EQT Files Investor Presentation Detailing Strong Operational and Financial Performance Delivered by New Board and Management TeamSource: Business Wire
Preliminary Second Quarter Results Demonstrate Continued Business Momentum
EQT’s Purpose-Built Board Is Best Positioned to Oversee the Company’s Continued Success and Further Value Creation
Independent Analysis Affirms that EQT Is a Low-Cost Leader, and
Refutes Unsubstantiated and Unrealistic Claims of the
EQT Urges Shareholders to Vote TODAY “FOR” All 12 of the Company’s Highly Experienced Nominees on the GOLD Universal Proxy Card
Highlights of the presentation include EQT’s:
Transformation. Under the Company’s refreshed Board of
Directors (the “Board”) and management team, the new EQT is a more
efficient, premier pure-play upstream company.
EQT generated more than
$300 millionin cumulative adjusted free cash flow1 in Q4 2018 and Q1 2019.
- EQT generated more than
Tremendous progress. EQT is delivering significant value
through a compelling new, bottom-up strategic plan, capitalizing on
the Company’s top-tier asset base to generate significant free cash
EQT is on track to deliver
$300 to $400 millionof adjusted free cash flow1 in 2019, and over $3.0 billionthrough 2023 with meaningful upside.
- EQT is on track to deliver
Outstanding recent performance. Earlier this weekEQT
released strong preliminary second quarter 2019 results, which
demonstrate the Company’s momentum, including:
- Sales volumes at the high end of the Company’s guidance of 355 to 375 Bcfe;
$25 millionof incremental annual capital expenditure savings under EQT’s Target10% Initiative;
Adjusted free cash flow1 improvement of
$25 millionover the previously provided guidance2;
- 8% reduction in drilling days / 1,000 feet quarter-over-quarter3;
- 20% improvement in frac stages / crew quarter-over-quarter3; and
- 14% increase in frac plugs drilled per day quarter-over-quarter3.
Industry-leading cost structure. EQT has superior unit costs
and drilling efficiencies as compared to peers.
EQT’s well productivity, costs and planning efficiency were
historically as competitive as, or better than, Rice Energy’s,
according to independent analysis conducted by industry research
specialist Wood Mackenzie, and EQT’s new management team has
$175 millionin annual cost savings since November 2018.
- EQT’s well productivity, costs and planning efficiency were historically as competitive as, or better than, Rice Energy’s, according to independent analysis conducted by industry research specialist Wood Mackenzie, and EQT’s new management team has already identified
Significant stock price outperformance. EQT stock has outpaced
peers as new leadership has successfully executed its strategic plan.
EQT has outperformed its Appalachian Peers by 49%4
since the spin-off of
Equitrans Midstream Corporation.
- EQT has outperformed its Appalachian Peers by 49%4 since the spin-off of
Commitment to Board refreshment. EQT has actively engaged with
shareholders and added highly qualified new independent directors.
EQT added four highly qualified independent directors to the Board
at the end of 2018 and nominated three additional highly qualified
independent director candidates for the Annual Meeting. If
elected, 67% of the Board will be new in the last year and the
average tenure will be 2.3 years.
- EQT added four highly qualified independent directors to the Board at the end of 2018 and nominated three additional highly qualified independent director candidates for the Annual Meeting. If elected, 67% of the Board will be new in the last year and the average tenure will be 2.3 years.
Concerns that the election of the Toby Rice slate would result in a
weaker Board, managerial chaos and value destruction.
- The replacement of EQT’s recently refreshed management team and Board would decrease Board independence, disrupt the Company’s progress, adversely impact financial and operational results and jeopardize EQT’s strong outperformance.
The investor presentation and other materials regarding the Board of Directors’ recommendations for the Annual Meeting are available at VoteGoldForEQT.com/Presentations. EQT also today posted additional videos highlighting the strengths of the Company’s directors to VoteGoldForEQT.com/our-nominees/.
To ensure EQT can continue its successful transformation and build on its momentum, the Board recommends that shareholders vote “FOR” all 12 of EQT’s highly qualified director nominees by phone, on the internet or by signing and returning the GOLD universal proxy card in the postage-paid envelope provided. EQT reminds shareholders that their vote is extremely important no matter how many shares they own. Every vote counts and will impact the future of EQT as a focused E&P business.
If you have any questions, or need assistance in voting
your shares on the GOLD universal proxy card,
please call EQT’s proxy solicitor:
INNISFREE M&A INCORPORATED
TOLL-FREE at 1-877-687-1866 (from the U.S. or Canada)
Or at (412) 232-3651 (From Other Locations)
|Please discard and do NOT vote using any white proxy cards you may|
|receive from the Toby Rice Group|
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.
