,032,686
|
|
|
$
|
566,811
|
|
|
$
|
3,237,780
|
|
|
$
|
1,797,890
|
|
|
Total sales volumes (MMcfe)
|
|
|
374,237
|
|
|
|
205,067
|
|
|
|
1,093,782
|
|
|
|
593,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
|
$
|
2.76
|
|
|
$
|
2.96
|
|
|
$
|
3.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (loss) income, 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 (loss)
income to EQT Corporation total operating income (loss), as reported.
EQT Production adjusted operating income (loss) is presented because it
is an important measure used by EQT’s management to evaluate
period-over-period comparisons of earnings trends. EQT Production
adjusted operating income (loss) should not be considered as an
alternative to EQT Corporation operating income (loss) presented in
accordance with GAAP. EQT Production adjusted operating income (loss)
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 (loss) to
evaluate earnings trends because the measure reflects only the impact of
settled derivative contracts and thus the income from natural gas sales
is not impacted by the often-volatile fluctuations in the fair value of
derivatives prior to settlement. The measure also excludes 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 (loss) as presented provides useful
information for investors for evaluating period-over-period earnings.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
EQT Production operating (loss) income, as reported on segment page
|
|
$
|
(121,678
|
)
|
|
$
|
12,201
|
|
|
$
|
(2,127,323
|
)
|
|
$
|
322,634
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
Loss (gain) on derivatives not designated as hedges
|
|
|
3,075
|
|
|
|
(35,625
|
)
|
|
|
(5,620
|
)
|
|
|
(222,693
|
)
|
|
Net cash settlements (paid) received on derivatives not designated
as hedges
|
|
|
(14,285
|
)
|
|
|
13,321
|
|
|
|
(27,401
|
)
|
|
|
(6,837
|
)
|
|
Premiums (paid) received for derivatives that settled during the
period
|
|
|
(18
|
)
|
|
|
537
|
|
|
|
453
|
|
|
|
1,595
|
|
|
Asset and lease impairments
|
|
|
271,455
|
|
|
|
952
|
|
|
|
2,742,022
|
|
|
|
5,053
|
|
|
EQT Production adjusted operating income (loss)
|
|
$
|
138,549
|
|
|
$
|
(8,614
|
)
|
|
$
|
582,131
|
|
|
$
|
99,752
|
|
|
|
|
|
|
|
|
|
|
|
EQM Adjusted EBITDA
EQM adjusted EBITDA means EQM’s net income plus EQM’s net interest
expense, depreciation, amortization of intangible assets, preferred
interest payments, non-cash long-term compensation expense and
transaction costs less EQM’s equity income, AFUDC-equity and adjusted
EBITDA of assets prior to acquisition. 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 adjusted 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 and nine months ended September 30, 2018.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net income attributable to EQM
|
|
$
|
209,927
|
|
|
$
|
142,938
|
|
|
$
|
704,109
|
|
|
$
|
425,273
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Net interest expense
|
|
|
41,005
|
|
|
|
9,426
|
|
|
|
76,740
|
|
|
|
26,014
|
|
|
Depreciation
|
|
|
43,567
|
|
|
|
22,244
|
|
|
|
126,957
|
|
|
|
64,191
|
|
|
Amortization of intangible assets
|
|
|
10,387
|
|
|
|
–
|
|
|
|
31,160
|
|
|
|
–
|
|
|
Preferred interest payments
|
|
|
2,746
|
|
|
|
2,746
|
|
|
|
8,238
|
|
|
|
8,238
|
|
|
Non-cash long-term compensation expense
|
|
|
636
|
|
|
|
–
|
|
|
|
1,275
|
|
|
|
225
|
|
|
Transaction costs(1)
|
|
|
2,161
|
|
|
|
–
|
|
|
|
7,511
|
|
|
|
–
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Equity income
|
|
|
(16,087
|
)
|
|
|
(6,025
|
)
|
|
|
(35,836
|
)
|
|
|
(15,413
|
)
|
|
AFUDC - equity
|
|
|
(1,448
|
)
|
|
|
(831
|
)
|
|
|
(3,585
|
)
|
|
|
(4,128
|
)
|
|
Adjusted EBITDA attributable to the Drop-Down Transaction(2)
|
|
|
–
|
|
|
|
–
|
|
|
|
(60,507
|
)
|
|
|
–
|
|
|
Adjusted EBITDA attributable to the Midstream Mergers(3)
|
|
|
(12,825
|
)
|
|
|
–
|
|
|
|
(160,128
|
)
|
|
|
–
|
|
|
EQM Adjusted EBITDA
|
|
$
|
280,069
|
|
|
$
|
170,498
|
|
|
$
|
695,934
|
|
|
$
|
504,400
|
|
|
(1)
|
|
There were no transaction costs for the three and nine months ended
September 30, 2017.
