Significant volume growth continues
EQT Corporation (NYSE: EQT) today announced first quarter
2016 net income attributable to EQT of $5.6 million, or
$0.04 per diluted share (EPS), compared to earnings of
$173.4 million, or $1.14 per diluted share for the first
quarter of 2015. Adjusted net income was $10.5 million in the first
quarter 2016, $153.0 million lower than the first quarter 2015; and
adjusted EPS was $0.07, down from $1.07. Adjusted operating cash
flow attributable to EQT was $218.6 million, $156.0 million lower
than the first quarter 2015. The non-GAAP financial measures are
detailed and reconciled in the Non-GAAP Disclosures section of this
news release.
Highlights:
- Production sales volume was 24%
higher
- Midstream gathering revenue was 6%
higher
- Midstream transmission revenue was 10%
higher
- Realized natural gas price was 35%
lower
- Cash balance was $1.6 billion
(excluding EQM)
- $1.5 billion unsecured revolver is
undrawn
RESULTS BY BUSINESS
EQT PRODUCTION
EQT Production achieved production sales volume of 179.9 Bcfe in
the first quarter 2016, representing a 24% increase over the first
quarter last year, and 16% higher than the fourth quarter of
2015.
EQT Production’s adjusted operating loss totaled $8.0 million
for the quarter, compared to adjusted operating income of $167.5
million in 2015. Adjusted operating revenue for the quarter was
$473.1 million, which was $116.8 million lower than the same period
last year, primarily due to a lower average realized sales price,
partially offset by the increase in production sales volume.
Average realized price for the first quarter of 2016 was $2.63 per
Mcfe, 35% lower than the $4.06 per Mcfe realized in the same period
last year.
The “net marketing services” line on the EQT Production Results
of Operations includes revenue generated by our marketing group by
either reselling third-party transportation capacity not used to
transport EQT’s produced gas or utilizing such capacity to
transport purchased gas to higher priced markets, net of the
transportation charges for such capacity. Net marketing services
revenue totaled $4.6 million in the first quarter of 2016; $8.6
million lower than the same quarter last year, due to incremental
capacity costs in the current quarter and higher demand due to
colder weather in 2015.
Consistent with the growth in sales volume, EQT Production’s
operating expenses for the quarter were $489.3 million, $31.3
million higher than the same period last year. Depreciation,
depletion, and amortization (DD&A) expenses were $23.4 million
higher; gathering expenses were $20.0 million higher; transmission
expenses were $11.7 million higher; and processing expenses were
$1.6 million higher. Exploration expenses were $9.4 million lower;
production taxes were $2.3 million lower; lease operating expenses
(LOE), excluding production taxes, were $2.1 million lower; and
selling, general and administrative (SG&A) expenses were $2.0
million lower, excluding a current quarter $1.8 million charge for
the Huron restructuring, and a prior year drilling program
reduction charge of $7.0 million.
The Company drilled (spud) 16 gross wells during the first
quarter 2016, including 15 Marcellus wells, with an average
length-of-pay of 6,100 feet; and one Utica well with a
length-of-pay of 7,000 feet.
Guidance
The Company increased its 2016 guidance for production sales
volume to 710 – 730 Bcfe, including liquids volume of 10,250 –
10,750 MBBls. Production sales volume for the second quarter of
2016 is projected to be 175 – 180 Bcfe; and liquids volume is
expected to be 2,700 – 2,750 MBBls. Average differential to the
NYMEX price forecast of negative $0.60 – negative $0.70 per Mcf for
2016; and negative $0.70 – negative $0.75 per Mcf for the second
quarter of 2016. Net marketing services are expected to be positive
$5.0 million – negative $5.0 million in 2016; and zero – negative
$5.0 million in the second quarter of 2016.
EQT MIDSTREAM
EQT Midstream’s first quarter 2016 operating income was $141.9
million, an increase of $12.1 million over the first quarter of
2015, primarily as a result of increased gathering and transmission
revenue, partially offset by increased operating expenses.
