Published on EQT Invest or Cent er (ht t ps://ir.eqt .com) on 12/13/17

EQT Announces 2018 Operational Forecast
Release Date:
Wednesday, December 13, 2017 6:30 am EST

T erms:
Dateline City:
PITTSBURGH

Volume Growth of 17% Forecast Within Cash Flow
PITTSBURGH--(BUSINESS WIRE)--EQT Corporat ion (NYSE:EQT) t oday announced t he Company’s 2018 capit al expendit ure
(CAPEX) forecast of $2.4 billion, which includes $2.2 billion for well development and $150 million for acreage fill-ins and bolt on leasing. Based on current pricing and synergy capt ure, t he 2018 drilling program is expect ed t o be fully funded t hrough
adjust ed operat ing cash flow at t ribut able t o EQT.
“We have already begun t o realize synergies associat ed wit h complet ion of t he Rice Energy acquisit ion, which include an
est imat ed $100 million reduct ion in our project ed corporat e G&A expenses," st at ed St eve Schlot t erbeck, EQT’s president
and chief execut ive officer. "Init ial development plans for our consolidat ed acreage t arget a 50% increase in average lat eral
lengt hs, which is exceeded wit h 12,600 foot lat erals project ed in Pennsylvania, result ing in a 40% reduct ion in per unit LOE
and product ion SG&A expenses. These cost st ruct ure and capit al efficiency improvement s support a more compelling
invest ment proposit ion, as we shift from maximizing volume growt h t o focusing on capit al ret urns and ret urning cash t o
shareholders.”
EQT forecast s 2018 product ion sales volume of 1,520 – 1,560 Bcfe. The 2018 drilling program ant icipat es a 15% increase in
product ion sales volume in 2019. It is ant icipat ed t hat t he 2019 development plan will be funded ent irely by t he cash flow
provided by EQT Product ion.
EQT’s 2018 CAPEX forecast excludes CAPEX for it s ret ained midst ream asset s, as well as for EQT Midst ream Part ners, LP
(NYSE:EQM) and Rice Midst ream Part ners LP (NYSE:RMP), mast er limit ed part nerships cont rolled by EQT Corporat ion and
consolidat ed in EQT’s financial st at ement s. EQM and RMP announced t heir 2018 CAPEX forecast s t oday in a separat e news
release, which can be found at www.eqt midst reampart ners.com and www.ricemidst ream.com, respect ively.
MARCELLUS DEVELOPMENT
In 2018, t he Company plans t o drill 139 Marcellus wells wit h an average lat eral lengt h of 11,800 feet – all of which will be on
mult i-well pads t o maximize operat ional efficiency and well economics. The program will focus on t he Company’s core
Marcellus acreage, which is t arget ing 111 wells in Pennsylvania and 28 wells in West Virginia. During t he year, t he Company
plans t o t urn-in-line (TIL) 160 –170 Marcellus wells.
OHIO UT ICA DEVELOPMENT
The Company plans t o drill 38 gross (25 net ) Ohio Ut ica wells wit h an average lat eral lengt h of 11,300 feet . The Company
plans t o TIL 40 – 50 gross wells during t he year.
UPPER DEVONIAN DEVELOPMENT
The Company plans t o drill 19 Upper Devonian wells wit h an average lat eral lengt h of 15,600 feet . These wells will be limit ed
t o co-development on Marcellus pads in Pennsylvania. The Company plans t o TIL 20 – 25 wells during t he year.
RICE DEBT REPLACEMENT SAVINGS
As a result of t he replacement of $1.3 billion of Rice senior not es wit h lower coupon invest ment grade debt , EQT expect s t o
realize annual int erest savings of approximat ely $45 million.
HAYWOOD H18 WELL
Earlier t his week, t he company t urned in line t he longest lat eral complet ed t o dat e by any operat or in t he Marcellus. The
Haywood H18 well in Washingt on Count y, PA has a complet ed lat eral lengt h of 17,400 feet and will develop 42 Bcfe of
reserves. Lat erals of t his lengt h are project ed t o have development cost s of $0.36 / Mcfe and will generat e an IRR great er
t han 70% at $3.00 NYMEX. The company plans t o drill 27 Marcellus wells at 17,000 feet or longer in 2018.
2018 GUIDANCE
Based on current NYMEX nat ural gas prices, adjust ed operat ing cash flow at t ribut able t o EQT is project ed t o be $2,350 $2,450 million for 2018, which includes $325 – $375 million from EQT’s int erest s in EQT GP Holdings, LP (NYSE:EQGP) and RMP.
See t he Non-GAAP Disclosures sect ion for import ant informat ion regarding t he non-GAAP financial measures included in t his

 news release, including reasons why EQT is unable t o provide a project ion of it s 2018 net cash provided by operat ing
act ivit ies, t he most comparable financial measure t o adjust ed operat ing cash flow at t ribut able t o EQT and t o EQT
Product ion, calculat ed in accordance wit h GAAP.