|
|
(2)
|
|
Adjusted EBITDA attributable to EQM’s acquisition of Rice Olympus
Midstream LLC, Strike Force Midstream Holdings LLC and Rice West
Virginia Midstream LLC from EQT (the Drop-Down Transaction) for the
period prior to May 1, 2018 was excluded from EQM's adjusted EBITDA
calculations as these amounts were generated by the Drop-Down
Transaction prior to acquisition by EQM; therefore, the amounts
could not have been distributed to EQM's unitholders. Adjusted
EBITDA attributable to the Drop-Down Transaction for the nine months
ended September 30, 2018, was calculated as net income of $41.0
million plus depreciation of $5.8 million and amortization of
intangible assets of $13.8 million, less interest income of less
than $0.1 million.
|
|
(3)
|
|
Adjusted EBITDA attributable to the Midstream Mergers for the period
prior to July 23, 2018, was excluded from EQM's adjusted EBITDA
calculations as these amounts were generated by the Midstream
Mergers prior to EQM’s acquisition of RMP; therefore, the amounts
could not have been distributed to EQM's unitholders. Adjusted
EBITDA attributable to the Midstream Mergers for the three and nine
months ended September 30, 2018, was calculated as net income of
$8.5 million and $123.2 million, respectively, plus net interest
expense of $0.3 million and $4.6 million, respectively, depreciation
of $3.4 million and $31.4 million, respectively, non-cash
compensation expense of $0.6 million and $0.9 million, respectively.
|
|
|
|
|
Third 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.
EQM Midstream Partners, LP and EQGP 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.eqm-midstreampartners.com
,
and on the investor information page of the Company’s web site at
ir.eqm-midstreampartners.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 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 91% limited partner interest in EQGP Holdings, LP. EQGP Holdings,
LP owns the general partner interest, all of the incentive distribution
rights, and a portion of the limited partner interest in EQM 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 EQM Midstream Partners
EQM Midstream Partners, LP (EQM) is a growth-oriented limited
partnership formed by EQT Corporation to own, operate, acquire, and
develop midstream assets in the Appalachian Basin. As the third largest
gatherer of natural gas in the United States, EQM provides midstream
services to EQT Corporation and third-party companies through its
strategically located natural gas transmission, storage, and gathering
systems, and water services to support energy development and production
in the Marcellus and Utica regions. EQM owns approximately 950 miles of
FERC-regulated interstate pipelines and approximately 2,130 miles of
high-and low-pressure gathering lines.
For more information on EQM Midstream Partners, visit
www.eqm-midstreampartners.com
.
About EQGP Holdings:
EQGP Holdings, LP is a limited partnership that owns the general partner
interest, all the incentive distribution rights, and a portion of the
limited partner interests in EQM Midstream Partners, LP. EQT Corporation
owns the general partner interest and a 91% limited partner interest in
EQGP Holdings, LP.
For more information on EQGP Holdings, LP, visit
www.eqm-midstreampartners.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
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, and timing of regulatory
approvals and anticipated in-service date of the MVP project; the
ultimate terms, partners and structure of the MVP JV; 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 acquisition of Rice (the Rice Merger) and the
Midstream Mergers, 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; the impact and outcome of pending and future litigation; whether
the separation of the Company’s production and midstream businesses (the
Separation) will be completed and the timing of the Separation; the
projected cash flows resulting from the Company’s partnership interests
in EQGP and EQM; 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; the amount and timing of any repurchases under
the Company’s stock buyback program; 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.