Operating revenue was $224.7 million, $16.5 million higher as a
result of higher Marcellus volume. Gathering revenue was 6% higher
at $137.0 million and transmission revenue increased by 10% to
$79.2 million.
Total operating expenses for the quarter were $82.9 million, a
$4.4 million increase over the same period last year, and
consistent with the volume growth. Per unit gathering and
compression expense was unchanged year-over-year.
The results for EQT Midstream Partners (NYSE: EQM) were released
today and provide operational results, as well as updates on
significant midstream projects under development by EQM. This
release is available at www.eqtmidstreampartners.com.
OTHER BUSINESS
Common Stock Offering
In February 2016, EQT completed a registered public offering of
7,475,000 shares of common stock. The Company received net proceeds
of $430.4 million from this offering.
EQT Midstream Partners, LP (NYSE: EQM) / EQT GP Holdings, LP
(NYSE: EQGP)
On April 26, 2016, EQM announced a cash distribution to its
unitholders of $0.745 per unit for the first quarter of 2016. EQGP
also announced a cash distribution to its unitholders of $0.134 per
unit for the first quarter of 2016.
The results for EQM and EQGP were released today and are
available at www.eqtmidstreampartners.com.
Calculation of Net Income Attributable to Noncontrolling
Interest
The results of EQGP and EQM are consolidated in EQT’s results.
For the first quarter of 2016, EQT recorded earnings of $82.8
million, or $0.53 per diluted share, attributable to the publicly
held partnership interests in EQGP and EQM.
Three Months Ended (thousands)
March 31,
2016 EQM net income $ 129,065 Less: general partner
interest (including incentive distribution rights) 21,187
Limited partner interest in net income $ 107,878
EQM LP units Publicly owned (71.9%) $ 77,787 EQGP
owned (28.1%) 30,091 LP interest in net income $
107,878
EQGP EQM LP units ownership $ 30,091 EQM GP
units ownership (including incentive distribution rights) 21,187
EQGP incremental expenses (956 ) Net Income attributable to
EQGP $ 50,322
EQGP units Publicly owned LP (9.9%) $
5,002 EQT owned LP (90.1%) 45,320
Net Income attributable to EQGP
$ 50,322
EQT earnings (consolidated) EQM
publicly-owned LP units $ 77,787 EQGP publicly-owned LP units
5,002 Net income attributable to noncontrolling
interest $ 82,789
Guidance
Net income attributable to noncontrolling interest is projected
to be approximately $77 million for the second quarter 2016, and
approximately $320 million for the full year 2016.
Hedging
During the quarter, the Company added to its hedge position. The
Company’s total natural gas production hedge position through
December 2018 is:
2016(a)
2017(b)
2018(b)
NYMEX Swaps Total Volume (Bcf)
220
180
89
Average Price per Mcf (NYMEX)(c) $
3.65
$
3.34
$ 3.11 Fixed Price Physical Sales(d) Total Volume
(Bcf)
32
19
− Average Price per Mcf (NYMEX)(c) $
2.96
$ 2.93 $ − Collars Total Volume (Bcf) − 8 7 Average Floor
Price per Mcf (NYMEX)(c) $ − $ 3.01 $ 2.16 Average Cap Price per
Mcf (NYMEX)(c) $ − $ 4.10 $ 4.47 (a) April through December.
(b) For 2016 through 2018, the Company also has a natural gas sales
agreement for approximately 35 Bcf per year that includes a NYMEX
ceiling price of $4.88 per Mcf. The Company also sold calendar
2016, 2017 and 2018 calls for approximately 11, 29 and 12 Bcf at
strike prices of $3.65, $3.52 and $3.45 per Mcf, respectively. (c)
The average price is based on a conversion rate of 1.05 MMBtu/Mcf.
(d) Fixed price physical sales impact is included in average
differential on the EQT Corporation Price Reconciliation.
