PITTSBURGH, May 5, 2021 /PRNewswire/ -- EQT Corporation
(NYSE: EQT) today announced financial and operational results for
the first quarter 2021.
First Quarter Highlights:
- Sales volumes of 415 Bcfe, in-line with guidance
- Received an average realized price of $2.61/Mcfe
- Total per unit operating costs of $1.31/Mcfe, $0.04
below midpoint of annual guidance
- Net cash provided by operating activities of $400 MM; free cash flow(1) of
$259 MM
- Capital expenditures of $238 MM,
$42 MM below the low-end of guidance
range
- Well costs of $635/foot in the PA
Marcellus, $40/foot below full-year
2021 well costs target
- Reduced 2021 capital expenditure guidance by $75 MM
- Increased free cash flow(1) guidance by $75 MM
- Announced project to certify approximately 4.0 Bcf/d of gas
producing from over 200 pads
- Successfully executed one-year extension of $2.5 B revolving credit facility
President and CEO Toby Rice
stated, "This team continues to deliver operational and financial
results that meet or exceed expectations. The efficiencies being
realized across the organization have enabled us to reduce our
expected 2021 capital expenditures by $75
million, while still delivering the same volumes. We now
expect to generate between $575 and
$675 million in free cash
flow(1) in 2021, which will strengthen our balance
sheet, reduce leverage and accelerate our strategy of returning
cash to shareholders."
Rice continued, "Delivering high performance for our investors,
environment, communities and every stakeholder group is at the
heart of our strategy and we are committed to the highest standard
of ESG performance. The gas certification projects we announced
during the quarter with Project Canary and Equitable Origin/MiQ are
both important steps in our efforts to solidify our position as the
ESG leader in our industry. We look forward to sharing other
exciting initiatives, as well as our specific emission targets,
with our stakeholders in the coming months."
(1) A non-GAAP
financial measure. See the Non-GAAP Disclosures section of this
news release for the definition of, and other important information
regarding, this non-GAAP financial measure.
|
First Quarter 2021 Financial and Operational
Performance
|
Three Months Ended
March 31,
|
|
|
($ millions,
except average realized price and EPS)
|
2021
|
|
2020
|
|
Change
|
Total sales volume
(Bcfe)
|
415
|
|
|
385
|
|
|
30
|
|
Average realized
price ($/Mcfe)
|
$
|
2.61
|
|
|
$
|
2.49
|
|
|
$
|
0.12
|
|
Net loss attributable
to EQT Corporation
|
$
|
(41)
|
|
|
$
|
(167)
|
|
|
$
|
126
|
|
Adjusted net income
attributable to EQT (a)
|
$
|
83
|
|
|
$
|
38
|
|
|
$
|
45
|
|
Adjusted EBITDA
(a)
|
$
|
555
|
|
|
$
|
468
|
|
|
$
|
87
|
|
Diluted earnings per
share (EPS)
|
$
|
(0.15)
|
|
|
$
|
(0.65)
|
|
|
$
|
0.50
|
|
Adjusted EPS
(a)
|
$
|
0.30
|
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
Net cash provided by
operating activities
|
$
|
400
|
|
|
$
|
500
|
|
|
$
|
(100)
|
|
Capital
expenditures
|
$
|
238
|
|
|
$
|
262
|
|
|
$
|
(24)
|
|
Free cash flow
(a)
|
$
|
259
|
|
|
$
|
251
|
|
|
$
|
8
|
|
|
(a) A non-GAAP
financial measure. See the Non-GAAP Disclosures section of this
news release for the definition of, and other important information
regarding, this non-GAAP financial measure.
|
Net loss attributable to EQT Corporation for the three months
ended March 31, 2021 was $41
million, $0.15 per diluted
share, compared to net loss attributable to EQT Corporation for the
same period in 2020 of $167 million,
$0.65 per diluted share. The
improvement was attributable primarily to higher sales of natural
gas, natural gas liquids (NGLs) and oil, income from investments,
lower impairments and an income tax benefit, partly offset by loss
on derivatives not designated as hedges, a gain on the share
exchange with Equitrans Midstream Corporation in the first quarter
of 2020, lower dividends and other income, increased depreciation
and depletion and increased selling, general and administrative
expense.
Total sales volume increased primarily as a result of sales
volume of 34 Bcfe from upstream assets that the Company acquired
from Chevron U.S.A. Inc. in the
fourth quarter of 2020 (the Chevron Acquisition), partly offset by
a decrease of 5 Bcfe attributable to assets that the Company
divested in the second quarter of 2020.
Net cash provided by operating activities decreased by
$100 million and free cash
flow(1) increased by $8
million compared to the same quarter last year due primarily
to lower capital expenditures.
