Analyst Presentation October 22, 2015
EQT Cautionary Statements EQT Corporation (NYSE: EQT) EQT Plaza 625 Liberty Avenue, Suite 1700 Pittsburgh, PA 15222 Pat Kane - Chief Investor Relations Officer (412) 553-7833 The 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 in this presentation, such as EUR (estimated ultimate recovery) and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. We caution you that the SEC views such estimates as inherently unreliable and these estimates may be misleading to investors unless the investor is an expert in the natural gas industry. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible (3P) reserves in filings with the SEC due to the different levels of certainty associated with each reserve category. Disclosures in this presentation contain certain forward-looking statements. 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 presentation 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 reserves; drilling plans and programs (including spacing and the number, type, depth, lateral length and location of wells to be drilled); projected natural gas prices, liquids price uplift, basis, recoveries and average differential; projected market mix; total resource potential, reserves, EUR, expected rates and pressures, and expected decline curve; projected production sales volume and growth rates (including liquids sales volume and growth rates); internal rate of return (IRR), compound annual growth rate (CAGR), and expected after-tax returns per well; technology (including drilling and completion techniques); projected finding and development costs, operating costs, unit costs, well costs, and midstream revenue deductions; projected gathering and transmission volumes and growth rates; the Company s access to, and timing of, capacity on pipelines; project firm pipeline capacity and sales; infrastructure programs (including the timing, cost and capacity of expected gathering and transmission 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; projected EBITDA; monetization transactions, including midstream asset sales (dropdowns) to EQT Midstream Partners, LP (EQM) and other asset sales, joint ventures or other transactions involving the Company s assets; and the Company s use of proceeds from the initial public offering of EQT GP Holdings, LP (EQGP) common units; the amount and timing of any repurchases under the Company s share repurchase authorization; projected capital expenditures; liquidity and financing requirements, including funding sources and availability; projected operating revenue, cash flows and cash-on-hand; hedging strategy; the effects of government regulation and litigation; dividend and distribution amounts and rates; and tax position. 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, 2014, 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 presentation regarding EQGP and its subsidiaries, including EQM, is derived from publicly available information published by EQGP and EQM. 2
Non-GAAP Measures The Company uses Adjusted EQT Midstream EBITDA as a financial measure in this presentation. Adjusted EQT Midstream EBITDA is defined as the Company s EQT Midstream business segment s operating income (loss) plus depreciation and amortization expense less gains on dispositions. Adjusted EQT Midstream EBITDA also excludes the Company s EQT Midstream business segment s results associated with the Big Sandy Pipeline and Langley processing facility. Adjusted EQT Midstream EBITDA is not a financial measure calculated in accordance with generally accepted accounting principles (GAAP). Adjusted EQT Midstream EBITDA is a non-gaap supplemental financial measure that Company management and external users of the Company s financial statements, such as industry analysts, investors, lenders and rating agencies, 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 believes that the presentation of Adjusted EQT Midstream EBITDA in this presentation provides useful information in assessing the Company s financial condition