Operating Income
The Company reports operating income by segment in this news
release. 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 (loss) income by
segment, as reported in this news release, to the consolidated
operating income reported in the Company’s financial
statements:
Three Months Ended
March 31, (thousands)
2016 2015
Operating income (loss): EQT Production $ (11,254 ) $ 185,843 EQT
Midstream 141,859 129,741 Unallocated expenses (3,404 )
(825 ) Total operating income $ 127,201 $ 314,759
Unallocated expenses consist primarily of incentive compensation
expense and administrative costs.
Marcellus Horizontal Well Status (cumulative since
inception)
As of As of As
of As of As of 3/31/16
12/31/15 9/30/15 6/30/15 3/31/15 Wells
spud 869 854 827 796 758 Wells online 735 693 642 604 560 Wells
complete, not online 45 57 65 60 45 Frac stages (spud wells)*
24,169 23,609 22,570 21,332 20,263 Frac stages online 19,158 17,596
15,904 14,664 13,394 Frac stages complete, not online 1,400 1,858
2,069 1,972 1,347
*Includes planned stages for spud wells that have not yet been
hydraulically fractured.
NON-GAAP DISCLOSURES
Adjusted Net Income and Adjusted Earnings per Diluted
Share
Adjusted net income and adjusted earnings per diluted share 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 and adjusted earnings per diluted share should not be
considered as alternatives to net income or earnings per diluted
share presented in accordance with GAAP.
The table below reconciles adjusted net income and adjusted
earnings per diluted share with net income and earnings per diluted
share as derived from the statements of consolidated income to be
included in EQT’s report on Form 10-Q for the quarter ended March
31, 2016.
Three Months Ended March 31,
(thousands, except per share information)
2016
2015 Net income attributable to EQT, as reported $ 5,636 $
173,427 Add back (deduct): Asset impairments and one-time drilling
costs 1,832 24,395 Huron restructuring charges 3,812 − Gain on
derivatives not designated as hedges (108,995 ) (43,592 ) Net cash
settlements received on derivatives not designated as hedges
109,132 7,742 Premiums paid for derivatives that settled during the
period (463 ) (1,007 ) Tax impact (413 ) 2,565
Adjusted net income attributable to EQT $ 10,541 $ 163,530
Diluted weighted average common shares outstanding 157,195
152,756 Diluted EPS, as adjusted $ 0.07 $ 1.07
Operating Cash Flow and Adjusted Operating Cash Flow
Attributable to EQT
Operating cash flow and adjusted operating cash flow
attributable to EQT 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 excludes adjusted EQT
Midstream Partners EBITDA (a non-GAAP supplemental financial
measure reconciled below), except for the EQT GP Holdings, LP
(EQGP) and EQT Midstream Partners, LP (EQM) cash distribution
payable 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. Operating cash flow and
adjusted operating cash flow attributable to EQT should not be
considered as alternatives to net cash provided by operating
activities presented in accordance with GAAP. The tables below
reconcile 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 quarter ended March
31, 2016.
Three Months Ended March 31,
(thousands)
2016 2015 Net income $
88,425 $ 221,168 Add back / (deduct): Depreciation, depletion and
amortization 221,231 194,745 Asset and lease impairments, non-cash
1,832 18,995 Deferred income tax expense (benefit) 7,073 (31,070 )
Gain on derivatives not designated as hedges (108,995 ) (43,592 )
Cash settlements received on derivatives not designated as hedges
109,132 7,742 Non-cash incentive compensation 12,777 15,441 Other
items, net (4,740 ) (1,463 ) Operating cash flow:
$ 326,735 $ 381,966 (Deduct) / add back:
Changes in other assets and liabilities (41,818 )
71,150 Net cash provided by operating activities $ 284,917
$ 453,116
Three Months
Ended March 31, (thousands)
2016
2015 Operating cash flow (a non-GAAP measure reconciled
above) $ 326,735 $ 381,966 (Deduct) / add back: Adjusted EQT
Midstream Partners EBITDA(1) (141,571 ) (96,560 ) Cash distribution
payable to EQT (2) 32,122 22,395 Exploration expense (cash) 1,291
1,425 Drilling program reduction charges, cash − 5,400 Current
taxes on transactions(3) − 59,939
Adjusted operating cash flow attributable to EQT $ 218,577 $
374,565 (1)
Adjusted EQT Midstream Partners EBITDA is
a non-GAAP supplemental financial measure reconciled below.