Per Unit Operating Costs
The following presents
certain of the Company's production-related operating costs on a
per unit basis.
|
Three Months
Ended
March
31,
|
Per Unit
($/Mcfe)
|
2021
|
|
2020
|
Gathering
|
$
|
0.68
|
|
|
$
|
0.68
|
|
Transmission
|
0.30
|
|
|
0.38
|
|
Processing
|
0.10
|
|
|
0.08
|
|
Lease operating
expense (LOE), excluding production taxes
|
0.07
|
|
|
0.07
|
|
Production
taxes
|
0.05
|
|
|
0.03
|
|
Exploration
|
—
|
|
|
—
|
|
SG&A
(a)
|
0.11
|
|
|
0.09
|
|
Total per unit
operating costs
|
$
|
1.31
|
|
|
$
|
1.33
|
|
|
|
|
|
Production
depletion
|
$
|
0.90
|
|
|
$
|
0.92
|
|
Adjusted interest
expense (b)
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
(a) Included in
SG&A for the three months ended March 31, 2021 is non-cash
long-term incentive compensation costs of $6 million.
|
(b) A non-GAAP
financial measure. See the Non-GAAP Disclosures section of this
news release for the definition of, and other important information
regarding, this non-GAAP financial measure.
|
Liquidity
As of March 31, 2021, the Company had
$300 million of credit facility
borrowings and $0.8 billion letters
of credit outstanding under its $2.5
billion credit facility. In April
2021, the Company extended the maturity date of its credit
facility by one year to July 31,
2023.
As of March 31, 2021, total debt was $4,806 million and net debt(1) was
$4,765 million, compared to
$4,925 million and $4,907 million, respectively, as of
December 31, 2020.
As of April 30, 2021, the Company had sufficient unused
borrowing capacity under its credit facility, net of letters of
credit, to satisfy any collateral requests that its counterparties
would be permitted to request of the Company pursuant to the
Company's over the counter (OTC) derivative instruments, midstream
services contracts and other contracts. As of April 30, 2021,
such amounts could be up to approximately $1.1 billion, inclusive of letters of
credit, OTC derivative instrument margin deposits and other
collateral posted of approximately $0.9 billion in the aggregate.
OPERATIONAL UPDATE
During the first quarter 2021, the
Company successfully completed all critical integration tasks
associated with the Chevron Acquisition. The integration
framework embedded in the Company's modern operating model provides
a detailed and transparent roadmap centered around high-priority
work and critical milestones. This platform allowed for over 700
detailed integration tasks to be seamlessly completed on or ahead
of schedule.
On April 1, 2021 the Company
closed on the acquisition of certain oil and gas assets from
Reliance Marcellus, LLC, pursuant to the exercise of a preferential
purchase right triggered upon Northern Oil and Gas, Inc.'s
acquisition of Reliance's Marcellus assets. The total purchase
price for the acquisition was approximately $69 million and the assets acquired consist of
approximately 40 MMcfe per day of current production and 4,100 net
acres located in the core of the southwest Pennsylvania
Marcellus. When accounting for incremental wells expected to
be turned-in-line during the remainder of the year, the Company
expects this transaction will add approximately 15 Bcfe to its full
year 2021 production estimates.
The Company continues to deliver operational results across the
organization that meet or exceed expectations. Well costs continued
to trend favorably during the quarter. During the first quarter
2021, the Company averaged approximately $635 per foot in the PA Marcellus, $40 below the full-year 2021 target of
$675 per foot. In January 2021, the Company achieved record
performance on completion efficiencies, with one of its crews
pumping a total of 507 hours during the month. This
represents just one of many actions driving capital efficiencies
across the organization.
As a result of continued operational efficiencies, the Company
has reduced its full-year 2021 capital expenditure guidance by
$75 million to $1.025 - $1.125
billion, with a corresponding increase to its full-year 2021
free cash flow guidance, which has been increased to $575 to $675
million(1).
The tables below reflect the Company's operational activity
during the first quarter 2021 and planned activity for the second
quarter 2021.
Wells Drilled
(SPUD)
|
|
PA
Marcellus
|
|
WV
Marcellus
|
|
OH
Utica
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
Net Wells
|
8
|
|
13
|
|
9
|
|
4
|
|
—
|
|
—
|
Net Avg. Lateral
(ft.)
|
11,115
|
|
11,650
|
|
13,350
|
|
11,475
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Wells Horizontally
Drilled
|
|
PA
Marcellus
|
|
WV
Marcellus
|
|
OH
Utica
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
Net Wells
|
17
|
|
7
|
|
8
|
|
5
|
|
—
|
|
—
|
Net Avg. Lateral
(ft.)
|
13,265
|
|
10,530
|
|
12,045
|
|
12,345
|
|
—
|
|
—
|
|
Wells Completed
(Frac)
|
|
PA
Marcellus
|
|
WV
Marcellus
|
|
OH
Utica
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
Net Wells
|
15
|
|
21
|
|
—
|
|
6
|
|
5
|
|
—
|
Net Avg. Lateral
(ft.)
|
12,150
|
|
11,760
|
|
—
|
|
8,165
|
|
11,760
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Wells
Turned-in-Line (TIL)
|
|
PA
Marcellus
|
|
WV
Marcellus
|
|
OH
Utica
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
|
1Q21A
|
|
2Q21E
|
Net Wells
|
13
|
|
18
|
|
—
|
|
9
|
|
—
|
|
5
|
Net Avg. Lateral
(ft.)