PRODUCT ION

Q3 2017

2018

Tot al product ion sales volume (Bcfe)

Difference

1,520 – 1,560

Liquids sales volume, excluding et hane (Mbbls)

13,400 – 13,800

Et hane sales volume (Mbbls)

4,900 – 5,200

Marcellus / Upper Devonian Rigs

10

Top-hole rigs

4

Frac Crews

10

Unit Cost s ($ / Mcfe)
Gat hering t o EQM and RMP

$

0.47

$

0.48 – 0.50

4%

Transmission t o EQM

$

0.23

$

0.11 – 0.13

(48)%

Third-part y gat hering and t ransmission

$

0.45

$

0.42 – 0.44

(4)%

LOE, excluding product ion t axes

$

0.13

$

0.07 – 0.09

(38)%

Product ion t axes

$

0.07

$

0.06 – 0.08

–

SG&A

$

0.19

$

0.10 – 0.12

(42)%

DD&A

$

1.03

$

1.16 – 1.18

14%

Development cost s ($ / Mcfe)

$

0.58*

$

0.44

Average different ial ($ / Mcf)

$ (0.50) – (0.30)

Net market ing services ($MM)

$

50 – 65

*Full-year 2017 est imat e

FINANCIAL

Adjust ed operat ing cash flow at t ribut able t o EQT Product ion ($MM)

$ 2,285 – 2,335

HEDGING

The Company’s t ot al nat ural gas product ion hedge posit ions t hrough 2020 are

2018

2019

2020

439

174

211

$ 3.16

$ 3.07

$ 3.06

117

66

−

NYMEX Swaps
Tot al Volume (Bcf)
Average Price per Mcf (NYMEX)

Collars
Tot al Volume (Bcf)

(24)%

 Average Floor Price per Mcf (NYMEX)

$ 3.28

$ 3.15

$

−

Average Cap Price per Mcf (NYMEX)

$ 3.78

$ 3.68

$

−

10

7

$ 2.91

$ 2.94

Put s (Long)
Tot al Volume (Bcfe)
Average Floor Price per Mcf (NYMEX)