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
|
|
Q4 2018
|
|
Full-Year 2018
|
|
Total production sales volume (Bcfe)
|
|
365 – 385
|
|
1,460 – 1,480
|
|
Liquids sales volume, excluding ethane (Mbbls)
|
|
2,270 –2,370
|
|
11,270 – 11,570
|
|
Ethane sales volume (Mbbls)
|
|
1,330 – 1,430
|
|
5,460 – 5,760
|
|
Total liquids sales volume (Mbbls)
|
|
3,600 – 3,800
|
|
16,730 – 17,330
|
|
|
|
|
|
|
|
Marcellus / Utica Rigs
|
|
9 – 11
|
|
|
|
Top-hole Rigs
|
|
2 – 4
|
|
|
|
Frac Crews
|
|
6 – 8
|
|
|
|
Unit Costs ($ / Mcfe)
|
|
|
|
|
|
Gathering to EQM Midstream
|
|
|
|
$ 0.50 – 0.52
|
|
Transmission to EQM Midstream
|
|
|
|
$ 0.11 – 0.13
|
|
Third-party gathering and transmission
|
|
|
|
$ 0.39 – 0.41
|
|
Processing
|
|
|
|
$ 0.10 – 0.12
|
|
LOE, excluding production taxes
|
|
|
|
$ 0.05 – 0.07
|
|
Production taxes
|
|
|
|
$ 0.05 – 0.07
|
|
SG&A
|
|
|
|
$ 0.09 – 0.11
|
|
DD&A
|
|
|
|
$ 1.05 – 1.07
|
|
|
|
|
|
|
|
Average differential ($ / Mcf)
|
|
$ (0.51) – (0.41)
|
|
$ (0.40) – (0.30)
|
|
Pipeline and net marketing services ($MM)
|
|
$ 0 – 5
|
|
$ 40 – 50
|
|
|
|
|
|
|
|
ADJUSTED OPERATING CASH FLOW ($MM)
|
|
|
|
|
|
Adjusted operating cash flow attributable to EQT Production
|
|
|
|
$ 2,250 – 2,350
|
|
Distributions to EQT from EQM and EQGP
|
|
|
|
$ 250 – 300
|
|
Interest, taxes, and other items
|
|
|
|
$ 0 – 50
|
|
Adjusted operating cash flow attributable to EQT
|
|
|
|
$ 2,600 – 2,700
|
Based on current NYMEX natural gas prices of $2.97
Adjusted
operating cash flow does not include transaction costs or tax impacts of
the separation.
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
Statements of Consolidated Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018 (a)
|
|
2017
|
|
2018 (a)
|
|
2017
|
|
|
|
(Thousands except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
1,046,989
|
|
|
$
|
552,953
|
|
|
$
|
3,264,728
|
|
|
$
|
1,803,132
|
|
Pipeline, water and net marketing services
|
|
|
114,956
|
|
|
|
70,835
|
|
|
|
376,776
|
|
|
|
216,499
|
|
(Loss) gain on derivatives not designated as hedges
|
|
|
(3,075
|
)
|
|
|
35,625
|
|
|
|
5,620
|
|
|
|
222,693
|
|
Total operating revenues
|
|
|
1,158,870
|
|
|
|
659,413
|
|
|
|
3,647,124
|
|
|
|
2,242,324
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
186,407
|
|
|
|
136,219
|
|
|
|
576,597
|
|
|
|
404,743
|
|
Operation and maintenance
|
|
|
29,892
|
|
|
|
19,589
|
|
|
|
82,218
|
|
|
|
54,721
|
|
Production
|
|
|
42,751
|
|
|
|
39,513
|
|
|
|
149,471
|
|
|
|
129,461
|
|
Exploration
|
|
|
15,772
|
|
|
|
2,436
|
|
|
|
42,058
|
|
|
|
9,039
|
|
Selling, general and administrative
|
|
|
65,400
|
|
|
|
66,263
|
|
|
|
195,828
|
|
|
|
190,891
|
|
Depreciation and depletion
|
|
|
435,311
|
|
|
|
246,560
|
|
|
|
1,290,876
|
|
|
|
719,295
|
|
Impairment / loss on sale of long-lived assets
|
|
|
259,279
|
|
|
|
–
|
|
|
|
2,706,438
|
|
|
|
-
|
|
Transaction costs
|
|
|
31,506
|
|
|
|
10,806
|
|
|
|
93,176
|
|
|
|
15,044
|
|