and results of operations. Adjusted EQT Midstream EBITDA should not be considered as an alternative to EQT Midstream operating income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EQT Midstream EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect operating income. Additionally, because Adjusted EQT Midstream EBITDA may be defined differently by other companies in the Company s industry, the Company s definition of Adjusted EQT Midstream EBITDA will most likely not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measure. Please see the Appendix for a reconciliation of Adjusted EQT Midstream EBITDA to EQT Midstream operating income, its most directly comparable financial measure calculated in accordance with GAAP. 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. 3
Calculations Within This Presentation Finding and development costs (F&D costs) from all sources for peer companies presented in this presentation are calculated as the cost incurred, relating to natural gas and oil activities in accordance with Financial Accounting Standards Board Accounting Standards Codification 932 (ASC 932), divided by the sum of extensions, discoveries and other additions; purchase of natural gas and oil in place; and revisions of previous estimates, as provided for years 2012 2014 and derived from publicly available information filed with the SEC. Per unit operating expenses are calculated by dividing the sum of lease operating expenses, production taxes and the gathering and transmission costs for equity gas, by production sales volumes for the same period. Per unit operating expenses in the presentation are calculated from publicly available information filed with the SEC for the year ended December 31, 2014. 4
Key Investment Highlights Extensive reserves of natural gas* 10.7 Tcfe Proved; >22 years R/P 42.8 Tcfe 3P; >87 years R/P 53 Tcfe Total Resource Potential; >108 years R/P Proven ability to profitably develop our reserves >25% production sales volume growth forecasted in 2015 Industry leading cost structure Extensive and growing midstream business EQT owns 90% interest in EQT GP Holdings, LP (NYSE: EQGP) EQGP owns: 30% limited partner interest; 2% general partner interest and all incentive distribution rights of EQT Midstream Partners, LP** Strong liquidity position $1.7 billion cash** $1.5 billion undrawn, unsecured revolver *As of 12/31/2014 **As of 09/30/2015 5
Leading Appalachian E&P Company 2014 Operating Income of $853.4 million 9,100 pipeline miles 10.7 Tcfe proved reserves 3.4 MM acres As of 12/31/2014 6
Production MMcf/d Production By Play Marcellus Shale drilling driving growth 1,800 1,600 1,400 Marcellus Huron Other 1,200 1,000 800 600 Began horizontal drilling 400 200 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 7
Bcfe Reserves By Play Proved Reserve Growth 12,000 Upper Devonian Other 10,000 Huron Marcellus 8,348 215 8,000 861 10,739 455 760 1,240 42.8 Tcfe 3P reserves (as of December 31, 2014) Huron 11.9 6,000 4,000 5,220 5,365 866 889 1,475 1,062 6,004 761 965 1,316 5,956 8,284 Marcellus 23.3 2,000 2,879 3,414 4,278 0 2010 2011 2012 2013 2014 53 Tcfe Total Resource Potential 8
Marcellus Play 600,000 EQT acres 86% NRI / 80% HBP 23.3 Tcfe 3P 31 Tcfe total resource potential 138 wells in 2015 Core Development Area 9
Marcellus Core Development Area Near term development strategically focused on core ~260,000 EQT acres ~2,840 locations 526 wells online* 123 wells in 2015 5,400 laterals 91 acre spacing 11.2 Bcfe EUR / well 2,065 Mcfe EUR / ft. of lateral Core Development Area $5.7 MM / well *As of 09/30/2015 10
Core Marcellus IRR 350% 300% PRICE ATAX IRR $2.50 22% $3.00 46% $3.50 82% Wellhead After OpEx After Tax 250% 200% 150% 100% 50% 0% $2.50 $3.00 $3.50 Realized Price 11
Utica Play 400,000 EQT acres 3,000 locations 1 well online* 2 wells in progress ~13,000 deep 5,400 lateral $12.5 $14.0 MM / well** Scotts Run 591340 Greene County, PA 3,221 treated interval 24 hr. IP: 72.9 MMcf 22.6 MMcf / 1000 8,641 psi flowing casing pressure 0.95 pore pressure gradient BIG 190 Wetzel County, WV Spud September 18, 2015 12,700 vertical depth 3,500-4,000 lateral Pettit 593066 Greene County, PA Spud August 17, 2015 13,400 vertical depth 4,000-4,500 lateral *As of 09/30/2015 **Target cost 12