−
$

−

The Company also sold calendar 2018 and 2019 calls/swapt ions for approximat ely 75 and 45 Bcf at a st rike price of
$3.48 and $3.69 per Mcf, respect ively
For 2018 t he Company sold put s for approximat ely 3 Bcf at a st rike price of $2.63 per Mcf
The average price is based on a conversion rat e of 1.05 MMBt u/Mcf
YEAR-END 2017 EARNINGS CALL INFORMAT ION
The Company int ends t o release full-year 2017 earnings and host a live webcast for securit y analyst s on February 15, 2018.
The webcast will be available at www.eqt .com and will begin at 10:30 a.m. ET.
No n-GAAP Disclo sures
Adjusted Operating Cash Flo w Attributable to EQT and Adjusted Operating Cash Flo w Attributable to
EQT Pro ductio n
Adjust ed operat ing cash flow at t ribut able t o EQT and adjust ed operat ing cash flow at t ribut able t o EQT Product ion are nonGAAP supplement al financial measures t hat are present ed as indicat ors of an oil and gas explorat ion and product ion
company’s abilit y t o int ernally fund explorat ion and development act ivit ies and t o service or incur addit ional debt . EQT
includes t his informat ion because management believes t hat changes in operat ing asset s and liabilit ies relat e t o t he t iming
of cash receipt s and disbursement s and t herefore may not relat e t o t he period in which t he operat ing act ivit ies occurred.
Adjust ed operat ing cash flow at t ribut able t o EQT is EQT’s net cash provided by operat ing act ivit ies, less changes in ot her
asset s and liabilit ies, adjust ed t o exclude EQM and RMP adjust ed EBITDA (non-GAAP supplement al financial measures
described below), plus EQM and RMP int erest expense plus t he EQGP and RMP cash dist ribut ions payable t o EQT.
Management believes t hat removing t he impact on operat ing cash flows of t he public unit holders of EQM, EQGP and RMP
t hat is ot herwise required t o be consolidat ed in EQT’s result s provides useful informat ion t o an EQT invest or. As used in t his
news release, adjust ed operat ing cash flow at t ribut able t o EQT Product ion means t he EQT Product ion segment ’s t ot al
operat ing revenues less t he EQT Product ion segment ’s cash operat ing expense, less gains (losses) on derivat ives not
designat ed as hedges, plus net cash set t lement s received (paid) on derivat ives not designat ed as hedges, plus premiums
received (paid) for derivat ives t hat set t led during t he period, plus EQT Product ion asset impairment s (if applicable). Adjust ed
operat ing cash flow at t ribut able t o EQT and adjust ed operat ing cash flow at t ribut able t o EQT Product ion should not be
considered as alt ernat ives t o net cash provided by operat ing act ivit ies present ed in accordance wit h GAAP.
EQT has not provided project ed net cash provided by operat ing act ivit ies or a reconciliat ion of project ed adjust ed operat ing
cash flow at t ribut able t o EQT or project ed adjust ed operat ing cash flow at t ribut able t o EQT Product ion t o project ed net
cash provided by operat ing act ivit ies, t he most comparable financial measure calculat ed in accordance wit h GAAP. EQT is
unable t o project net cash provided by operat ing act ivit ies because t his met ric includes t he impact of changes in operat ing
asset s and liabilit ies relat ed t o t he t iming of cash receipt s and disbursement s t hat may not relat e t o t he period in which t he
operat ing act ivit ies occurred. EQT is unable t o project t hese t iming differences wit h any reasonable degree of accuracy
wit hout unreasonable effort s such as predict ing t he t iming of it s and cust omers’ payment s, wit h accuracy t o a specific day,
t hree or more mont hs in advance. Furt hermore, EQT does not provide guidance wit h respect t o it s average realized price or
income t axes, among ot her it ems, t hat are reconciling it ems bet ween net cash provided by operat ing act ivit ies and
adjust ed operat ing cash flow at t ribut able t o EQT and adjust ed operat ing cash flow at t ribut able t o EQT Product ion, as
applicable. Nat ural gas prices are volat ile and out of EQT’s cont rol, and t he t iming of t ransact ions and t he income t ax effect s
of fut ure t ransact ions and ot her it ems are difficult t o accurat ely predict . Therefore, EQT is unable t o provide project ed net
cash provided by operat ing act ivit ies, or t he relat ed reconciliat ion of project ed adjust ed operat ing cash flow at t ribut able t o
EQT and project ed operat ing cash flow at t ribut able t o EQT Product ion t o project ed net cash provided by operat ing
act ivit ies, wit hout unreasonable effort .
EQT Midstream Partners Adjusted EBIT DA
As used in t his news release, EQT Midst ream Part ners (EQM) adjust ed EBITDA means EQM’s net income plus EQM’s net
int erest expense, depreciat ion and amort izat ion expense, income t ax expense (benefit ) (if applicable), preferred int erest
payment s received post -conversion, and non-cash long-t erm compensat ion expense less EQM’s equit y income, AFUDCequit y, pre-acquisit ion capit al lease payment s for Allegheny Valley Connect or, LLC (AVC), and adjust ed EBITDA of asset s
prior acquisit ion. EQM adjust ed EBITDA is a non-GAAP supplement al financial measure t hat management and ext ernal users of
EQT’s consolidat ed financial st at ement s, such as indust ry analyst s, invest ors, lenders and rat ing agencies, use t o assess t he
effect s of t he noncont rolling int erest s in relat ion t o:
EQT's operat ing performance as compared t o ot her companies in it s indust ry;
t he abilit y of EQT's asset s t o generat e sufficient cash flow t o make dist ribut ions t o it s invest ors;
EQT's abilit y t o incur and service debt and fund capit al expendit ures; and
t he viabilit y of acquisit ions and ot her capit al expendit ure project s and t he ret urns on invest ment of various invest ment
opport unit ies.