|
12,460
|
|
11,040
|
|
—
|
|
9,850
|
|
—
|
|
11,700
|
2021 GUIDANCE
Production
|
|
Q2
2021
|
|
Full-Year
2021
|
Total sales volume
(Bcfe)
|
|
405 - 425
|
|
1,620 -
1,700
|
Liquids sales
volume, excluding ethane (Mbbls)
|
|
2,875 -
2,975
|
|
11,300 -
11,500
|
Ethane sales
volume (Mbbls)
|
|
1,375 -
1,475
|
|
5,600 -
5,800
|
Total liquids sales
volume (Mbbls)
|
|
4,250 -
4,450
|
|
16,900 -
17,300
|
|
|
|
|
|
Btu uplift (MMbtu /
Mcf)
|
|
1.050 -
1.060
|
|
1.050 -
1.060
|
|
|
|
|
|
Average differential
($ / Mcf)
|
|
($0.65) -
($0.55)
|
|
($0.60) -
($0.40)
|
|
|
|
|
|
Resource
Counts
|
|
|
|
|
Top-hole
Rigs
|
|
|
|
1 - 2
|
Horizontal
Rigs
|
|
|
|
1 - 2
|
Frac Crews
|
|
|
|
2 - 3
|
|
|
|
|
|
Per Unit Operating
Costs ($ / Mcfe)
|
|
|
|
|
Gathering
|
|
|
|
$0.68 -
$0.70
|
Transmission
|
|
|
|
$0.30 -
$0.32
|
Processing
|
|
|
|
$0.10 -
$0.12
|
LOE, excluding
production taxes
|
|
|
|
$0.07 -
$0.09
|
Production
taxes
|
|
|
|
$0.03 -
$0.05
|
SG&A
|
|
|
|
$0.11 -
$0.13
|
Total
per unit operating costs
|
|
|
|
$1.29 -
$1.41
|
|
|
|
|
|
Adjusted interest
expense ($ / Mcfe) (a)
|
|
|
|
$0.15 -
$0.16
|
|
|
|
|
|
Financial ($
Billions)
|
|
|
|
|
Adjusted EBITDA
(a)
|
|
|
|
$1.850 -
$1.950
|
Adjusted operating cash
flow (a)
|
|
|
|
$1.650 -
$1.750
|
Capital expenditures
(b)
|
|
$0.265 -
$0.285
|
|
$1.025 -
$1.125
|
Free cash flow
(a)
|
|
|
|
$0.575 -
$0.675
|
|
Based on NYMEX
natural gas price of $2.83 per MMbtu as of April 23,
2021.
|
|
(a) Non-GAAP
financial measure. See the Non-GAAP Disclosures section for the
definition of, and other important information regarding, the
non-GAAP financial measures included in this news release,
including reasons why EQT is unable to provide a projection of its
2021 net cash provided by operating activities, the most comparable
financial measure calculated in accordance with GAAP, to projected
adjusted operating cash flow and free cash flow, or a projection of
its 2021 net income, the most comparable financial measure
calculated in accordance with GAAP, to projected adjusted
EBITDA.
|
(b) Excludes
amounts attributable to noncontrolling interests.
|
First Quarter 2021 Earnings Webcast Information
The
Company's conference call with securities analysts begins at
10:00 a.m. ET on Thursday May 6, 2021
and will be broadcast live via the Company's web site at
www.eqt.com and on the investor information page of the Company's
web site at ir.eqt.com, with a replay available for seven days
following the call.
HEDGING (as of April 30, 2021)
The Company's
total natural gas production NYMEX hedge positions are:
|
|
2021
(a)
|
|
2022
|
|
2023
|
|
2024
|
Swaps:
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
863
|
|
|
618
|
|
|
115
|
|
|
2
|
|
Average Price
($/Dth)
|
|
$
|
2.73
|
|
|
$
|
2.67
|
|
|
$
|
2.51
|
|
|
$
|
2.67
|
|
Calls – Net
Short:
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
269
|
|
|
284
|
|
|
77
|
|
|
15
|
|
Average Short Strike
Price ($/Dth)
|
|
$
|
2.92
|
|
|
$
|
2.89
|
|
|
$
|
2.89
|
|
|
$
|
3.11
|
|
Puts – Net
Long:
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
158
|
|
|
135
|
|
|
69
|
|
|
15
|
|
Average Long Strike
Price ($/Dth)
|
|
$
|
2.59
|
|
|
$
|
2.35
|
|
|
$
|
2.40
|
|
|
$
|
2.45
|
|
Fixed Price Sales
(b):
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
54
|
|
|
4
|
|
|
3
|
|
|
—
|
|
Average Price
($/Dth)
|
|
$
|
2.49
|
|
|
$
|
2.38
|
|
|
$
|
2.38
|
|
|
$
|
—
|
|
|
(a) April 1 -
December 31, 2021.
|
(b) The
difference between the fixed price and NYMEX price is included in
average differential presented in the Company's price
reconciliation.
|
For 2021 (April 1 - December 31),
2022, 2023 and 2024, the Company has natural gas sales agreements
for approximately 14 MMDth, 18 MMDth, 88 MMDth and 11 MMDth,
respectively, that include average NYMEX ceiling prices of
$3.17, $3.17, $2.84 and
$3.21, respectively. The Company has
also entered into transactions to hedge basis. The Company may use
other contractual agreements from time to time to implement its
commodity hedging strategy.