Amortization of intangible assets
|
|
|
20,728
|
|
|
|
–
|
|
|
|
62,185
|
|
|
|
-
|
|
Total operating expenses
|
|
|
1,087,046
|
|
|
|
521,386
|
|
|
|
5,198,847
|
|
|
|
1,523,194
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
71,824
|
|
|
|
138,027
|
|
|
|
(1,551,723
|
)
|
|
|
719,130
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
21,755
|
|
|
|
6,526
|
|
|
|
43,092
|
|
|
|
15,880
|
|
Interest expense
|
|
|
93,042
|
|
|
|
50,377
|
|
|
|
240,059
|
|
|
|
137,110
|
|
Income (loss) before income taxes
|
|
|
537
|
|
|
|
94,176
|
|
|
|
(1,748,690
|
)
|
|
|
597,900
|
|
Income tax (benefit) expense
|
|
|
(62,911
|
)
|
|
|
(11,281
|
)
|
|
|
(503,505
|
)
|
|
|
119,093
|
|
Net income (loss)
|
|
|
63,448
|
|
|
|
105,457
|
|
|
|
(1,245,185
|
)
|
|
|
478,807
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
103,141
|
|
|
|
82,117
|
|
|
|
362,696
|
|
|
|
250,349
|
|
Net (loss) income attributable to EQT Corporation
|
|
$
|
(39,693
|
)
|
|
$
|
23,340
|
|
|
$
|
(1,607,881
|
)
|
|
$
|
228,458
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
259,560
|
|
|
|
173,476
|
|
|
|
262,816
|
|
|
|
173,368
|
|
Net (loss) income
|
|
$
|
(0.15
|
)
|
|
$
|
0.13
|
|
|
$
|
(6.12
|
)
|
|
$
|
1.32
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
259,560
|
|
|
|
173,675
|
|
|
|
262,816
|
|
|
|
173,572
|
|
Net (loss) income
|
|
$
|
(0.15
|
)
|
|
$
|
0.13
|
|
|
$
|
(6.12
|
)
|
|
$
|
1.32
|
|
Dividends declared per common share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
(a)
|
|
For the three months and nine months ended September 30, 2018, the
EQT Statements of Consolidated Operations include the results of
operations acquired in the Rice Merger, which occurred on November
13, 2017.
|
|
|
|
|
|
|
|
EQT CORPORATION AND SUBSIDIARIES
|
|
PRICE RECONCILIATION
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
in thousands (unless noted)
|
|
2018 (e)
|
|
2017
|
|
2018 (e)
|
|
2017
|
|
NATURAL GAS
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcf)
|
|
|
350,297
|
|
|
|
176,311
|
|
|
|
1,013,836
|
|
|
|
508,457
|
|
|
NYMEX price ($/MMBtu) (a)
|
|
$
|
2.90
|
|
|
$
|
3.00
|
|
|
$
|
2.89
|
|
|
$
|
3.16
|
|
|
Btu uplift
|
|
|
0.17
|
|
|
|
0.30
|
|
|
|
0.19
|
|
|
|
0.28
|
|
|
Natural gas price ($/Mcf)
|
|
$
|
3.07
|
|
|
$
|
3.30
|
|
|
$
|
3.08
|
|
|
$
|
3.44
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis ($/Mcf) (b)
|
|
|
(0.41
|
)
|
|
|
(0.81
|
)
|
|
|
(0.24
|
)
|
|
|
(0.53
|
)
|
|
Cash settled basis swaps (not designated as hedges) ($/Mcf)
|
|
|
(0.06
|
)
|
|
|
(0.04
|
)
|
|
|
(0.07
|
)
|
|
|
(0.02
|
)
|
|
Average differential, including cash settled basis swaps ($/Mcf)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.85
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Average adjusted price ($/Mcf)
|
|
$
|
2.60
|
|
|
$
|
2.45
|
|
|
$
|
2.77
|
|
|
$
|
2.89
|
|
|
Cash settled derivatives (cash flow hedges) ($/Mcf)
|
|
|
–
|
|
|
|
0.01
|
|
|
|
–
|
|
|
|
0.01
|
|
|
Cash settled derivatives (not designated as hedges) ($/Mcf)
