EQT Reports Second Quarter 2024 Results
PITTSBURGH, July 23, 2024 /PRNewswire/ -- EQT Corporation (NYSE: EQT) today announced financial and operational results for the second quarter of 2024.
Second Quarter 2024 and Recent Highlights:
- Closed the acquisition of Equitrans Midstream Corporation (Equitrans) a full quarter ahead of plan, resulting in approximately $150 million of savings relative to initial expectations; accelerates synergy capture and the commencement of deleveraging plan
- Sales volume of 508 Bcfe, above the high-end of guidance driven by continued operational efficiency gains and strong well performance
- Capital expenditures of $576 million, below the midpoint of guidance despite faster activity pace; recent developments show a step change improvement in completion efficiency with potential for structurally lower well costs
- Total per unit operating costs of $1.40 per Mcfe, below the low-end of guidance driven by lower-than-expected LOE and SG&A expense
- Higher-than-expected southeast gas prices via Mountain Valley Pipeline capacity drove second quarter differential towards the low-end of guidance
- Total debt and net debt(1) down from $5.8 billion and $5.7 billion at year-end 2023 to $5.0 billion and $4.9 billion, respectively, at quarter-end
- Retired approximately $600 million of 2025 senior notes with proceeds from partial non-operated asset monetization; marketing remaining 60% interest in northeast Pennsylvania non-operated assets
- Increased revolving credit facility lender commitments from $2.5 billion to $3.5 billion
- Converted non-binding Heads of Agreement with Glenfarne Energy Transition's Texas LNG to binding Liquefaction Tolling Services Agreement for 2 million tonnes per annum of liquefaction tolling capacity
- Released 2023 ESG report highlighting successful achievement of GHG emission intensity and methane emission intensity targets one year ahead of schedule; on track to achieve net zero by 2025(2)
President and CEO Toby Z. Rice stated, "This week marked a significant milestone in the history of our company as we closed the acquisition of Equitrans, transforming EQT into America's only large-scale, vertically integrated natural gas business. This combination creates a truly differentiated business model among the energy investment landscape, as EQT is now at the low end of the North American natural gas cost curve. We believe our sustainable cost structure advantage, combined with our scale, peer leading inventory depth, low emissions profile and world class operating team offers the best risk-adjusted exposure to natural gas prices of any publicly investable asset in the world."
Rice continued, "We also experienced yet another quarter of operational outperformance as our teams continue to find novel ways to drive incremental efficiency gains. Recent enhancements we've made to supply chain logistics have driven materially faster completion times on our latest wells, which are outpacing our 2023 average completion speed by more than 35%. We see the potential for these gains to drive structurally lower well costs and future maintenance capital requirements."
(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. |
(2) | "Net zero" refers to net zero Scope 1 and Scope 2 greenhouse gas (GHG) emissions, in each case from assets owned by EQT on June 30, 2021 (i.e., when EQT announced its net zero goal). Scope 1 GHG emissions are based exclusively on emissions reported to the U.S. Environmental Protection Agency (EPA) under the EPA's Greenhouse Gas Reporting Program (Subpart W) for the onshore petroleum and natural gas production segment. |
Second Quarter 2024 Financial and Operational Performance
Three Months Ended June 30, | |||||
($ millions, except average realized price and EPS) | 2024 | 2023 | Change | ||
Total sales volume (Bcfe) | 508 | 471 | 37 | ||
Average realized price ($/Mcfe) | $ 2.33 | $ 2.11 | $ 0.22 | ||
Net income (loss) attributable to EQT | $ 10 | $ (67) | $ 77 | ||
Adjusted net loss attributable to EQT (a) | $ (34) | $ (62) | $ 28 | ||
Diluted income (loss) per share (EPS) | $ 0.02 | $ (0.18) | $ 0.20 | ||
Adjusted EPS (a) | $ (0.08) | $ (0.17) | $ 0.09 | ||
Net income (loss) | $ 9 | $ (67) | $ 76 | ||
Adjusted EBITDA (a) | $ 464 | $ 360 | $ 104 | ||
Net cash provided by operating activities | $ 322 | $ 437 | $ (115) | ||
Adjusted operating cash flow (a) | $ 405 | $ 341 | $ 64 | ||
Capital expenditures, excluding noncontrolling interests | $ 576 | $ 470 | $ 106 | ||
Free cash flow (a) | $ (171) | $ (129) | $ (42) | ||
(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. |
Per Unit Operating Costs
The following table presents certain of the Company's production-related operating costs on a per unit basis.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
Per Unit ($/Mcfe) | 2024 | 2023 | 2024 | 2023 | |||
Gathering | $ 0.59 | $ 0.68 | $ 0.58 | $ 0.67 | |||
Transmission | 0.35 | 0.33 | 0.33 | 0.33 | |||
Processing | 0.13 | 0.11 | 0.13 | 0.11 | |||
Lease operating expense (LOE) | 0.12 | 0.08 | 0.11 | 0.07 | |||
Production taxes | 0.08 | 0.04 | 0.09 | 0.04 | |||
Selling, general and administrative (SG&A) | 0.13 | 0.13 | 0.13 | 0.12 | |||
Total per unit operating costs | $ 1.40 | $ 1.37 | $ 1.37 | $ 1.34 | |||
Production depletion | $ 0.90 | $ 0.83 | $ 0.90 | $ 0.83 | |||
Gathering expense per Mcfe decreased for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to the Company's ownership of the gathering assets acquired in the Company's acquisition of THQ Appalachia I Midco, LLC (Tug Hill) and THQ-XcL Holdings I Midco, LLC (XcL Midstream, and such acquisition, the Tug Hill and XcL Midstream Acquisition), the lower gathering cost structure that resulted pursuant to the Company's consolidated gas gathering and compression agreement, dated February 26, 2020, with an affiliate of Equitrans and the Company's acquisition of the remaining minority interest in gathering assets located in northeast Pennsylvania during the second quarter of 2024.
