PITTSBURGH, April 23, 2020 /PRNewswire/
-- EQT Corporation (NYSE: EQT) today announces
certain preliminary first quarter 2020 operational and financial
highlights, provides updates on outlook and its deleveraging plan,
and schedules first quarter 2020 earnings conference call.
President and CEO Toby Rice
stated: "The benefits of our transformation strategy have come to
fruition during the first quarter 2020. We exceeded our
production expectations through continued operational efficiencies,
made substantial progress towards our well cost targets and
outperformed our operating cost projections, all while spending
roughly 25% less capital than the prior quarter. These
results reflect our commitment to being the best and lowest cost
operator, and I'm excited about our team's ability to continue
building on this positive momentum in an improving natural gas
environment."
Rice continued, "We believe these operational improvements, when
combined with an expected improved natural gas pricing environment
and anticipated cash inflows, are more than sufficient to allow us
to repay all of our 2021 maturities by the end of 2020. As a
result, we intend to more selectively explore non-core asset sales
and opportunistically assess monetizing our remaining equity
interest in Equitrans Midstream in a strategic manner in lieu of
attempting to fully achieve our Deleveraging Plan by
mid-2020. We believe these actions are aligned with our
desire to position the company to generate sustainable long-term
value for our stakeholders."
Preliminary First Quarter 2020
Highlights(1):
- We have experienced limited operational impacts as a result of
the COVID-19 pandemic
- Sales volumes of 380 – 385 Bcfe, exceeding high-end of the
guidance range of 360 – 370 Bcfe
- Average differential of ($0.20) –
($0.15) per Mcf, in-line with
midpoint of the guidance range of ($0.25) – ($0.05)
per Mcf
- Capital expenditures of $250 –
$270 million, approximately 25% lower
than fourth quarter 2019
- Well costs of $740 – $750 per lateral foot in the Pennsylvania
Marcellus, accelerating path towards target well costs
- Total cash operating costs of $1.34 – $1.37 per
Mcfe(2)
- Increased 2021 hedge position to approximately 40% of expected
production at an average realized floor price of $2.50 per Dth
- 2020 cash tax refunds now expected to be approximately
$390 million, accelerated in part by
the CARES Act
- In advanced discussions to divest certain non-strategic assets
for approximately $125 million
(1)First quarter 2020 highlights reflect our
preliminary estimates with respect to such results based on
currently available information, is not a comprehensive statement
of our financial results and is subject to completion of our
financial closing procedures. These results may change, and those
changes may be material.
(2)Includes transportation and processing,
production, exploration and selling, general and administrative
expenses
Updates on outlook
The energy industry is currently experiencing two significant
external stimuli that are impacting both day-to-day operations and
the macro environment. The novel coronavirus, or COVID-19, outbreak
and ensuing "stay at home" mandates throughout the United States and other parts of the world
have resulted in decreased demand for natural gas, NGLs and oil.
Additionally, in March 2020, the
group of oil producing nations known as OPEC+ failed to reach an
agreement over proposed oil production cuts stemming from the
decrease in global demand for oil in light of the COVID-19 pandemic
(the "oil price war"). Although the members of OPEC+ eventually
reached an agreement in April 2020 to
reduce their oil production beginning in May
2020 and continuing through April
2022, the OPEC+ members' production of oil in the interim
period prior to the commencement of the production cuts and the
significant drop in demand has led to significant increases in the
supply, and decreases in the price, of oil.
To date, we have experienced limited operational impacts as a
result of the work from home restrictions or COVID-19 directly. As
a "life-sustaining" business under the guidelines issued by each of
the states in which we operate, we have been allowed to continue
operations, provided that non-essential personnel have been
required to work from home. One of the primary actions taken by the
new management team during the 100-Day Plan was the establishment
of a digital work environment, which has allowed us to maintain the
engagement and connectivity of our personnel, as well as minimize
the number of employees required in the office and field.
Similarly, we expect to have limited direct operational impacts
from the oil price war. The oversupply of oil and NGLs resulting
from the demand destruction attributable to COVID-19 is anticipated
by some market participants to result in a lack of storage capacity
and ultimately the shutting in of certain oil and NGLs production.
We have limited direct oil and NGLs exposure, with approximately
95% of our production being natural gas.
The prices for natural gas, NGLs and oil have historically been
volatile; however, the volatility in the prices for these
commodities has substantially increased as a result of recent world
developments in 2020. Oil prices in particular have plummeted in
recent days. Strip pricing for natural gas has increased
meaningfully as a result of the oil price war, with the principal
contributing factor believed to be the market expectation that
supply decreases in associated natural gas – natural gas produced
as a byproduct of principally oil production activities – as a
result of reduced or curtailed operations in oil basins will more
than offset reduced demand for natural gas as a result of COVID-19.
The impact of these recent developments on natural gas prices and
our business are unpredictable, and there is no assurance that
natural gas prices will remain at recently elevated prices or that
any positive impact from the oil price war will outweigh the
negative impact from reduced demand for natural gas as a result of
COVID-19 or other factors.