NON-GAAP DISCLOSURES
Adjusted Net Income Attributable to EQT and Adjusted Earnings
per Diluted Share (Adjusted EPS)
Adjusted net income
attributable to EQT is defined as net loss attributable to EQT
Corporation, excluding (gain) loss on sale/exchange of long-lived
assets, impairments, the revenue impact of changes in the fair
value of derivative instruments prior to settlement and certain
other items that impact comparability between periods. Adjusted EPS
is defined as adjusted net income attributable to EQT divided by
diluted weighted average common shares outstanding. Adjusted net
income attributable to EQT and adjusted EPS are non-GAAP
supplemental financial measures used by the Company's management to
evaluate period-over-period earnings trends. The Company's
management believes that these measures provide useful information
to external users of the Company's consolidated financial
statements, such as industry analysts, lenders and ratings
agencies. Management uses adjusted net income attributable to EQT
and adjusted EPS to evaluate earnings trends because the measures
reflect only the impact of settled derivative contracts; thus, the
measures exclude the often-volatile revenue impact of changes in
the fair value of derivative instruments prior to settlement. These
measures also exclude other items that affect the comparability of
results or that are not indicative of trends in the ongoing
business. Adjusted net income attributable to EQT and adjusted EPS
should not be considered as alternatives to net loss attributable
to EQT Corporation or diluted EPS presented in accordance with
GAAP.
The table below reconciles adjusted net income attributable to
EQT and adjusted EPS with net loss attributable to EQT Corporation
and diluted EPS, respectively, the most comparable financial
measures calculated in accordance with GAAP, each as derived from
the Statements of Condensed Consolidated Operations to be included
in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2021.
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands, except
per share information)
|
Net loss attributable
to EQT Corporation
|
$
|
(40,518)
|
|
|
$
|
(167,139)
|
|
Add
(deduct):
|
|
|
|
(Gain) loss on
sale/exchange of long-lived assets
|
(1,207)
|
|
|
48,852
|
|
Impairment and
expiration of leases
|
16,757
|
|
|
53,768
|
|
Loss (gain) on
derivatives not designated as hedges
|
188,813
|
|
|
(389,436)
|
|
Net cash settlements
(paid) received on derivatives not designated as hedges
|
(38,140)
|
|
|
245,736
|
|
Premiums (paid) for
derivatives that settled during the period
|
(9,726)
|
|
|
(3,555)
|
|
Other operating
expenses (a)
|
9,443
|
|
|
—
|
|
Gain on Equitrans
Share Exchange
|
—
|
|
|
(187,223)
|
|
(Income) loss from
investments
|
(11,848)
|
|
|
390,628
|
|
Loss on debt
extinguishment
|
4,424
|
|
|
16,610
|
|
Non-cash interest
expense (amortization)
|
7,258
|
|
|
2,260
|
|
Tax impact of non-GAAP
items (b)
|
(41,982)
|
|
|
27,420
|
|
Adjusted net income
attributable to EQT
|
$
|
83,274
|
|
|
$
|
37,921
|
|
Diluted weighted
average common shares outstanding
|
281,932
|
|
|
255,435
|
|
Diluted
EPS
|
$
|
(0.15)
|
|
|
$
|
(0.65)
|
|
Adjusted
EPS
|
$
|
0.30
|
|
|
$
|
0.15
|
|
|
(a) Other operating
expenses includes transaction costs, reorganization costs,
litigation expense and other costs which affect the comparability
of results or that are not indicative of trends in the ongoing
business.
|
|
(b) The tax impact of
non-GAAP items represents the incremental tax (expense) benefit
that would have been incurred had these items been excluded from
net loss attributable to EQT Corporation, which resulted in blended
tax rates of 25.3% and (15.4%) for the three months ended March 31,
2021 and 2020, respectively. The 2021 rate differs from the
Company's statutory tax rate primarily due to state taxes,
including valuation allowances limiting certain state tax benefits.
The 2020 rate differs from the Company's statutory tax rate due
primarily to valuation allowances provided against federal and
state deferred tax assets for additional unrealized losses on the
Company's investment in Equitrans Midstream Corporation that, if
sold, would result in capital losses.
|
Adjusted EBITDA
Adjusted EBITDA is defined as net
loss, excluding interest expense, income tax (benefit) expense,
depreciation and depletion, amortization of intangible assets,
(gain) loss on sale/exchange of long-lived assets, impairments, the
revenue impact of changes in the fair value of derivative
instruments prior to settlement and certain other items that impact
comparability between periods. Adjusted EBITDA is a non-GAAP
supplemental financial measure used by the Company's management to
evaluate period-over-period earnings trends. The Company's
management believes that this measure provides useful information
to external users of the Company's consolidated financial
statements, such as industry analysts, lenders and ratings
agencies. Management uses adjusted EBITDA to evaluate earnings
trends because the measure reflects only the impact of settled
derivative contracts; thus, the measure excludes the often-volatile
revenue impact of changes in the fair value of derivative
instruments 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. Adjusted EBITDA
should not be considered as an alternative to net loss presented in
accordance with GAAP.