 EQT believes t hat EQM adjust ed EBITDA provides useful informat ion t o invest ors in assessing EQT's financial condit ion and
result s of operat ions. EQM adjust ed EBITDA should not be considered as an alt ernat ive t o EQM’s net income, operat ing
income, or any ot her measure of financial performance or liquidit y present ed in accordance wit h GAAP. EQM adjust ed EBITDA
has import ant limit at ions as an analyt ical t ool because it excludes some, but not all, it ems t hat affect EQM's net income.
Addit ionally, because EQM adjust ed EBITDA may be defined different ly by ot her companies in EQT's or EQM's indust ries, t he
definit ion of EQM adjust ed EBITDA may not be comparable t o similarly t it led measures of ot her companies, t hereby
diminishing t he ut ilit y of t he measure.
Rice Midstream Partners Adjusted EBIT DA
As used in t his news release, Rice Midst ream Part ners (RMP) adjust ed EBITDA means RMP’s net income (loss) plus RMP’s net
int erest expense, depreciat ion expense, amort izat ion of int angible asset s, non-cash equit y compensat ion expense,
amort izat ion of deferred financing cost s and ot her nonrecurring it ems. RMP adjust ed EBITDA is a non-GAAP supplement al
financial measure t hat management and ext ernal users of EQT’s consolidat ed financial st at ement s, such as indust ry
analyst s, invest ors, lenders and rat ing agencies, use t o assess t he effect s of t he noncont rolling int erest s in relat ion t o:
EQT's operat ing performance as compared t o ot her companies in it s indust ry;
t he abilit y of EQT's asset s t o generat e sufficient cash flow t o make dist ribut ions t o it s invest ors;
EQT's abilit y t o incur and service debt and fund capit al expendit ures; and
t he viabilit y of acquisit ions and ot her capit al expendit ure project s and t he ret urns on invest ment of various invest ment
opport unit ies.
EQT believes t hat RMP adjust ed EBITDA provides useful informat ion t o invest ors in assessing EQT's financial condit ion and
result s of operat ions. RMP adjust ed EBITDA should not be considered as an alt ernat ive t o RMP’s net income, operat ing
income, or any ot her measure of financial performance or liquidit y present ed in accordance wit h GAAP. RMP adjust ed EBITDA
has import ant limit at ions as an analyt ical t ool because it excludes some, but not all, it ems t hat affect RMP's net income.
Addit ionally, because RMP adjust ed EBITDA may be defined different ly by ot her companies in EQT's or RMP's indust ries, t he
definit ion of RMP adjust ed EBITDA may not be comparable t o similarly t it led measures of ot her companies, t hereby
diminishing t he ut ilit y of t he measure.
Abo ut EQT Co rpo ratio n:
EQT Corporat ion is an int egrat ed energy company wit h emphasis on Appalachian area nat ural gas product ion, gat hering, and
t ransmission. Wit h nearly 130 years of experience and a long-st anding hist ory of good corporat e cit izenship, EQT is t he
largest producer of nat ural gas in t he Unit ed St at es. As a leader in t he use of advanced horizont al drilling t echnology, EQT is
commit t ed t o minimizing t he impact of drilling-relat ed act ivit ies and reducing it s overall environment al foot print . Through
safe and responsible operat ions, EQT is helping t o meet t he nat ion’s growing demand for clean-burning energy, while
cont inuing t o provide a rewarding workplace and enrich t he communit ies where it s employees live and work. EQT owns a 90%
limit ed part ner int erest in EQT GP Holdings, LP, which owns t he general part ner int erest , all of t he incent ive dist ribut ion
right s, and a port ion of t he limit ed part ner int erest s in EQT Midst ream Part ners, LP. EQT also owns a 28% limit ed part ner
int erest and all of t he incent ive dist ribut ion right s in Rice Midst ream Part ners LP.
Visit EQT Corporat ion at www.EQT.com and t o learn more about EQT’s sust ainabilit y effort s, please visit ht t ps://csr.eqt .com.
Abo ut EQT Midstream Partners:
EQT Midst ream Part ners, LP is a growt h-orient ed limit ed part nership formed by EQT Corporat ion t o own, operat e, acquire,
and develop midst ream asset s in t he Appalachian Basin. The Part nership provides midst ream services t o EQT Corporat ion
and t hird-part y companies t hrough it s st rat egically locat ed t ransmission, st orage, and gat hering syst ems t hat service t he
Marcellus and Ut ica regions. The Part nership owns approximat ely 950 miles of FERC-regulat ed int erst at e pipelines; and also
owns approximat ely 1,800 miles of high and low pressure gat hering lines.
Visit EQT Midst ream Part ners, LP at www.eqt midst reampart ners.com.
Abo ut EQT GP Ho ldings:
EQT GP Holdings, LP is a limit ed part nership t hat owns t he general part ner int erest , all of t he incent ive dist ribut ion right s, and
a port ion of t he limit ed part ner int erest s in EQT Midst ream Part ners, LP. EQT Corporat ion owns t he general part ner int erest
and a 90% limit ed part ner int erest in EQT GP Holdings, LP.
Visit EQT GP Holdings, LP at www.eqt midst reampart ners.com.
Abo ut Rice Midstream Partners:
Rice Midst ream Part ners LP is a fee-based, growt h-orient ed limit ed part nership formed t o own, operat e, develop and acquire
midst ream asset s in t he Appalachian basin. RMP provides midst ream services t o EQT Corporat ion and t hird-part y companies
t hrough it s nat ural gas gat hering, compression and wat er asset s in t he rapidly developing dry gas cores of t he Marcellus and
Ut ica Shales.
Visit Rice Midst ream Part ners LP at www.ricemidst ream.com.