Update on Deleveraging Plan
In October 2019, we announced a
plan to reduce debt by approximately 30%, or approximately
$1.5 billion (the "Deleveraging
Plan"), by mid-2020 through asset monetizations and increased free
cash flow. The Deleveraging Plan contemplated generating targeted
proceeds from monetizations of select, non-core exploration and
production assets, core mineral assets and/or our retained equity
interest in Equitrans Midstream.
We continue to actively pursue monetization opportunities for
certain of our non-core assets, and we are in advanced stages of
negotiations for the sale of certain of our non-core assets
principally located in central Pennsylvania for an anticipated sale price of
approximately $125 million. Given
current market conditions and our expectation that natural gas
prices may improve further starting in the latter half of 2020, we
intend to more selectively explore non-core asset sales and
opportunistically assess monetizing our remaining equity interest
in Equitrans Midstream Corporation in a strategic manner in lieu of
attempting to fully achieve our Deleveraging Plan by mid-2020. We
believe that the combination of the anticipated proceeds from these
asset sales, an anticipated approximately $390 million of income tax refunds (in part
accelerated by the Coronavirus Aid, Relief and Economic Security
Act (the CARES Act)) and improved realized free cash flow amounts
as a result of accelerated well cost reductions will be sufficient
to allow us to repay or refinance our debt maturing in 2021 by the
end of 2020. Until our leverage target is achieved, we still expect
to use all free cash flow and divestiture proceeds to reduce
debt.
The successful execution of the Deleveraging Plan is based on
our current expectations, including with respect to matters beyond
our control, and is subject to change. There can be no assurance
that we will be able to find attractive asset monetization
opportunities or that such transactions will be completed on our
anticipated timeframe, if at all. Furthermore, our estimated value
for the assets to be monetized under the Deleveraging Plan involves
multiple assumptions and judgments about future events that are
inherently uncertain; accordingly, there can be no assurance that
the resulting net cash proceeds from asset monetization
transactions will be as anticipated, even if such transactions are
consummated. Some of the factors that could affect our ability to
successfully execute the Deleveraging Plan include changes in the
financial condition or prospects of prospective purchasers and the
availability of financing to potential purchasers on reasonable
terms, if at all, the number of prospective purchasers, the number
of competing assets on the market, unfavorable economic conditions,
industry trends and changes in laws and regulations. If we are not
able to successfully execute the Deleveraging Plan or otherwise
reduce debt to a level we believe appropriate, our credit ratings
may be lowered, we may reduce or delay our planned capital
expenditures or investments, and we may revise or delay our
strategic plans.
First Quarter 2020 Earnings Conference Call:
EQT will host a conference call with security analysts on
May 7, 2020, beginning at
10:30 a.m. ET. Topics of the
teleconference will include financial and operational results, and
other matters, with respect to the first quarter 2020. A brief
Q&A session for security analysts will immediately follow the
discussion. EQT plans to issue its financial and operating results
prior to the market opening on the same day.
To access the live audio webcast of the conference call, visit
EQT's investor relations website at ir.eqt.com. A replay will also
be available via EQT's investor relations website for seven days
following the live call.
About EQT Corporation
EQT Corporation is a natural gas production company with
emphasis in the Appalachian Basin and operations throughout
Pennsylvania, West Virginia and Ohio. With 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 demand for clean-burning energy, while
continuing to provide a rewarding workplace and support for
activities that enrich the communities where its employees live and
work.
Cautionary Statements
This communication contains 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
communication specifically include preliminary first quarter 2020
financial and operating results and expectations of plans,
strategies, divestitures, objectives and growth and anticipated
financial and operational performance of the Company and its
subsidiaries.
These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from projected
or estimated 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,
considering 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 and which include, but are not limited to,
volatility of commodity prices; the costs and results of drilling
and operations; access to and cost of capital; uncertainties about
estimates of reserves, identification of drilling locations and the
ability to add proved reserves in the future; the assumptions
underlying production forecasts; the quality of technical data; the
Company's ability to appropriately allocate capital and resources
among its strategic opportunities; inherent hazards and risks
normally incidental to drilling for, producing, transporting and
storing natural gas, natural gas liquids and oil; cyber security
risks; availability and cost of drilling rigs, completion services,
equipment, supplies, personnel, oilfield services and water
required to execute the Company's exploration and development
plans; the ability to obtain environmental and other permits and
the timing thereof; government regulation or action; environmental
and weather risks, including the possible impacts of climate
change; and disruptions to the Company's business due to
acquisitions and other significant transactions. The risks and
uncertainties that may affect the forward-looking statements
include, but are not limited to, those set forth under Item 1A,
"Risk Factors," of the Company's Annual Report on Form 10-K for the
year ended December 31, 2019, as
filed with the Securities and Exchange Commission on February 27, 2020, and as updated by the
Company's Current Report on Form 8-K that will be filed with the
SEC on April 23, 2020, the Company's
subsequent Quarterly Reports on Form 10-Q, and other documents the
Company files from time to time with the SEC. Any forward-looking
statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update or revise
any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by
law.
Investor contact:
Andrew Breese – Director, Investor
Relations
412.395.2555
ABreese@eqt.com
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SOURCE EQT Corporation