The table below reconciles adjusted EBITDA with net loss, the
most comparable financial measure as calculated in accordance with
GAAP, as reported in the Statements of Condensed Consolidated
Operations to be included in the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2021.
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands)
|
Net loss
|
$
|
(41,032)
|
|
|
$
|
(167,139)
|
|
Add
(deduct):
|
|
|
|
Interest
expense
|
75,099
|
|
|
62,374
|
|
Income tax (benefit)
expense
|
(14,494)
|
|
|
32,822
|
|
Depreciation and
depletion
|
377,116
|
|
|
357,526
|
|
Amortization of
intangible assets
|
—
|
|
|
7,478
|
|
(Gain) loss on
sale/exchange of long-lived assets
|
(1,207)
|
|
|
48,852
|
|
Impairment and
expiration of leases
|
16,757
|
|
|
53,768
|
|
Loss (gain) on
derivatives not designated as hedges
|
188,813
|
|
|
(389,436)
|
|
Net cash settlements
(paid) received on derivatives not designated as hedges
|
(38,140)
|
|
|
245,736
|
|
Premiums (paid) for
derivatives that settled during the period
|
(9,726)
|
|
|
(3,555)
|
|
Other operating
expenses (a)
|
9,443
|
|
|
—
|
|
Gain on Equitrans
Share Exchange
|
—
|
|
|
(187,223)
|
|
(Income) loss from
investments
|
(11,848)
|
|
|
390,628
|
|
Loss on debt
extinguishment
|
4,424
|
|
|
16,610
|
|
Adjusted
EBITDA
|
$
|
555,205
|
|
|
$
|
468,441
|
|
|
(a) Other
operating expenses includes transaction costs, reorganization
costs, litigation expense and other costs which affect the
comparability of results or that are not indicative of trends in
the ongoing business.
|
The Company has not provided projected net income (loss) or a
reconciliation of projected adjusted EBITDA to projected net income
(loss), the most comparable financial measure calculated in
accordance with GAAP. Net income (loss) includes the impact of
depreciation and depletion expense, income tax (benefit) expense,
the revenue impact of changes in the projected fair value of
derivative instruments prior to settlement and certain other items
that impact comparability between periods and the tax effect of
such items, which may be significant and difficult to project with
a reasonable degree of accuracy. Therefore, projected net income
(loss), and a reconciliation of projected adjusted EBITDA to
projected net income (loss), are not available without unreasonable
effort.
Adjusted Operating Cash Flow and Free Cash Flow
Adjusted operating cash flow is defined as net cash provided by
operating activities less changes in other assets and liabilities.
Free cash flow is defined as adjusted operating cash flow less
accrual-based capital expenditures, excluding capital expenditures
attributable to noncontrolling interests. Adjusted operating cash
flow and free cash flow are non-GAAP supplemental financial
measures used by the Company's management to assess liquidity,
including the Company's ability to generate cash flow in excess of
its capital requirements and return cash to shareholders. The
Company's management believes that these measures provide useful
information to external users of the Company's consolidated
financial statements, such as industry analysts, lenders and
ratings agencies. Adjusted operating cash flow and free cash flow
should not be considered as alternatives to net cash provided by
operating activities or any other measure of liquidity presented in
accordance with GAAP.
The table below reconciles adjusted operating cash flow and 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 to
be included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2021.
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands)
|
Net cash provided by
operating activities
|
$
|
399,915
|
|
|
$
|
500,262
|
|
Decrease (increase) in
changes in other assets and liabilities
|
95,523
|
|
|
12,385
|
|
Adjusted operating cash
flow
|
$
|
495,438
|
|
|
$
|
512,647
|
|
Less: capital
expenditures
|
(238,208)
|
|
|
(262,132)
|
|
Add: capital
expenditures attributable to noncontrolling interests
|
1,272
|
|
|
—
|
|
Free cash
flow
|
$
|
258,502
|
|
|
$
|
250,515
|
|
The Company has not provided projected net cash provided by
operating activities or reconciliations of projected adjusted
operating cash flow and 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 payments and its 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 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 reconciliations of projected adjusted
operating cash flow and free cash flow to projected net cash
provided by operating activities, without unreasonable effort.
Adjusted Operating Revenues
Adjusted operating
revenues is defined as total operating revenues, less the revenue
impact of changes in the fair value of derivative instruments prior
to settlement and net marketing services and other revenues.
Adjusted operating revenues (also referred to as total natural gas
& liquids sales, including cash settled derivatives) is a
non-GAAP supplemental financial measure used by the Company's
management to evaluate period-over-period earnings trends. The
Company's management believes that this measure provides useful
information to external users of the Company's consolidated
financial statements, such as industry analysts, lenders and
ratings agencies. Management uses adjusted operating revenues to
evaluate earnings trends because the measure reflects only the
impact of settled derivative contracts; thus, the measure excludes
the often-volatile revenue impact of changes in the fair value of
derivative instruments prior to settlement. The measure also
excludes net marketing services and other revenues because it is
unrelated to the revenue for the Company's natural gas and liquids
production. Adjusted operating revenues should not be considered as
an alternative to total operating revenues presented in accordance
with GAAP.