|
|
|
0.03
|
|
|
|
0.13
|
|
|
|
0.05
|
|
|
|
0.01
|
|
|
Average natural gas price, including cash settled derivatives ($/Mcf)
|
|
$
|
2.63
|
|
|
$
|
2.59
|
|
|
$
|
2.82
|
|
|
$
|
2.91
|
|
|
Natural gas sales, including cash settled derivatives
|
|
$
|
922,974
|
|
|
$
|
456,347
|
|
|
$
|
2,862,582
|
|
|
$
|
1,484,711
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS
|
|
|
|
|
|
|
|
|
|
NGLs (excluding ethane):
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
13,964
|
|
|
|
19,054
|
|
|
|
51,299
|
|
|
|
55,089
|
|
|
Sales volume (Mbbls)
|
|
|
2,328
|
|
|
|
3,176
|
|
|
|
8,550
|
|
|
|
9,182
|
|
|
Price ($/Bbl)
|
|
$
|
40.73
|
|
|
$
|
29.81
|
|
|
$
|
37.97
|
|
|
$
|
28.33
|
|
|
Cash settled derivatives (not designated as hedges) ($/Bbl)
|
|
|
(2.28
|
)
|
|
|
(0.44
|
)
|
|
|
(1.39
|
)
|
|
|
(0.43
|
)
|
|
Average NGLs price, including cash settled derivatives ($/Bbl)
|
|
$
|
38.45
|
|
|
$
|
29.37
|
|
|
$
|
36.58
|
|
|
$
|
27.90
|
|
|
|
|
|
|
|
|
|
|
|
|
NGLs sales
|
|
$
|
89,498
|
|
|
$
|
93,273
|
|
|
$
|
312,768
|
|
|
$
|
256,123
|
|
|
Ethane:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
9,002
|
|
|
|
8,226
|
|
|
|
25,413
|
|
|
|
24,970
|
|
|
Sales volume (Mbbls)
|
|
|
1,501
|
|
|
|
1,371
|
|
|
|
4,236
|
|
|
|
4,162
|
|
|
Price ($/Bbl)
|
|
$
|
7.88
|
|
|
$
|
5.92
|
|
|
$
|
7.82
|
|
|
$
|
6.45
|
|
|
Ethane sales
|
|
$
|
11,822
|
|
|
$
|
8,119
|
|
|
$
|
33,108
|
|
|
$
|
26,858
|
|
|
Oil:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (c)
|
|
|
974
|
|
|
|
1,476
|
|
|
|
3,234
|
|
|
|
4,565
|
|
|
Sales volume (Mbbls)
|
|
|
162
|
|
|
|
246
|
|
|
|
539
|
|
|
|
761
|
|
|
Price ($/Bbl)
|
|
$
|
51.73
|
|
|
$
|
36.86
|
|
|
$
|
54.41
|
|
|
$
|
39.96
|
|
|
Oil sales
|
|
$
|
8,392
|
|
|
$
|
9,072
|
|
|
$
|
29,322
|
|
|
$
|
30,198
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liquids sales volume (MMcfe) (c)
|
|
|
23,940
|
|
|
|
28,756
|
|
|
|
79,946
|
|
|
|
84,624
|
|
|
Total liquids sales volume (Mbbls)
|
|
|
3,991
|
|
|
|
4,793
|
|
|
|
13,325
|
|
|
|
14,105
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquids sales
|
|
$
|
109,712
|
|
|
$
|
110,464
|
|
|
$
|
375,198
|
|
|
$
|
313,179
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PRODUCTION
|
|
|
|
|
|
|
|
|
|
Total natural gas & liquids sales, including cash settled
derivatives (d)
|
|
$
|
1,032,686
|
|
|
$
|
566,811
|
|
|
$
|
3,237,780
|
|
|
$
|
1,797,890
|
|
|
Total sales volume (MMcfe)
|
|
|
374,237
|
|
|
|
205,067
|
|
|
|
1,093,782
|
|
|
|
593,081
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
|
$
|
2.76
|
|
|
$
|
2.96
|
|
|
$
|
3.03
|
|
|
(a)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $2.90 and $3.00 for
the three months ended September 30, 2018 and 2017, respectively,
and $2.90 and $3.17 for the nine months ended September 30, 2018 and
2017, respectively).
|
|
(b)
|
|
Basis represents the difference between the ultimate sales price for
natural gas and the NYMEX natural gas price.