Cautionary Statements
Disclosures in t his news release cont ain cert ain forward-looking st at ement s wit hin t he meaning of Sect ion 21E of t he
Securit ies Exchange Act of 1934, as amended, and Sect ion 27A of t he Securit ies Act of 1933, as amended. St at ement s t hat
do not relat e st rict ly t o hist orical or current fact s are forward-looking. Wit hout limit ing t he generalit y of t he foregoing,
forward-looking st at ement s cont ained in t his news release specifically include t he expect at ions of plans, st rat egies,
object ives and growt h and ant icipat ed financial and operat ional performance of t he Company and it s subsidiaries, including

 guidance regarding t he Company's st rat egy t o develop it s Marcellus, Ohio Ut ica, Upper Devonian and ot her reserves; drilling
plans and programs (including t he number, t ype, average lat eral lengt h and locat ion of wells t o be drilled or t urned-in-line, t he
number and t ype of drilling rigs, t he number of frac crews and t he number of mult i-pad wells); project ed product ion sales
volume and growt h rat es (including liquids sales volume and growt h rat es); project ed unit cost s, G&A expenses, expense
reduct ions, average different ial and net market ing services revenue; project ed adjust ed operat ing cash flow at t ribut able t o
EQT and project ed adjust ed operat ing cash flow at t ribut able t o EQT Product ion; project ed capit al expendit ures, capit al
budget , and sources of funds for capit al expendit ures; ret urn on capit al; and project ed cash flows, including t he abilit y t o
fund t he 2018 drilling program t hrough cash from operat ions, and project ed cash flows result ing from t he Company’s
part nership int erest s in EQGP and RMP. These st at ement s involve risks and uncert aint ies t hat could cause act ual result s t o
differ mat erially from project ed result s. Accordingly, invest ors should not place undue reliance on forward-looking
st at ement s as a predict ion of act ual result s. The Company has based t hese forward-looking st at ement s on current
expect at ions and assumpt ions about fut ure event s. While t he Company considers t hese expect at ions and assumpt ions t o
be reasonable, t hey are inherent ly subject t o significant business, economic, compet it ive, regulat ory and ot her risks and
uncert aint ies, many of which are difficult t o predict and beyond t he Company's cont rol. The risks and uncert aint ies t hat may
affect t he operat ions, performance and result s of t he Company's business and forward-looking st at ement s include, but are
not limit ed t o, t hose set fort h under It em 1A, "Risk Fact ors" of t he Company's Form 10-K for t he year ended December 31,
2016, as updat ed by any subsequent Form 10-Qs.
Any forward-looking st at ement speaks only as of t he dat e on which such st at ement is made and t he Company does not
int end t o correct or updat e any forward-looking st at ement , whet her as a result of new informat ion, fut ure event s or
ot herwise.
Informat ion in t his news release regarding EQGP and it s subsidiaries, including EQM, and RMP and it s subsidiaries, is derived
from publicly available informat ion published by t he part nerships.

Language:
English

Contact:
EQT analyst inquiries:
Pat rick Kane, 412-553-7833
Chief Invest or Relat ions Officer
pkane@eqt .com
or
EQT Midst ream Part ners or Rice Midst ream Part ners analyst inquiries:
Nat e Tet low, 412-553-5834
Invest or Relat ions Direct or
nt et low@eqt .com
or
Media inquiries:
Nat alie Cox, 412-395-3941
Corporat e Direct or, Communicat ions
ncox@eqt .com

T icker Slug:
Ticker: EQT
Exchange: NYSE
Source URL: https://ir.eqt.com/press-release/eqt-announces-2018-operational-forecast