The table below reconciles adjusted operating revenues to total
operating revenues, the most comparable financial measure
calculated in accordance with GAAP, as reported in the Statements
of Condensed Consolidated Operations to be included in the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2021.
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands, unless
noted)
|
Total operating
revenues
|
$
|
949,923
|
|
|
$
|
1,107,057
|
|
Add
(deduct):
|
|
|
|
Loss (gain) on
derivatives not designated as hedges
|
188,813
|
|
|
(389,436)
|
|
Net cash settlements
(paid) received on derivatives not designated as hedges
|
(38,140)
|
|
|
245,736
|
|
Premiums (paid) for
derivatives that settled during the period
|
(9,726)
|
|
|
(3,555)
|
|
Net marketing services
and other
|
(7,785)
|
|
|
(2,420)
|
|
Adjusted operating
revenues
|
$
|
1,083,085
|
|
|
$
|
957,382
|
|
|
|
|
|
Total sales volume
(MMcfe)
|
415,190
|
|
|
385,070
|
|
Average realized
price ($/Mcfe)
|
$
|
2.61
|
|
|
$
|
2.49
|
|
Adjusted Interest Expense Per Unit
Adjusted interest
expense per unit is defined as interest expense less non-cash
interest expense (amortization) of debt discounts and issuance
costs divided by total sales volume. Adjusted interest expense per
unit is a non-GAAP supplemental financial measure used by the
Company's management to evaluate period-over-period interest
expense which required cash payments. The Company's management
believes that this measure provides useful information to external
users of the Company's consolidated financial statements, such as
industry analysts, lenders and ratings agencies. Management uses
adjusted interest expense per unit to evaluate interest expense
which required cash payments because the measure excludes non-cash
interest expense (amortization) that affects the comparability of
results and does not result in cash payments. Adjusted interest
expense per unit should not be considered as an alternative to
interest expense presented in accordance with GAAP.
The table below reconciles adjusted interest expense per unit
with interest expense, the most comparable financial measure
calculated in accordance with GAAP, as derived from the Statements
of Condensed Consolidated Operations to be included in the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2021.
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands, unless
noted)
|
Interest
expense
|
$
|
75,099
|
|
|
$
|
62,374
|
|
Less: Non-cash
interest expense (amortization)
|
7,258
|
|
|
2,260
|
|
Adjusted interest
expense
|
$
|
67,841
|
|
|
$
|
60,114
|
|
|
|
|
|
Total sales volume
(MMcfe)
|
415,190
|
|
|
385,070
|
|
Adjusted interest
expense per unit ($/Mcfe)
|
$
|
0.16
|
|
|
$
|
0.16
|
|
The table below reconciles the full-year 2021 forecasted ranges
of adjusted interest expense per unit with interest expense, the
most comparable financial measure calculated in accordance with
GAAP.
|
Year Ended
December 31, 2021
|
|
(Thousands, unless
noted)
|
Interest
expense
|
$
|
280,000
|
|
|
$
|
290,000
|
|
Less: Non-cash
interest expense (amortization)
|
30,000
|
|
|
30,000
|
|
Adjusted interest
expense
|
$
|
250,000
|
|
|
$
|
260,000
|
|
|
|
|
|
Forecasted sales
volume (MMcfe)
|
1,700,000
|
|
|
1,620,000
|
|
Adjusted interest
expense per unit ($/Mcfe)
|
$
|
0.15
|
|
|
$
|
0.16
|
|
Net Debt
Net debt is defined as total debt less cash
and cash equivalents. Total debt includes the Company's current
portion of debt, credit facility borrowings, senior notes and note
payable to EQM Midstream Partners, LP. Net debt is a non-GAAP
supplemental financial measure used by the Company's management to
evaluate leverage since the Company could choose to use its cash
and cash equivalents to retire debt. The Company's management
believes that this measure provides useful information to external
users of the Company's consolidated financial statements, such as
industry analysts, lenders and ratings agencies. Net debt should
not be considered as an alternative to total debt presented in
accordance with GAAP.
The table below reconciles net debt with total debt, the most
comparable financial measure calculated in accordance with GAAP, as
derived from the Statements of Condensed Consolidated Balance
Sheets to be included in the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2021.
|
March 31,
2021
|
|
December 31,
2020
|
|
(Thousands)
|
Current portion of
debt
|
$
|
29,291
|
|
|
$
|
154,161
|
|
Credit facility
borrowings
|
300,000
|
|
|
300,000
|
|
Senior notes
(a)
|
4,378,270
|
|
|
4,371,467
|
|
Note payable to EQM
Midstream Partners, LP
|
98,487
|
|
|
99,838
|
|
Total
debt
|
4,806,048
|
|
|
4,925,466
|
|
Less: Cash and cash
equivalents
|
40,670
|
|
|
18,210
|
|
Net
debt
|
$
|
4,765,378
|
|
|
$
|
4,907,256
|
|
|
(a)
Senior notes included the convertible senior notes which, at
issuance, were recorded in the consolidated financial statements at
fair value. The debt discount, which is the excess of the principal
amount of $500 million over its fair value at issuance, will
be amortized to interest expense over the term of the convertible
senior notes, which is approximately 6 years. As of March 31,
2021, the carrying amount of the convertible senior notes was
approximately $365 million. See the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2021 for further
discussion.