This news release contains 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 projected adjusted free cash
flow, sales volumes and capital expenditures; and anticipated cost
savings. 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, taking into
account all information currently available to the Company. 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
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, except as required by law.
Adjusted Free Cash Flow
Adjusted free cash flow is defined as the Company’s net cash provided by operating activities less changes in other assets and liabilities, less EBITDA attributable to discontinued operations (a non-GAAP supplemental financial measure defined below), plus interest expense attributable to discontinued operations and cash distributions from discontinued operations, less accrual-based capital expenditures attributable to continuing operations. Adjusted free cash flow is a non-GAAP supplemental financial measure that the Company's management and external users of its consolidated financial statements, such as industry analysts, lenders and ratings agencies use to assess the Company’s liquidity. The Company believes that adjusted free cash flow provides useful information to management and investors in assessing the impact of the Company’s ability to generate cash flow in excess of capital requirements and return cash to shareholders. Adjusted free cash flow should not be considered as an alternative to net cash provided by operating activities or any other measure of liquidity presented in accordance with GAAP.
The table below reconciles adjusted free cash flow with net cash
provided by operating activities, the most comparable financial measure
calculated in accordance with GAAP, as derived from the Statements of
Condensed Consolidated Cash Flows included in the Company's report on
Form 10-Q for the quarter ended
Three Months Ended
March 31, 2019
Three Months Ended
December 31, 2018
|Net cash provided by operating activities||$||871,287||$||530,866||$||1,402,153|
|(Deduct) / add back changes in other assets and liabilities||(223,934||)||261,216||37,282|
|Operating cash flow||$||647,353||$||792,082||$||1,439,435|
|(Deduct) / add back:|
|EBITDA attributable to discontinued operations(a)||—||(118,934||)||(118,934||)|
|Interest expense attributable to discontinued operations||—||19,452||19,452|
|Adjusted operating cash flow||$||647,353||$||692,600||$||1,339,953|
|Capital expenditures attributable to continuing operations||(476,022||)||(558,351||)||(1,034,373||)|
|Adjusted free cash flow||$||171,331||$||134,249||$||305,580|
|(a)||As a result of the separation of the Company's midstream business from its upstream business and subsequent spin-off of Equitrans Midstream Corporation in November 2018, the results of operations of Equitrans Midstream Corporation are presented as discontinued operations in the Company's Statements of Condensed Consolidated Operations. EBITDA attributable to discontinued operations is a non-GAAP supplemental financial measure reconciled in the section below.|
The Company has not provided projected net cash provided by operating
activities or a reconciliation of projected adjusted free cash flow to
projected net cash provided by operating activities, the most comparable
financial measure calculated in accordance with GAAP. The Company is
unable to project net cash provided by operating activities for any
future period 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. The Company 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, months in advance.
Furthermore, the Company 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 and adjusted free cash flow, as applicable. Natural gas prices
are volatile and out of the Company’s control, and the timing of
transactions and the income tax effects of future transactions and other
items are difficult to accurately predict. Therefore, the Company is
unable to provide projected net cash provided by operating activities,
or the related reconciliation of projected adjusted free cash flow to
projected net cash provided by operating activities, without
unreasonable effort. Projected 2019 adjusted free cash flow is based on
average NYMEX natural gas price (April to December) of
EBITDA Attributable to Discontinued Operations
EBITDA attributable to discontinued operations is a non-GAAP
supplemental financial measure defined as income from discontinued
operations, net of tax plus interest expense, income tax expense,
depreciation and amortization of intangible assets attributable to
discontinued operations for the three months ended
The table below reconciles EBITDA attributable to discontinued
operations with income from discontinued operations, net of tax, the
most comparable financial measure calculated in accordance with GAAP, as
reported in the Statements of Condensed Consolidated Operations included
in the Company’s report on Form 10-K for the year ended
Three Months Ended
December 31, 2018
|Income (loss) from discontinued operations, net of tax||$||(163,911)|
|Add back / (deduct):|
|Income tax benefit||(31,575)|
|Amortization of intangible assets||4,847|
|Impairment of goodwill||267,878|
|EBITDA attributable to discontinued operations||$||118,934|
Non-GAAP financial measure, see non-GAAP disclosures for definition and pricing assumptions.
|2||Excludes the impact of litigation reserves and proxy-related costs.|
|3||Second quarter through May 31, 2019 compared to first quarter 2019.|
|4||Based on total shareholder return from 11/13/18 through 5/31/19. Appalachian Peers represents the median total shareholder return of AR, CNX, COG, RRC and SWN from 11/13/18 through 5/31/19.|
Blake McLean – Senior Vice President, Investor Relations and Strategy
Michael Laffin – Vice President, Communications