Daily Production (Mcf/d) Utica Play Type Curves - 5,400 lateral 35,000 Utica 5.9 MMcf/ft Utica 4.3 MMcf/ft 30,000 25,000 ATAX IRR ($2.00 Realized Price) Well Cost 4.3 MMcf/ft 5.9 MMcf/ft $12.5 MM 34% 53% $14.0 MM 21% 37% 20,000 15,000 10,000 5,000 0 0 10 20 30 40 50 60 70 80 90 100 Time in Months (First 100 Months Represented) Cumulative Production over Time 4.3 MMcf/ft 5.9 MMcf/ft % of EUR at 1 year 47% 35% % of EUR at 5 years 69% 61% 13
Casing Flow Pressure (psig) Cumulative Production (MMcf / 1,000 Lateral) Scott s Run Utica Well Update Cumulative Production, Pressure and Rate vs. Time 3,500 3,000 2,500 2.3 Bcf / 1,000 recovered by day 254 EUR: 5.9 Bcf / 1,000 EUR: 4.3 Bcf / 1,000 2,000 1,500 Actual Projected 1,000 500 30 MMcf/d - 0 30 60 90 120 150 180 210 240 270 300 330 360 390 420 450 480 510 540 Days on Production 12,000 70 10,000 60 8,000 6,000 4,000 Flowing pressure meets line pressure (500 psi) at day 254 50 40 30 20 Daily Flow Rate (MMcf/d) 2,000 40 psi/day pressure decline EUR: 5.9 Bcf / 1,000 EUR: 4.3 Bcf / 1,000 10-0 30 60 90 120 150 180 210 240 270 300 330 360 390 420 450 480 510 540 0 Days on Production 14
EQT RICE CHK SWN COG UPL NFG PXD RRC XCO NBL AR CNX XEC NFX SM STR CXO QEP EOG EGN MDU WLL $/Mcfe CNX AR COG EQT RRC NFG RICE SWN SM XCO XEC UPL EOG WLL CXO NBL QEP NFX CHK EGN MDU $/Mcfe Industry Leading Cost Structure $7 $6 $5 3-year F&D (all sources) Mean = $2.66 $4 $3 $0.73 $2 $1 $0 For the three years ended 12/31/2014 $4 $3 Per Unit Operating Expenses Mean = $1.69 $2 $0.47 $1 $0 Year ended 12/31/2014 15
EQT Corporation Midstream Overview Consolidated Transmission & Storage* 3.5 Bcf/d current capacity 47 Bcf gas storage capacity Gathering* 2 Bcf/d capacity Formed MLP in 2012 (NYSE: EQM) $600 $500 $400 $300 $200 EQT Corporation Adjusted EQT Midstream EBITDA** EQT Midstream EQT Midstream Partners, LP Production Sales Volumes (Bcfe) 700 600 500 400 300 200 $100 $0 EQT Production sales drive EQT Midstream EBITDA growth 2010 2011 2012 2013 2014 2015E*** *As of 12/31/2014 **Excludes Big Sandy and Langley in 2010-2011; see Non-GAAP Reconciliation in the appendix ***Pro-forma reflecting full-year impact of Northern West Virginia Marcellus Gathering System acquisition 100 0 16
EQT Corporation Midstream Marcellus Midstream Assets Allegheny Valley Connector 200-mile FERC pipeline 450 MMcf/d capacity ~$30MM CAPEX in 2015 ~$40 MM projected annual EBITDA 2015 Gathering CAPEX $75 - $100 MM Allegheny Valley Connector Tioga 65 MMcf/d Applegate 150 MMcf/d Longhorn 130 MMcf/d Terra 80 MMcf/d 17
EQT GP Holdings, LP (NYSE: EQGP) EQT owns 90% LP interest of EQGP EQGP owns in EQM* 30% limited partner interest 2% general partner interest incentive distribution rights EQGP Price per Unit Value of EQGP Units held by EQT ($MM) $24 $5,753 $38 $26 $6,233 $41 $28 $6,712 $44 $30 $7,191 $47 Value per EQT share *As of 09/30/2015 18
EQT Midstream Partners, LP (NYSE: EQM) Transmission & Storage 3.1 Bcf/d current capacity 700 mile FERC-regulated interstate pipeline 32 Bcf of gas storage capacity Gathering System Jupiter Gathering System Supports EQT PA dry gas production Northern West Virginia Marcellus Gathering System Supports EQT wet and dry gas production 19
EQT Midstream Partners, LP Growth Projects Ohio Valley Connector 36-mile FERC regulated pipeline to connect transmission in West Virginia to Clarington, OH Q3 2016 in-service ~1 Bcf/d capacity 650 MMcf/d contracted under firm 20-year term Mountain Valley Pipeline 300-mile FERC-regulated pipeline to growing demand center in southeast US Q4 2018 in-service JV with NextEra Energy, WGL Midstream, Vega Energy Partners, and RGC Resources 2 Bcf/d capacity commitments 20-year term 20