|
Investor Contact:
Andrew
Breese
Director, Investor Relations
412.395.2555
ABreese@eqt.com
About EQT Corporation
EQT Corporation is a leading
independent natural gas production company with operations focused
in the cores of the Marcellus and Utica Shales in the Appalachian
Basin. We are dedicated to responsibly developing our world-class
asset base and being the operator of choice for our
stakeholders. By leveraging a culture that prioritizes
operational efficiency, technology and sustainability, we seek to
continuously improve the way we produce environmentally
responsible, reliable and low-cost energy. We have a
longstanding commitment to the safety of our employees,
contractors, and communities, and to the reduction of our overall
environmental footprint. Our values are evident in the way we
operate and in how we interact each day – trust, teamwork, heart,
and evolution are at the center of all we do.
EQT Management speaks to investors from time to time and the
analyst presentation for these discussions, which is updated
periodically, is available via EQT's investor relations website at
https://ir.eqt.com.
Cautionary Statements
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).
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 EQT Corporation and its subsidiaries (collectively,
the Company), including guidance regarding the Company's strategy
to develop its reserves; drilling plans and programs (including the
number, average lateral length and location of wells to be drilled
or turned-in-line, the number and type of drilling rigs and the
number of frac crews); projections of wells SPUD, horizontally
drilled, completed and turned-in-line; projected natural gas
prices, basis and average differential; the impact of commodity
prices on the Company's business; total resource potential;
projected production and sales volume and growth rates (including
liquids sales volume and growth rates); projected well costs and
unit costs; projected reductions in expenses, capital costs and
well costs, the projected timing of achieving such reductions and
the Company's ability to achieve such reductions; infrastructure
programs; the Company's ability to successfully implement and
execute the executive management team's operational, organizational
technological and ESG-related initiatives, and achieve the
anticipated results of such initiatives; monetization transactions,
including asset sales, joint ventures or other transactions
involving the Company's assets, the timing of such monetization
transactions, if at all, the projected proceeds from such
monetization transactions and the Company's planned use of such
proceeds; potential acquisition transactions or other strategic
transactions, the timing thereof and the Company's ability to
achieve the intended operational, financial and strategic benefits
from any such transactions; the projected benefits and production
estimates associated with the Company's acquisition of assets from
Chevron and Reliance; the amount and timing of any redemptions,
repayments or repurchases of the Company's common stock,
outstanding debt securities or other debt instruments; the
Company's ability to reduce its debt and the timing of such
reductions, if any; projected dividends, if any; projected free
cash flow, adjusted interest expense, adjusted operating cash flow,
and adjusted EBITDA; liquidity and financing requirements,
including funding sources and availability; the Company's ability
to maintain or improve its credit ratings, leverage levels and
financial profile, and the timing of achieving such improvements,
if at all; the Company's hedging strategy; the Company's tax
position and projected effective tax rate; and the expected impact
of changes in 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, 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. These risks and
uncertainties 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, NGLs 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. These and other risks are described under Item 1A,
"Risk Factors," and elsewhere in the Company's Annual Report on
Form 10-K for the year ended December 31,
2020 and other documents the Company files from time to time
with the Securities and Exchange Commission. In addition, the
Company may be subject to currently unforeseen risks that may have
a materially adverse impact on it. 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.
EQT CORPORATION
AND SUBSIDIARIES
STATEMENTS OF
CONDENSED CONSOLIDATED OPERATIONS (UNAUDITED)
