Market Overview

EQT Reports Third Quarter 2019 Results and Preliminary 2020 Outlook

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Transformation underway: modern, technology-driven, efficient and value-focused

EQT Corporation (NYSE:EQT) today announced financial and operational performance results for the third quarter 2019 and preliminary financial and operational guidance for 2020.

Third Quarter Highlights:

  • Achieved sales volumes of 381 Bcfe or 4.14 Bcfe/d
  • Received an average realized price of $2.47 per Mcfe
  • Capital expenditures of $475 million; full-year 2019 guidance reduced by $115 million, while maintaining full-year production guidance
  • Executed an asset exchange transaction for 16,000 net mineral acres in West Virginia, solidifying core position for future large-scale development
  • Step change in Marcellus horizontal drilling performance, improving rate of penetration by 50% over the second quarter of 2019

100-Day Plan Highlights:

  • Hired all evolution leaders, adding proven leadership to the organization
  • Migrated the workforce into a simplified organizational structure to enhance accountability
  • Streamlined the organization, reducing overhead costs by approximately $65 million per year
  • Successfully implemented digital work environment to align workforce with operational targets
  • Standardized well designs across entire leasehold position to increase development consistency
  • Established stable operations schedule through year-end 2020 to drive efficiencies

2020 Plan Highlights1:

  • Sales volumes of 1,450 - 1,500 Bcfe, roughly flat to 2019 expected sales volumes
  • Capital expenditures of $1.30 - $1.40 billion, a $525 million year-over-year reduction, compared to prior 2019 guidance2
  • Adjusted free cash flow (a non-GAAP measure)3 of $200 - $300 million; 7-11% free cash flow yield (a non-GAAP measure)3,4
  • Expect to reduce well costs, overhead, land and other capital expenditures by 25% relative to legacy costs
  • Executing large-scale combo development: 50% of wells turned-in-line and 80% of wells spud
  • Committed to reducing debt by at least $1.5 billion by mid-year
  • 87% of 2020 gas production hedged at a weighted average floor price of $2.71 per Dth

President and CEO Toby Rice stated: "We are on track to transform EQT into a modern, digitally-enabled, efficient and values-driven natural gas producer. Over the past 100 days, our actions have been focused on delivering the foundational elements necessary for EQT's transition toward efficiently executing large-scale development projects across our sizable undeveloped core inventory. The team has made significant progress, and the execution of our planned initiatives is expected to reduce capital expenditures by approximately $525 million in 2020, as compared to prior full-year 2019 guidance."

Rice continued, "As such, I am pleased to share that our preliminary 2020 forecast will generate between $200 and $300 million of adjusted free cash flow, which highlights the durability of our business at cyclically low natural gas prices. Further, we are committed to allocating our capital responsibly and effectively, with the intent to reduce absolute debt by at least $1.5 billion by mid-year 2020 to maintain Investment Grade metrics."

(1) Further detail is provided in our Investor Presentation, available on our website.

(2) Excludes $115 million reduction in 2019 full-year capital expenditures announced on October 31, 2019.

(3) See the Non-GAAP Disclosures section of this news release for definition and other important information regarding this non-GAAP financial measure, including reasons why EQT is unable to provide a reconciliation of projected adjusted free cash flow and free cash flow yield to the most comparable measure calculated in accordance with GAAP without unreasonable effort.

(4) Free cash flow yield calculated using market capitalization as of September 30, 2019.

THIRD QUARTER 2019 FINANCIAL AND OPERATIONAL PERFORMANCE

 

Three Months Ended

September 30,

 

 

 

%

($ millions, except EPS)

2019

 

2018

 

Change

 

Change

Total sales volume (Bcfe)

381

 

 

374

 

 

7

 

 

2

%

Loss from continuing operations

$

(361

)

 

$

(127

)

 

$

(234

)

 

(184

)%

Adjusted net (loss) income from continuing operations (a non-GAAP measure)

$

(14

)

 

$

42

 

 

$

(56

)

 

(133

)%

Adjusted EBITDA from continuing operations (a non-GAAP measure)

$

444

 

 

$

524

 

 

$

(80

)

 

(15

)%

Diluted earnings per share (EPS) from continuing operations

$

(1.41

)

 

$

(0.49

)

 

$

(0.92

)

 

(188

)%

Adjusted EPS from continuing operations (a non-GAAP measure)

$

(0.06

)

 

$

0.16

 

 

$

(0.22

)

 

(138

)%

Net cash provided by operating activities

$

319

 

 

$

904

 

 

$

(585

)

 

(65

)%

Adjusted free cash flow (a non-GAAP measure)

$

(178

)

 

$

(300

)

 

$

122

 

 

41

%

In the third quarter 2019, the Company reported a loss from continuing operations of $361 million, or $1.41 per diluted share, compared to a loss from continuing operations for the same period 2018 of $127 million, or a loss of $0.49 per diluted share. The increase in the reported loss was attributable primarily to the unrealized loss on the investment in Equitrans Midstream Corporation (Equitrans Midstream), lower operating revenues and higher proxy, transaction and reorganization and other selling, general and administrative (SG

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