|
|
(c)
|
|
NGLs, ethane and crude oil were converted to Mcfe at the rate of six
Mcfe per barrel for all periods.
|
|
(d)
|
|
Also referred to in this report as EQT Production adjusted operating
revenues, a non–GAAP supplemental financial measure.
|
|
(e)
|
|
EQT Production includes the results of production operations
acquired in the Rice Merger, which occurred on November 13, 2017.
|
|
|
|
|
|
|
|
EQT PRODUCTION
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018 (a)
|
|
2017
|
|
2018 (a)
|
|
2017
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
Marcellus (b)
|
|
|
316,740
|
|
|
|
181,650
|
|
|
|
899,642
|
|
|
|
523,122
|
|
Ohio Utica
|
|
|
52,400
|
|
|
|
(4
|
)
|
|
|
147,706
|
|
|
|
247
|
|
Other
|
|
|
5,097
|
|
|
|
23,421
|
|
|
|
46,434
|
|
|
|
69,712
|
|
Total production sales volumes (c)
|
|
|
374,237
|
|
|
|
205,067
|
|
|
|
1,093,782
|
|
|
|
593,081
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
4,068
|
|
|
|
2,229
|
|
|
|
4,007
|
|
|
|
2,172
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price ($/Mcfe)
|
|
$
|
2.76
|
|
|
$
|
2.76
|
|
|
$
|
2.96
|
|
|
$
|
3.03
|
|
|
|
|
|
|
|
|
|
|
|
Gathering to EQM Gathering ($/Mcfe)
|
|
$
|
0.50
|
|
|
$
|
0.47
|
|
|
$
|
0.50
|
|
|
$
|
0.48
|
|
Transmission to EQM Transmission ($/Mcfe)
|
|
$
|
0.12
|
|
|
$
|
0.23
|
|
|
$
|
0.13
|
|
|
$
|
0.23
|
|
Third party gathering and transmission ($/Mcfe)
|
|
$
|
0.40
|
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
0.46
|
|
Processing ($/Mcfe)
|
|
$
|
0.10
|
|
|
$
|
0.22
|
|
|
$
|
0.12
|
|
|
$
|
0.23
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
Production taxes ($/Mcfe)
|
|
$
|
0.06
|
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.09
|
|
Production depletion ($/Mcfe)
|
|
$
|
1.03
|
|
|
$
|
1.03
|
|
|
$
|
1.03
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and depletion (thousands):
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
$
|
384,965
|
|
|
$
|
210,393
|
|
|
$
|
1,128,248
|
|
|
$
|
613,379
|
|
Other depreciation and depletion
|
|
|
6,118
|
|
|
|
13,710
|
|
|
|
33,470
|
|
|
|
41,032
|
|
Total depreciation and depletion
|
|
$
|
391,083
|
|
|
$
|
224,103
|
|
|
$
|
1,161,718
|
|
|
$
|
654,411
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands) (d)
|
|
$
|
855,494
|
|
|
$
|
449,303
|
|
|
$
|
2,225,435
|
|
|
$
|
1,850,482
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
1,046,989
|
|
|
$
|
552,953
|
|
|
$
|
3,264,728
|
|
|
$
|
1,803,132
|
|
Pipeline and net marketing services
|
|
|
6,132
|
|
|
|
9,140
|
|
|
|
42,382
|
|
|
|
31,656
|
|
(Loss) gain on derivatives not designated as hedges
|
|
|
(3,075
|
)
|
|
|
35,625
|
|
|
|
5,620
|
|
|
|
222,693
|
|
Total operating revenues
|
|
|
1,050,046
|
|
|
|
597,718
|
|
|
|
3,312,730
|
|
|
|
2,057,481
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
|
199,475
|
|
|
|
116,921
|
|
|
|
587,844
|
|
|
|
334,801
|
|
Transmission
|
|
|
182,932
|
|
|
|
119,729
|
|
|
|
548,106
|
|
|
|
354,534
|
|
Processing
|
|
|
38,340
|
|
|
|
44,166
|
|
|
|
129,523
|
|
|
|
133,745
|
|
LOE, excluding production taxes
|
|
|
21,480
|
|
|
|
26,060
|
|
|
|
83,069
|
|
|
|
77,171
|
|
Production taxes
|
|
|
21,254
|
|
|
|
13,453
|
|
|
|
66,162
|
|
|
|
52,290
|
|
Exploration
|
|
|
15,772
|
|
|
|
2,437
|
|
|
|
42,058
|
|
|
|
9,040
|
|
Selling, general and administrative (SG&A)
|
|
|
42,109
|