|
|
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands, except per share amounts)
|
Operating
revenues:
|
|
|
|
Sales of natural gas,
natural gas liquids and oil
|
$
|
1,130,951
|
|
|
$
|
715,201
|
|
(Loss) gain on
derivatives not designated as hedges
|
(188,813)
|
|
|
389,436
|
|
Net marketing services
and other
|
7,785
|
|
|
2,420
|
|
Total operating
revenues
|
949,923
|
|
|
1,107,057
|
|
Operating
expenses:
|
|
|
|
Transportation and
processing
|
445,784
|
|
|
439,834
|
|
Production
|
47,230
|
|
|
40,380
|
|
Exploration
|
949
|
|
|
923
|
|
Selling, general and
administrative
|
45,006
|
|
|
34,938
|
|
Depreciation and
depletion
|
377,116
|
|
|
357,526
|
|
Amortization of
intangible assets
|
—
|
|
|
7,478
|
|
(Gain) loss on
sale/exchange of long-lived assets
|
(1,207)
|
|
|
48,852
|
|
Impairment and
expiration of leases
|
16,757
|
|
|
53,768
|
|
Other operating
expenses
|
9,443
|
|
|
—
|
|
Total operating
expenses
|
941,078
|
|
|
983,699
|
|
Operating
income
|
8,845
|
|
|
123,358
|
|
Gain on Equitrans
Share Exchange
|
—
|
|
|
(187,223)
|
|
(Income) loss from
investments
|
(11,848)
|
|
|
390,628
|
|
Dividend and other
income
|
(3,304)
|
|
|
(24,714)
|
|
Loss on debt
extinguishment
|
4,424
|
|
|
16,610
|
|
Interest
expense
|
75,099
|
|
|
62,374
|
|
Loss before income
taxes
|
(55,526)
|
|
|
(134,317)
|
|
Income tax (benefit)
expense
|
(14,494)
|
|
|
32,822
|
|
Net loss
|
(41,032)
|
|
|
(167,139)
|
|
Less: Net loss
attributable to noncontrolling interest
|
(514)
|
|
|
—
|
|
Net loss attributable
to EQT Corporation
|
$
|
(40,518)
|
|
|
$
|
(167,139)
|
|
|
|
|
|
Loss per share of
common stock attributable to EQT Corporation:
|
Basic:
|
|
|
|
Weighted average
common stock outstanding
|
278,852
|
|
|
255,435
|
|
Net loss
|
$
|
(0.15)
|
|
|
$
|
(0.65)
|
|
Diluted:
|
|
|
|
Weighted average
common stock outstanding
|
278,852
|
|
|
255,435
|
|
Net loss
|
$
|
(0.15)
|
|
|
$
|
(0.65)
|
|
EQT CORPORATION
AND SUBSIDIARIES
PRICE
RECONCILIATION
|
|
|
Three Months
Ended
March
31,
|
|
2021
|
|
2020
|
|
(Thousands, unless
noted)
|
NATURAL
GAS
|
|
|
|
Sales volume
(MMcf)
|
390,298
|
|
|
369,742
|
|
NYMEX price
($/MMBtu)
|
$
|
2.69
|
|
|
$
|
1.95
|
|
Btu uplift
|
0.15
|
|
|
0.10
|
|
Natural gas price
($/Mcf)
|
$
|
2.84
|
|
|
$
|
2.05
|
|
|
|
|
|
Basis ($/Mcf)
(a)
|
$
|
(0.25)
|
|
|
$
|
(0.22)
|
|
Cash settled basis
swaps (not designated as hedges) ($/Mcf)
|
(0.09)
|
|
|
0.05
|
|
Average differential,
including cash settled basis swaps ($/Mcf)
|
$
|
(0.34)
|
|
|
$
|
(0.17)
|
|
Average adjusted price
($/Mcf)
|
$
|
2.50
|
|
|
$
|
1.88
|
|
Cash settled
derivatives (not designated as hedges) ($/Mcf)
|
(0.01)
|
|
|
0.60
|
|
Average natural gas
price, including cash settled derivatives ($/Mcf)
|
$
|
2.49
|
|
|
$
|
2.48
|
|
Natural gas sales,
including cash settled derivatives
|
$
|
972,494
|
|
|
$
|
915,411
|
|
|
|
|
|
LIQUIDS
|
|
|
|
Natural gas
liquids (NGLs), excluding ethane:
|
|
|
|
Sales volume (MMcfe)
(b)
|
14,600
|
|
|
10,820
|
|
Sales volume
(Mbbl)
|
2,433
|
|
|
1,803
|
|
Price
($/Bbl)
|
$
|
37.28
|
|
|
$
|
18.58
|
|
Cash settled
derivatives (not designated as hedges) ($/Bbl)
|
(2.99)
|
|
|
—
|
|
Average NGLs price,
including cash settled derivatives ($/Bbl)
|
$
|
34.29
|
|
|
$
|
18.58
|
|
NGLs sales
|
$
|
83,443
|
|
|
$
|
33,511
|
|
Ethane:
|
|
|
|
Sales volume (MMcfe)
(b)
|
8,587
|
|
|
3,329
|
|
Sales volume
(Mbbl)
|
1,431
|
|
|
555
|
|
Price
($/Bbl)
|
$
|
6.66
|
|
|
$
|
4.05
|
|
Ethane
sales
|
$
|
9,534
|
|
|
$
|
2,245
|
|
Oil:
|
|
|
|
Sales volume (MMcfe)
(b)
|
1,705
|
|
|
1,179
|
|
Sales volume
(Mbbl)
|
284
|
|
|
197
|
|
Price
($/Bbl)
|
$
|
61.98
|
|
|
$
|
31.63
|
|
Oil sales
|
$
|
17,614
|
|
|
$
|
6,215
|
|
|
|
|
|
Total liquids sales
volume (MMcfe) (b)
|
24,892
|
|
|
15,328
|
|
Total liquids sales
volume (Mbbl)
|
4,148
|
|
|
2,555
|
|
Total liquids
sales
|
$
|
110,591
|
|
|
$
|
41,971
|
|
|
|
|
|
TOTAL
|
|
|
|
Total natural gas and
liquids sales, including cash settled derivatives (c)
|
$
|
1,083,085
|
|
|
$
|
957,382
|
|
Total sales volume
(MMcfe)
|
415,190
|
|
|
385,070
|
|
Average realized
price ($/Mcfe)
|
$
|
2.61
|
|
|
$
|
2.49
|
|
|
(a) Basis represents
the difference between the ultimate sales price for natural gas and
the NYMEX natural gas price.
|
(b) NGLs, ethane and
oil were converted to Mcfe at the rate of six Mcfe per
barrel.
|
(c) Also
referred to in this report as adjusted operating revenues, a
non-GAAP supplemental financial measure.
|
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SOURCE EQT Corporation (EQT-IR)