(2) Cash distribution payable to EQT for the three months ended
March 31, 2016, represents the distribution payable from EQGP to
EQT. The amount for the three months ended March 31, 2015,
represents the distribution payable from EQM to EQT, as the EQGP
IPO had not yet occurred. (3) Amount represents current tax expense
related to the sale of the Northern West Virginia Marcellus
Gathering System (NWV Gathering).
EQT Production Adjusted Operating Revenue
The table below reconciles EQT Production adjusted operating
revenue, a non-GAAP supplemental financial measure, to EQT
Corporation total operating revenue, as derived from the statements
of consolidated income to be included in EQT’s report on Form 10-Q
for the quarter ended March 31, 2016.
EQT Production adjusted operating revenue (also referred to as
total natural gas and liquids sales, including cash settled
derivatives) 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 revenue should
not be considered as an alternative to EQT Corporation total
operating revenue presented in accordance with GAAP. 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 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 “Net marketing
services” because management considers this revenue to be unrelated
to the revenue for its natural gas and liquids production. “Net
marketing services” includes 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 for
investors for evaluating period-over-period earnings and is
consistent with industry practices.
Three Months Ended Calculation of EQT Production
Adjusted Operating Revenue March 31, $ in thousands
(unless noted)
2016 2015 EQT Production
total operating revenue $ 478,008 $ 643,791 Add back (deduct): Gain
on derivatives not designated as hedges (108,995 ) (44,246 ) Net
cash settlements received on derivatives not designated as hedges
109,132 4,480 Premiums paid for derivatives that settled during the
period (463 ) (1,007 ) Net marketing services (4,586 )
(13,137 ) EQT Production adjusted operating revenue, a
non-GAAP measure $ 473,096 $ 589,881 Total sales volumes
(MMcfe) 179,935 145,198 Average realized price ($/Mcfe) $
2.63 $ 4.06 EQT Production total operating revenue $ 478,008
$ 643,791 EQT Midstream total operating revenue 224,729 208,227
Less: intersegment revenue, net (157,668 ) (137,203 )
EQT Corporation total operating revenue, as reported in accordance
with GAAP $ 545,069 $ 714,815
EQT Production Adjusted Operating Income (Loss)
The table below reconciles EQT Production adjusted operating
income (loss), a non-GAAP supplemental financial measure, to EQT
Corporation operating income, as derived from the statements of
consolidated income to be included in EQT’s report on Form 10-Q for
the three months ended March 31, 2016.
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) as presented excludes the revenue impact of
changes in the fair value of derivative instruments prior to
settlement, one-time restructuring charges, impairment and drilling
costs and non-cash gains (losses) on sales / exchanges of assets.
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 does not burden the
income from natural gas sales with 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.
