Former Rice Energy Leadership Team Sends Letter to Board of EQT and Releases Presentation on Path Forward for the Company
December 10 2018 - 6:00AM
Business Wire
Believes EQT Can Significantly Enhance
Shareholder Value with Improved Operational Performance and that
Individuals with Proven Operational Experience
Must Be Added to the Board and Management Team
Rice Team
is Ready, Willing and Able to Oversee the
Operational Transformation Needed to Maximize Value for All
Shareholders
Presentation Highlights Tremendous Potential
of EQT’s Assets and Detailed Business Plan to Generate Incremental
$400-600 Million of Free Cash Flow above EQT’s Current
Plans – Equaling Greater than $1.0 Billion of Free Cash Flow
per Year
Rice Team Has Identified Director Candidates
and Will Nominate Them for Election at 2019 Annual
Meeting If Necessary
Toby Z. Rice and Derek A. Rice, who collectively own 7 million
shares of EQT Corporation (the “Company” or “EQT”) (NYSE: EQT),
today sent a letter to the Board of Directors (the “Board”) of EQT
and released a presentation outlining the path forward for an
operational transformation at the Company to maximize value for all
shareholders.
Both the presentation and the letter can be viewed at
www.EQTPathForward.com.
The full text of the letter follows:
December 10, 2018
Board of DirectorsEQT CorporationEQT Plaza625 Liberty Avenue,
Suite 1700Pittsburgh, PA 15222
Dear Members of the Board:
The completion of the merger in November 2017 between EQT
Corporation (NYSE: EQT) (“EQT”) and the company we founded, Rice
Energy Inc. (“RICE”), created a world-class asset in the core of
the Appalachian Basin, setting the table for peer-leading capital
efficiency and returns. Our belief in the tremendous potential of
EQT’s assets was underscored by the fact that we took approximately
80% of the merger consideration in EQT stock. As of today, the Rice
family owns over 7 million shares of EQT.
The Rice Team continues to believe strongly in the potential of
EQT’s assets, but unfortunately the Company’s operational
performance has translated into a severely depressed stock price
that is not reflective of the underlying value of the assets. EQT
trades at or below PDP value, with no value ascribed to EQT’s core
undeveloped acreage. EQT’s valuation metrics of ~3.4x 2019E EBITDA
and ~$2,000/mcfepd represent a significant discount to Appalachian
peers, notwithstanding the fact that EQT has the deepest inventory
of high-quality natural gas assets in the basin.
EQT has the potential to unlock significant value for all its
shareholders, but, to deliver the results this asset base deserves,
a course correction is needed. EQT must add proven operational
experience to the Board and senior management team – in particular,
individuals with experience in large-scale operational
planning.
The Rice team has a demonstrated track record of delivering
basin-leading results on the exact same assets that EQT is
operating today. With the proper authority and Board support, our
team is willing to oversee the transformation needed to achieve
these results. We have executed on it before, and we are ready,
willing and able to execute on it again.
The Rice team is fully aligned with all EQT shareholders and
committed to improving EQT’s operations and delivering value for
all EQT shareholders and employees. We have a proven, detailed
business plan to generate an incremental $400-$600 million of
pre-tax free cash flow per year above EQT’s current plans, equaling
greater than $1.0 billion of free cash flow per year. This plan
would match EQT’s current five-year production goals but generate
twice the cash flow for shareholders. A detailed presentation
outlining this plan can be found at www.eqtpathforward.com.
Over the past few weeks, in response to repeated outreach by a
range of EQT investors asking for our assistance, we engaged in
private dialogue with Chairman Jim Rohr and CEO Rob McNally to
express our concerns and propose solutions, which included, among
other things, inserting Toby Rice into the organization with proper
authority and support to oversee operations. Unfortunately, given
the lack of reciprocal engagement – and EQT pushing forward with
establishing its 2019 operational plan and budget – it has become
apparent that they are unwilling to make the changes needed.
We are focused on results and willing to work constructively
with the current Board to reach a solution for the benefit of all
shareholders. However, if we do not arrive at a mutually agreeable
outcome that materially benefits all long-term shareholders, we
have identified director candidates and will nominate them for
election to the EQT Board at the 2019 Annual Meeting.
Respectfully,
Toby Z. RiceDerek A. Rice
IMPORTANT INFORMATION
Toby Z. Rice and Derek A. Rice, as well as certain of their
affiliates, may file a proxy statement with the U.S. Securities and
Exchange Commission (“SEC”) to solicit proxies from stockholders of
EQT for use at EQT’s 2019 annual meeting of stockholders. TOBY Z.
RICE AND DEREK A. RICE STRONGLY ADVISE ALL SECURITY HOLDERS OF EQT
TO READ ANY SUCH PROXY STATEMENT IF AND WHEN IT BECOMES AVAILABLE
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Any such proxy
statement, if and when filed, and any other relevant documents will
be available at no charge on the SEC’s website at
http://www.sec.gov/.
PARTICIPANT INFORMATION
In accordance with Rule 14a-12(a)(1)(i) under the Securities
Exchange Act of 1934, as amended, the following persons are, or may
be deemed to be, participants in the potential proxy solicitation:
Toby Z. Rice and Derek A. Rice. Toby Z. Rice holds a total of
400,000 shares of common stock, both directly and indirectly, in
EQT, and Derek A. Rice holds a total of 272,651 shares of common
stock, both directly and indirectly, in EQT. In addition, Toby Z.
Rice and Derek A. Rice are potential beneficiaries of the Rice
Energy 2016 Irrevocable Trust, which holds a total of 5,676,000
shares of EQT’s common stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181210005229/en/
For Investor Inquiries:Kyle Derhamkyle@teamrice.comFor
Media Inquiries:Sard Verbinnen & CoJim Barron:
212-687-8080Frances Jeter: 832-680-5120
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