Corporate Citizenship Safety Our first priority All accidents are preventable Company goal = zero incidents Committed to: The environment Our employees and contractors The communities where we drill and work EQT Foundation charitable giving of >$4 million / year More than $20 million / year in state and local taxes 21
Drilling and Hydraulic Fracturing Committed to operate in accordance with federal, state and local regulations Industry leading spill prevention plans and results Supports the disclosure of frac fluid additives Utilize multiple barriers to protect drinking water supplies Pre-drilling water sampling within 2,500 of drilling locations Multi-well pads reduce surface impacts 22
Investment Summary Extensive reserves of natural gas Proven ability to profitably develop our reserves >25% production sales volume growth forecasted in 2015 Strong liquidity position Committed to maximize shareholder value by: Accelerating the monetization of our vast reserves Operating in a safe and environmentally responsible manner 23
Appendix 24
Mbbls $/Mcf Liquids Volume Growth and Marcellus Impact Liquids Volume Growth $5.00 Marcellus Liquids Price Impact (1200 Btu Gas) 10,000 9,000 8,000 $4.00 NGLs (1.6 Gal/Mcf) Btu Premium NYMEX $3.27 $3.23 7,000 6,000 $3.00 $0.54 $0.39 $0.12 5,000 4,000 $2.00 3,000 $2.72 $2.72 2,000 $1.00 1,000-2009 2010 2011 2012 2013 2014 2015F $0.00 Not Processed Processed Includes natural gas liquids and oil Pricing is as of 10/20/2015 and is the 1 year forward NYMEX and Mount Belvieu for Propane $0.44, Iso-Butane $0.57, Normal Butane $0.56, and Pentanes $.97 25
$B Capital Investment Summary 3.0 2.5 2.0 $1.6 $1.9 $1.8 1.5 $1.2 $1.3 1.0 0.5 0.0 2011 2012 2013 2014 2015F Midstream Production Distribution Excludes acquisitions and EQT Midstream Partners, LP 26
Marcellus Play Development Areas Acres Undeveveloped Total Locations Undeveloped Locations PA Core 145,000 116,000 1,610 1,300 WV Core 115,000 92,000 1,230 980 PA Tier 2 200,000 189,000 1,600 1,520 WV Tier 2 140,000 136,000 1,120 1,100 TOTAL 600,000 533,000 5,560 4,900 Type curve and well cost data posted on www.eqt.com under investor relations 27
Daily Production (Mcf/d) Type Curves - 5,400 lateral Core Marcellus vs Utica 35,000 30,000 Utica 5.9 MMcf/ft Utica 4.3 MMcf/ft Core Marcellus 2.1 MMcf/ft 25,000 20,000 15,000 10,000 5,000 0 0 10 20 30 40 50 60 70 80 90 100 Time in Months (First 100 Months Represented) 28
Daily Production (Mcf/d) Marcellus Play Core Type Curve - 5,400 lateral 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 0 10 20 30 40 50 60 70 80 90 100 Time in Months (First 100 Months Represented) 29
Marcellus Capacity EQT Capacity & Firm Sales Market Mix Q4 2015 2016E 2017E TETCO M2 29-31% 19-21% 14-16% TETCO M3 34-36% 31-33% 28-30% TCO 10-11% 9-10% 6-8% Midwest 10-11% 23-25% 32-34% NYMEX 14-16% 12-14% 15-17% 30
Bcf $ / Mcf Risk Management Hedge Position as of October 21, 2015 300 250 $4.09 $3.81 $3.63 $4.50 $4.00 $3.50 200 150 $2.70 $2.94 $3.16 $3.00 $2.50 $2.00 100 $1.50 50-84 248 110 2015** 2016 2017 $1.00 $0.50 $0.00 Hedged Volume Average Hedge Price NYMEX Price 2015** 2016*** 2017*** NYMEX Price ($/Mcf) as of 10/20/2015 $2.70 $2.94 $3.16 Fixed Price Total Volume (Bcf) 75 248 103 Average Price per Mcf (NYMEX)* $4.04 $3.81 $3.66 Collars Total Volume (Bcf) 9-7 Average Floor Price per Mcf (NYMEX)* $4.47 $0.00 $3.15 Average Cap Price per Mcf (NYMEX)* $7.19 $0.00 $4.03 *The average price is based on a conversion rate of 1.05 MMBtu/Mcf **October through December ***For 2016 and 2017, the Company also has a natural gas sales agreement for 35 Bcf that includes a NYMEX ceiling price of $4.88/Mcf. The Company also sold calendar year 2016 and 2017 calls for approximately 11 Bcf and 17 Bcf at strike prices of $3.65 per Mcf and $3.79 per Mcf, respectively. 31
Ample Financial Flexibility to Execute Business Plan EQT Debt ratings Moody s Standard & Poor s Fitch Long-term debt Baa3 BBB BBB- Outlook Stable Stable Stable ($ MM, except net debt / capital) Sept. 30, 2015 Short-term debt* $ 0 Long-term debt* 2,478 Cash and cash equivalents* (1,661) Net debt (total debt minus cash)* $ 817 Total common stockholders' equity $ 5,172 Net debt / capital Strong balance sheet Manageable debt maturities* 14% * Excludes EQT Midstream Partners 32