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 March 31,
(thousands)
2016 2015 EQT Corporation
operating income, as reported in accordance with GAAP $ 127,201 $
314,759 Add back / (deduct): Unallocated expense 3,404 825 EQT
Midstream operating income, as reported on segment page
(141,859 ) (129,741 ) EQT Production operating (loss)
income, as reported on segment page $ (11,254 ) $ 185,843 Add back
/ (deduct): Gain on derivatives not designated as hedges (108,995 )
(44,246 ) Net cash settlements received on derivatives not
designated as hedges 109,132 4,480 Premiums paid for derivatives
that settled during the period (463 ) (1,007 ) Asset impairments
and one-time drilling costs 1,832 22,473 Huron restructuring
charges 1,777 − EQT Production adjusted
operating (loss) income $ (7,971 ) $ 167,543
Adjusted EQT Midstream Partners EBITDA
As used in this news release, adjusted EQT Midstream Partners
EBITDA means EQM’s net income plus EQM’s interest expense,
depreciation and amortization expense, income tax expense
(if applicable), and non-cash long-term compensation expense
less EQM’s non-cash adjustments (if applicable), equity
income, AFUDC-equity, capital lease payments, and adjusted EBITDA
attributable to the Northern West Virginia Marcellus Gathering
System (NWV Gathering) prior to acquisition. Adjusted EQT Midstream
Partners EBITDA is a non-GAAP supplemental financial measure that
management and external users of the Company'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:
- the Company's operating performance as
compared to other companies in its industry;
- the ability of the Company's assets to
generate sufficient cash flow to make distributions to its
investors;
- the Company'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.
The Company believes that adjusted EQT Midstream Partners EBITDA
provides useful information to investors in assessing the Company's
financial condition and results of operations. Adjusted EQT
Midstream Partners 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. Adjusted EQT Midstream Partners 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 EQT Midstream Partners EBITDA may be
defined differently by other companies in the Company's or EQM's
industries, the definition of adjusted EQT Midstream Partners
EBITDA to EQM's net income may not be comparable to similarly
titled measures of other companies, thereby diminishing the utility
of the measure. The table below reconciles adjusted EQT Midstream
Partners EBITDA, as derived from the statements of consolidated
operations to be included in EQM’s report on Form 10-Q for the
three months ended March 31, 2016.
Three Months Ended March 31,
(thousands, unless noted)
2016 2015 Net
Income, EQT Midstream Partners $ 129,065 $ 95,306 Add: Interest
expense 10,258 11,457 Depreciation and amortization expense 15,478
11,927 Income tax expense − 6,703 Non-cash long-term compensation
expense 195 566 Less: Equity income (1,589 ) − AFUDC - equity
(2,472 ) (714 ) Capital lease payments for Allegheny Valley
Connector (a) (9,364 ) (8,844 ) Adjusted EBITDA attributable to NWV
Gathering prior to acquisition (b) − (19,841 )
Adjusted EQT Midstream Partners EBITDA
$ 141,571 $ 96,560 (a) Reflects capital lease
payments due under the lease. These lease payments are generally
made monthly on a one month lag. (b) Adjusted EBITDA attributable
to NWV Gathering prior to acquisition for the periods presented was
excluded from EQM’s adjusted EBITDA calculations as these amounts
were generated by NWV Gathering prior to EQM’s acquisition;
therefore, they were not amounts that could have been distributed
to EQM’s unitholders. Adjusted EBITDA attributable to NWV Gathering
for the three months ended March 31, 2015 was calculated as net
income of $11.1 million plus depreciation and amortization expense
of $2.0 million plus income tax expense of $6.7 million.
First Quarter 2016 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.
EQT Midstream Partners, LP (NYSE: EQM) and EQT GP Holdings, LP
(NYSE: EQGP), 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.eqtmidstreampartners.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 125 years of experience, EQT continues
to be a leader in the use of advanced horizontal drilling
technology – designed to minimize the potential impact of
drilling-related activities and reduce the overall environmental
footprint. Through safe and responsible operations, the Company is
committed to meeting the country’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 also
owns a 90% limited partner interest in EQT GP Holdings, LP. EQT GP
Holdings, LP owns the general partner interest, all of the
incentive distribution rights, and a portion of the limited partner
interests in EQT Midstream Partners, LP.
Visit EQT Corporation at www.EQT.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 relations
website at http://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).