|
|
|
38,648
|
|
|
|
115,135
|
|
|
|
118,855
|
|
Depreciation and depletion
|
|
|
391,083
|
|
|
|
224,103
|
|
|
|
1,161,718
|
|
|
|
654,411
|
|
Impairment/loss on sale of long–lived assets
|
|
|
259,279
|
|
|
|
-
|
|
|
|
2,706,438
|
|
|
|
-
|
|
Total operating expenses
|
|
|
1,171,724
|
|
|
|
585,517
|
|
|
|
5,440,053
|
|
|
|
1,734,847
|
|
Operating (loss) income
|
|
$
|
(121,678
|
)
|
|
$
|
12,201
|
|
|
$
|
(2,127,323
|
)
|
|
$
|
322,634
|
|
(a)
|
|
Operational data for EQT Production includes results of operations
for production 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 $35.7 million and $50.7 million for fill-ins and bolt-ons
associated with legacy EQT acreage for the three months ended
September 30, 2018 and 2017, respectively, and $113.8 million and
$140.4 million for fill-ins and bolt-ons associated with legacy EQT
acreage for the nine months ended September 30, 2018 and 2017,
respectively. The three and nine months ended September 30, 2017,
included $7.8 million and $819.0 million of cash capital
expenditures, respectively; and the nine months ended September 30,
2017, included $7.5 million of non-cash capital expenditures.
|
|
|
|
|
|
EQM GATHERING
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018 (a)
|
|
2017
|
|
2018 (a)
|
|
2017
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
Firm reservation fee revenues
|
|
$
|
112,598
|
|
$
|
104,772
|
|
$
|
334,233
|
|
$
|
300,901
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (b)
|
|
|
8,661
|
|
|
7,873
|
|
|
30,725
|
|
|
19,173
|
|
Usage fees under interruptible contracts (c)
|
|
|
131,602
|
|
|
3,877
|
|
|
366,482
|
|
|
10,922
|
|
Total volumetric based fee revenues
|
|
|
140,263
|
|
|
11,750
|
|
|
397,207
|
|
|
30,095
|
|
Total operating revenues
|
|
|
252,861
|
|
|
116,522
|
|
|
731,440
|
|
|
330,996
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
|
18,850
|
|
|
10,104
|
|
|
54,551
|
|
|
30,737
|
|
SG&A
|
|
|
20,363
|
|
|
10,503
|
|
|
62,665
|
|
|
28,800
|
|
Depreciation
|
|
|
25,359
|
|
|
9,983
|
|
|
72,309
|
|
|
28,398
|
|
Amortization of intangible assets
|
|
|
10,387
|
|
|
-
|
|
|
31,160
|
|
|
-
|
|
Total operating expenses
|
|
|
74,959
|
|
|
30,590
|
|
|
220,685
|
|
|
87,935
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
177,902
|
|
$
|
85,932
|
|
$
|
510,755
|
|
$
|
243,061
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Gathered volumes (BBtu per day)
|
|
|
|
|
|
|
|
|
|
Firm capacity reservation
|
|
|
2,114
|
|
|
1,838
|
|
|
2,029
|
|
|
1,783
|
|
Volumetric based services (d)
|
|
|
4,437
|
|
|
370
|
|
|
4,291
|
|
|
292
|
|
Total gathered volumes
|
|
|
6,551
|
|
|
2,208
|
|
|
6,320
|
|
|
2,075
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
194,477
|
|
$
|
48,182
|
|
$
|
515,072
|
|
$
|
150,728
|
|
(a)
|
|
Includes the pre-acquisition results of the Drop-Down Transaction
and the Midstream Mergers, which were effective May 1, 2018 and July
23, 2018, respectively. The recast is for the period the acquired
businesses were under the common control of EQT, which began on
November 13, 2017 as a result of the Rice Merger.
|
|
(b)
|
|
Includes fees on volumes gathered in excess of firm contracted
capacity.
|
|
(c)
|
|
Includes volumes from contracts under which EQM has agreed to hold
capacity available without charging a capacity reservation fee.