Price Reconciliation Three Months Ended September 30, Nine Months Ended September 30, in thousands (unless noted) 2015 2014 2015 2014 LIQUIDS NGLs: Sales volume (MMcfe) (a) 13,827 12,047 39,552 27,768 Sales volume (Mbbls) 2,304 2,008 6,592 4,628 Gross price ($/Bbl) $ 8.10 $ 42.27 $ 15.17 $ 46.46 Gross NGL sales $ 18,665 $ 84,868 $ 99,983 $ 215,016 Third-party processing (19,970) (17,883) (57,084) (45,456) Net NGL sales $ (1,305) $ 66,985 $ 42,899 $ 169,560 Oil: Sales volume (MMcfe) (a) 1,102 933 3,250 1,632 Sales volume (Mbbls) 184 155 542 272 Net price ($/Bbl) $ 39.13 $ 87.91 $ 41.02 $ 87.46 Net oil sales $ 7,187 $ 13,668 $ 22,221 $ 23,785 Net liquids sales $ 5,882 $ 80,653 $ 65,120 $ 193,345 NATURAL GAS Sales volume (MMcf) 141,367 110,362 405,743 310,201 NYMEX price ($/MMBtu) (b) $ 2.77 $ 4.05 $ 2.80 $ 4.52 Btu uplift $ 0.28 $ 0.41 $ 0.26 $ 0.38 Gross natural gas price ($/Mcf) $ 3.05 $ 4.46 $ 3.06 $ 4.90 Basis ($/Mcf) $ (1.54) $ (1.54) $ (1.26) $ (0.90) Recoveries ($/Mcf) (c) 0.64 0.80 0.88 0.79 Cash settled basis swaps (not designated as hedges) ($/Mcf) 0.01 (0.02) (0.02) (0.04) Average differential ($/Mcf) $ (0.89) $ (0.76) $ (0.40) $ (0.15) Average adjusted price - unhedged ($/Mcf) $ 2.16 $ 3.70 $ 2.66 $ 4.75 Cash settled derivatives (cash flow hedges) ($/Mcf) 0.46 0.08 0.50 (0.12) Cash settled derivatives (not designated as hedges) ($/Mcf) 0.21 0.05 0.19 0.02 Average adjusted price, including cash settled derivatives ($/Mcf) $ 2.83 $ 3.83 $ 3.35 $ 4.65 Net natural gas sales, including cash settled derivatives $ 401,382 $ 422,359 $ 1,355,645 $ 1,444,221 TOTAL PRODUCTION Total net natural gas & liquids sales, including cash settled derivatives $ 407,264 $ 503,012 $ 1,420,765 $ 1,637,566 Total sales volume (MMcfe) 156,296 123,342 448,545 339,601 Net natural gas & liquids price, including cash settled derivatives ($/Mcfe) $ 2.61 $ 4.08 $ 3.17 $ 4.82 (a) NGLs and crude oil were converted to Mcfe at the rate of six Mcfe per barrel for all periods. (b) The Company s volume weighted NYMEX natural gas price (actual average NYMEX natural gas price ($/MMBtu) was $2.77 and $4.06 for the three months ended September 30, 2015 and 2014, respectively, and $2.80 and $4.55 for the nine months ended September 30, 2015 and 2014, respectively). (c) Recoveries represent differences in natural gas prices between the Appalachian Basin and the sales points of other markets reached by utilizing transportation capacity, differences in natural gas prices between Appalachian Basin and fixed price sales contracts, term sales with fixed differentials to NYMEX and other marketing activity, including the sale of unused pipeline capacity. Recoveries include approximately $0.20 and $0.19 per Mcf for the three months ended September 30, 2015 and 2014, respectively, and $0.20 and $0.18 per Mcf for the nine months ended September 30, 2015 and 2014, respectively, for the sale of unused pipeline capacity. 33
Price Reconciliation (continued) Three Months Ended September 30, Nine Months Ended September 30, in thousands (unless noted) 2015 2014 2015 2014 Midstream Deductions ($/Mcfe) Gathering to EQT Midstream $ (0.72) $ (0.74) $ (0.74) $ (0.74) Transmission to EQT Midstream (0.19) (0.20) (0.19) (0.20) Third-party gathering and transmission costs (0.49) (0.45) (0.46) (0.50) Total midstream deductions $ (1.40) $ (1.39) $ (1.39) $ (1.44) Average realized price to EQT Production ($/Mcfe) $ 1.21 $ 2.69 $ 1.78 $ 3.38 Gathering and transmission to EQT Midstream ($/Mcfe) $ 0.91 $ 0.94 $ 0.93 $ 0.94 Average realized price to EQT Corporation ($/Mcfe) $ 2.12 $ 3.63 $ 2.71 $ 4.32 34
Non-GAAP Reconciliation EQT Corporation Adjusted EQT Midstream EBITDA (millions) 2010 2011 2012 2013 2014 Midstream operating income $179 $417 $237 $329 $384 Add: depreciation and amortization 62 57 65 75 87 Less: gains on dispositions 203 20 7 Less: Big Sandy and Langley 31 14 Adjusted Midstream EBITDA $210 $257 $302 $384 $464 35