EBITDA is defined as earnings before interest, taxes,
depreciation, and amortization and is not a financial measure
calculated in accordance with GAAP. EBITDA is a non-GAAP
supplemental financial measure that the Company’s management and
external users of the Company’s financial statements, such as
industry analysts, investors, lenders and rating agencies, may use
to assess: (i) the Company’s performance versus prior periods; (ii)
the Company’s operating performance as compared to other companies
in its industry; (iii) the ability of the Company’s assets to
generate sufficient cash flow to make distributions to its
investors; (iv) the Company’s ability to incur and service debt and
fund capital expenditures; and (v) the viability of acquisitions
and other capital expenditure projects and the returns on
investment of various investment opportunities.
The Company is unable to provide a reconciliation of projected
EBITDA to projected operating income, the most comparable financial
measure calculated in accordance with GAAP, due to the unknown
effect, timing and potential significance of certain income
statement items.
Similarly, the Company is unable to provide a reconciliation of
its projected operating cash flow to projected net cash provided by
operating activities, the most comparable financial measure
calculated in accordance with GAAP, because of uncertainties
associated with projecting future net income and changes in assets
and liabilities.
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 Marcellus, deep Utica, and other reserves;
drilling plans and programs (including the number, type, feet of
pay and location of wells to be drilled); projected natural gas
prices, basis, recoveries and average differential; total resource
potential, reserves, EUR, expected decline curve and reserve
replacement ratio; projected Company and third party production
sales volume and growth rates (including liquids sales volume and
growth rates); projected finding and development costs, operating
costs, unit costs, well costs and midstream revenue deductions;
projected gathering and transmission volume and growth rates; the
Company’s access to, and timing of, capacity on pipelines;
infrastructure programs (including the timing, cost and capacity of
the transmission and gathering expansion projects); the timing,
cost, capacity and expected interconnects with facilities and
pipelines of the Ohio Valley Connector and Mountain Valley Pipeline
(MVP) projects; the ultimate terms, partners and structure of the
MVP joint venture; technology (including drilling and completion
techniques); projected EQT Midstream and EQT Midstream Partners, LP
(EQM) EBITDA; acquisitions, monetization transactions, including
asset sales (dropdowns) to EQM and other asset sales, joint
ventures or other transactions involving the Company’s assets; the
projected cash flows resulting from the Company’s limited partner
interests in EQT GP Holdings, LP (EQGP); internal rate of return
(IRR) and returns per well; projected capital expenditures;
potential future impairments of the Company’s assets; the amount
and timing of any repurchases under the Company’s share repurchase
authorization; 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, revenue, cash flows and cash-on-hand; hedging strategy;
the effects of government regulation and litigation; the dividend
and distribution amounts and rates; tax position and projected
effective tax rate. 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, 2015, 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, is derived from publicly available
information published by the partnerships.
EQT CORPORATION AND SUBSIDIARIES STATEMENTS
OF CONSOLIDATED INCOME (UNAUDITED) Three Months
Ended March 31, 2016 2015
(Thousands, except per share amounts) Revenue: Sales of
natural gas, oil and NGLs $ 364,427 $ 586,408 Pipeline and
marketing services 71,647 84,815 Gain on derivatives not designated
as hedges 108,995 43,592 Total operating revenue
545,069 714,815 Operating expenses: Transportation and
processing 77,193 65,776 Operation and maintenance 31,483 28,247
Production 26,896 31,356 Exploration 3,123 12,554 Selling, general
and administrative 57,942 63,126 Depreciation, depletion and
amortization 221,231 194,745 Impairment of long-lived assets
— 4,252 Total operating expenses 417,868
400,056 Operating income 127,201 314,759 Other income
4,840 939 Interest expense 36,180 37,216 Income
before income taxes 95,861 278,482 Income tax expense 7,436
57,314 Net income 88,425 221,168 Less: Net income
attributable to noncontrolling interests 82,789
47,741 Net income attributable to EQT Corporation $ 5,636 $ 173,427
Earnings per share of common stock attributable to EQT
Corporation: Basic: Weighted average common stock outstanding
156,720 152,036 Net income $ 0.04 $ 1.14 Diluted:
Weighted average common stock outstanding 157,195
152,756 Net income $ 0.04 $ 1.14 Dividends declared per common
share $ 0.03 $ 0.03
EQT Corporation Price
Reconciliation
New format. Results presented using the
historic format are available on our IR website.