|
|
(d)
|
|
Includes volumes gathered under interruptible contracts and volumes
gathered in excess of firm contracted capacity.
|
|
|
|
|
|
|
|
EQM TRANSMISSION
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
FINANCIAL DATA
|
|
(Thousands, other than per day amounts)
|
|
Firm reservation fee revenues
|
|
$
|
82,669
|
|
$
|
84,438
|
|
$
|
262,666
|
|
$
|
256,224
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
5,331
|
|
|
3,427
|
|
|
13,981
|
|
|
9,787
|
|
Usage fees under interruptible contracts
|
|
|
1,350
|
|
|
1,906
|
|
|
8,782
|
|
|
6,173
|
|
Total volumetric based fee revenues
|
|
|
6,681
|
|
|
5,333
|
|
|
22,763
|
|
|
15,960
|
|
Total operating revenues
|
|
|
89,350
|
|
|
89,771
|
|
|
285,429
|
|
|
272,184
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
|
|
|
10,721
|
|
|
9,485
|
|
|
27,082
|
|
|
23,984
|
|
SG&A
|
|
|
7,581
|
|
|
8,255
|
|
|
22,335
|
|
|
23,170
|
|
Depreciation
|
|
|
12,357
|
|
|
12,261
|
|
|
37,228
|
|
|
35,793
|
|
Total operating expenses
|
|
|
30,659
|
|
|
30,001
|
|
|
86,645
|
|
|
82,947
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
58,691
|
|
$
|
59,770
|
|
$
|
198,784
|
|
$
|
189,237
|
|
|
|
|
|
|
|
|
|
|
|
Equity Income
|
|
$
|
16,087
|
|
$
|
6,025
|
|
$
|
35,836
|
|
$
|
15,413
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Transmission pipeline throughput (BBtu per day)
|
|
|
|
|
|
|
|
|
|
Firm capacity reservation
|
|
|
2,927
|
|
|
2,517
|
|
|
2,857
|
|
|
2,288
|
|
Volumetric based services (b)
|
|
|
104
|
|
|
21
|
|
|
62
|
|
|
22
|
|
Total transmission pipeline throughput
|
|
|
3,031
|
|
|
2,538
|
|
|
2,919
|
|
|
2,310
|
|
|
|
|
|
|
|
|
|
|
|
Average contracted firm transmission reservation
commitments
(BBtu per day)
|
|
|
|
|
|
|
|
|
|
|
|
3,658
|
|
|
3,474
|
|
|
3,801
|
|
|
3,519
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
37,626
|
|
$
|
22,312
|
|
$
|
84,517
|
|
$
|
73,679
|
|
(a)
|
|
Includes fees on volumes transported in excess of firm contracted
capacity as well as usage fees on all volumes transported under firm
contracts.
|
|
(b)
|
|
Includes volumes transported under interruptible contracts and
volumes transported in excess of firm contracted capacity.
|
|
|
|
|
|
|
|
EQM WATER
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018 (a)
|
|
2017
|
|
2018 (a)
|
|
2017
|
|
FINANCIAL DATA
|
|
(Thousands)
|
|
Water services revenues
|
|
$
|
22,373
|
|
|
$
|
–
|
|
$
|
93,438
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operation and maintenance
|
|
|
18,521
|
|
|
|
–
|
|
|
36,901
|
|
|
|
–
|
|
SG&A
|
|
|
1,094
|
|
|
|
–
|
|
|
3,490
|
|
|
|
–
|
|
Depreciation
|
|
|
5,851
|
|
|
|
–
|
|
|
17,420
|
|
|
|
–
|
|
Total operating expenses
|
|
|
25,466
|
|
|
|
–
|
|
|
57,811
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
$
|
(3,093
|
)
|
|
$
|
–
|
|
$
|
35,627
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Water services volumes (MMgal)
|
|
|
449
|
|
|
|
–
|
|
|
1,740
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
7,981
|
|
|
$
|
–
|
|
$
|
17,358
|
|
|
$
|
–
|
|
(a)
|
|
This table sets forth selected financial and operational data for
RMP Water. The Company acquired the water assets that constitute RMP
Water on November 13, 2017, as part of the Rice Merger. On July 23,
2018, following the completion of the Midstream Mergers, RMP Water
became EQM Water.
|