Three Months Ended March 31, (thousands,
unless noted)
2016 2015 NATURAL
GAS Sales volume (MMcf) 165,274 130,907 NYMEX Price ($/MMBtu)
(a) $ 2.08 $ 2.99 Btu uplift $ 0.18 $ 0.27 Natural
gas price ($/Mcf) $ 2.26 $ 3.26 Basis ($/Mcf) (b) (0.42 )
0.24 Cash settled basis swaps (not designated as hedges) ($/Mcf)
0.20 (0.06 ) Average differential, including
cash settled basis swaps ($/Mcf) (0.22 ) 0.18
Average adjusted price ($/Mcf) $ 2.04 $ 3.44 Cash settled
derivatives (cash flow hedges) ($/Mcf) 0.13 0.52 Cash settled
derivatives (not designated as hedges) ($/Mcf) 0.46
0.08
Average natural gas price, including cash
settled derivatives ($/Mcf)
$ 2.63 $ 4.04 Natural gas sales, including cash settled
derivatives $ 434,853 $ 528,497
LIQUIDS Natural
Gas Liquids (NGLs): Sales volume (MMcfe) (c) 13,652 13,281
Sales volume (Mbbls) 2,275 2,214 Price ($/Bbl) $ 14.89 $
24.87 NGL sales $ 33,875 $ 55,056
Oil: Sales volume
(MMcfe) (c) 1,009 1,010 Sales volume (Mbbls) 168 168 Price ($/Bbl)
$ 25.98 $ 37.58 Oil sales $ 4,368 $ 6,328
Liquids sales $ 38,243 $ 61,384
TOTAL PRODUCTION
Total natural gas & liquids sales, including cash settled
derivatives (d) $ 473,096 $ 589,881 Total sales volume (MMcfe)
179,935 145,198
Average realized price ($/Mcfe)
$
2.63 $ 4.06
(a) The Company's volume weighted NYMEX
natural gas price (actual average NYMEX natural gas price ($/MMBtu)
was $2.09 and $2.98 for the three months ended March 31, 2016 and
2015, respectively).
(b) Basis represents the difference
between the ultimate sales price for natural gas and the NYMEX
natural gas price.
(c) NGLs and crude oil were converted to
Mcfe at the rate of six Mcfe per barrel for both periods.
(d) Also referred to in this report as EQT
Production adjusted operating revenue, a non-GAAP measure.
Total natural gas & liquids sales,
including cash settled derivatives above (d)
$
473,096
$
589,881
Deduct (add):
Net cash settlements received on
derivatives not designated as hedges
(109,132
)
(4,480
)
Premiums paid for derivatives that settled
during the period
463
1,007
Production sales
$
364,427
$
586,408
EQT PRODUCTION RESULTS OF
OPERATIONS Three Months Ended March 31,
2016 2015 OPERATIONAL DATA Sales
volume detail (MMcfe): Marcellus (a) 154,589 121,471 Other (b)
25,346 23,727 Total production sales volume
(c) 179,935 145,198 Average daily sales volume (MMcfe/d)
1,977 1,613 Average realized price ($/Mcfe) $ 2.63 $ 4.06
Gathering to EQT Midstream ($/Mcfe) $ 0.68 $ 0.74
Transmission to EQT Midstream ($/Mcfe) $ 0.19 $ 0.19 Third party
gathering and transmission ($/Mcfe) $ 0.28 $ 0.28 Processing
($/Mcfe) $ 0.14 $ 0.17 Lease operating expenses (LOE), excluding
production taxes ($/Mcfe) $ 0.08 $ 0.11 Production taxes ($/Mcfe) $
0.07 $ 0.10 Production depletion ($/Mcfe) $ 1.07 $ 1.16
Depreciation, depletion and amortization (DD&A) (thousands):
Production depletion $ 191,995 $ 169,028 Other DD&A
2,841 2,435 Total DD&A $ 194,836 171,463
Capital expenditures (thousands) $ 231,613 $ 481,974
FINANCIAL DATA (thousands) Revenue: Production sales $
364,427 $ 586,408 Net marketing services 4,586 13,137 Gain on
derivatives not designated as hedges 108,995
44,246 Total operating revenue 478,008 643,791
Operating expenses: Gathering 133,337 113,371 Transmission 75,184
63,443 Processing 26,015 24,423 LOE, excluding production taxes
14,418 16,534 Production taxes 12,478 14,822 Exploration 3,123
12,544 Selling, general and administrative (SG&A) 29,871 37,096
DD&A 194,836 171,463 Impairment of long-lived assets —
4,252 Total operating expenses 489,262
457,948 Operating (loss) income $ (11,254 ) $ 185,843 (a)
Includes Upper Devonian wells. (b) Includes 3,953 MMcfe of
deep Utica sales volume for the three months ended March 31, 2016.
(c) NGLs and crude oil were converted to Mcfe at the rate of six
Mcfe per barrel for all periods. EQT MIDSTREAM
EQT MIDSTREAM RESULTS OF OPERATIONS Three
Months Ended March 31, 2016
2015 OPERATIONAL DATA Operating revenue (thousands):
Gathering Firm reservation fee revenue $ 83,296 $ 58,373 Volumetric
based fee revenue: Usage fees under firm contracts (a) 10,753 9,549
Usage fees under interruptible contracts 42,905
61,016 Total volumetric based fee revenue 53,658
70,565 Total gathering revenue $ 136,954 $
128,938 Transmission Firm reservation fee revenue $ 63,341 $
61,854 Volumetric based fee revenue: Usage fees under firm
contracts (a) 13,224 8,575 Usage fees under interruptible contracts
2,596 1,536 Total volumetric based fee revenue
15,820 10,111 Total transmission revenue $
79,161 $ 71,965 Storage, marketing and other revenue
8,614 7,324 Total operating revenue $ 224,729
$ 208,227 Gathered volumes (BBtu per day): Firm
reservation 1,424 967 Volumetric based services (b) 899
1,087 Total gathered volumes 2,323 2,054
Gathering and compression expense ($/MMBtu) $ 0.11 $ 0.11
Transmission pipeline throughput (BBtu per day): Firm capacity
reservation 1,622 2,025 Volumetric based services (b) 487
213 Total transmission pipeline throughput 2,109
2,238 Average contracted firm transmission reservation
commitments (BBtu per day) 3,005 2,947 Capital expenditures
(thousands) $ 140,920 $ 72,575
FINANCIAL DATA
(thousands) Total operating revenue $ 224,729 $ 208,227
Operating expenses: Operation and maintenance (O&M) 31,808
29,813 SG&A 24,729 25,478 DD&A 26,333 23,195
Total operating expenses 82,870 78,486 Operating
income $ 141,859 $ 129,741 (a) Includes commodity
charges and fees on volumes gathered or transported in excess of
firm contracted capacity. (b) Includes volumes gathered or
transported under interruptible contracts and volumes in excess of
firm contracted capacity.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005350/en/
EQT analyst inquiries please contact:Patrick Kane – Chief
Investor Relations Officer, 412-553-7833pkane@eqt.comorEQT
Midstream Partners / EQT GP Holdings analyst inquiries please
contact:Nate Tetlow – Investor Relations Director,
412-553-5834ntetlow@eqt.comorMedia inquiries please
contact:Natalie Cox – Corporate Director, Communications,
412-395-3941ncox@eqt.com
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