Transmission expense per Mcfe increased for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to credits received from the Texas Eastern Transmission Pipeline in 2023 as well as additional capacity acquired.
Processing expense per Mcfe increased for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to increased processing expense from the liquids-rich assets acquired in the Tug Hill and XcL Midstream Acquisition.
LOE per Mcfe increased for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to increased LOE from the assets acquired in the Tug Hill and XcL Midstream Acquisition.
Production taxes per Mcfe increased for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to increased West Virginia property tax expense from the assets acquired in the Tug Hill and XcL Midstream Acquisition and higher price as well as increased severance tax expense from increased volumes from the assets acquired in the Tug Hill and XcL Midstream Acquisition.
Liquidity
As of June 30, 2024, the Company had $47 million of borrowings outstanding under its revolving credit facility. Total liquidity as of June 30, 2024 was $2.5 billion. On July 22, 2024, the Company amended its revolving credit facility to increase lender commitments thereunder from $2.5 billion to $3.5 billion.
As of June 30, 2024, total debt and net debt(1) were $5.0 billion and $4.9 billion, respectively, compared to $5.8 billion and $5.7 billion, respectively, as of December 31, 2023.
(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. |
2024 Outlook
The Company re-affirms its expectation of 2024 total sales volume of 2,100 – 2,200 Bcfe, which embeds approximately 180 Bcfe of net production curtailments in 2024, including 90 Bcfe in the second half of 2024. The Company maintains its 2024 EQT maintenance capital expenditures guidance of $1,950 – $2,050 million. The Company also maintains its 2024 strategic growth capital expenditures guidance of $200 – $300 million, which targets opportunistic, high-return water, midstream and other infrastructure and land opportunities. Following the close of the Equitrans acquisition, the Company expects to spend $180 – $230 million in the balance of 2024 for Equitrans capital expenditures.
During the third quarter of 2024, the Company plans to turn-in-line (TIL) 40 – 60 net wells. Total sales volume in the third quarter of 2024 is expected to be 510 – 560 Bcfe, inclusive of planned curtailments.
2024 Guidance
Production | Q3 2024 | Q4 2024 | ||
Total sales volume (Bcfe) | 510 – 560 | 515 – 565 | ||
Liquids sales volume, excluding ethane (Mbbl) | 3,600 – 3,900 | 4,000 – 4,300 | ||
Ethane sales volume (Mbbl) | 1,350 – 1,500 | 1,350 – 1,500 | ||
Total liquids sales volume (Mbbl) | 4,950 – 5,400 | 5,350 – 5,800 | ||
Btu uplift (MMBtu/Mcf) | 1.050 – 1.060 | 1.050 – 1.060 | ||
Average differential ($/Mcf) | ($0.80) – ($0.70) | ($0.65) – ($0.55) | ||
Resource Counts | ||||
Top-hole rigs | 1 – 2 | 1 – 2 | ||
Horizontal rigs | 1 – 2 | 1 – 2 | ||
Frac crews | 2 – 3 | 2 – 3 | ||
Midstream Revenue ($ Millions) | ||||
Third-party revenue | $120 – $145 | $140 – $165 | ||
Mountain Valley Pipeline (MVP) ($ Millions) | ||||
Distributions from MVP | – | $60 – $70 | ||
Capital contributions to MVP | $150 – $175 | $30 – $40 | ||
Per Unit Operating Costs ($/Mcfe) | ||||
Gathering | $0.07 – $0.09 | $0.05 – $0.07 | ||
Transmission | $0.44 – $0.46 | $0.45 – $0.47 | ||
Processing | $0.12 – $0.14 | $0.13 – $0.15 | ||
Upstream LOE | $0.14 – $0.16 | $0.12 – $0.14 | ||
Midstream operating and maintenance (O&M) | $0.08 – $0.10 | $0.08 – $0.10 | ||
Production taxes | $0.08 – $0.10 | $0.09 – $0.11 | ||
SG&A | $0.19 – $0.21 | $0.19 – $0.21 | ||
Total per unit operating costs | $1.12 – $1.26 | $1.11 – $1.25 | ||
Capital Expenditures ($ Millions) | ||||
EQT maintenance | $460 – $510 | $425 – $475 | ||
EQT strategic growth | $70 – $95 | $65 – $90 | ||
Equitrans | $90 – $115 | $90 – $115 | ||
Total capital expenditures | $620 – $720 | $580 – $680 |
Second Quarter 2024 Earnings Webcast Information
The Company's conference call with securities analysts begins at 10:00 a.m. ET on Wednesday July 24, 2024 and will be broadcast live via webcast. An accompanying presentation is available on the Company's investor relations website, www.ir.eqt.com under "Events & Presentations." To access the live audio webcast, visit the Company's investor relations website at ir.eqt.com. A replay will be archived and available for one year in the same location after the conclusion of the live event.
Hedging (as of July 19, 2024)
The following table summarizes the approximate volume and prices of the Company's NYMEX hedge positions. The difference between the fixed price and NYMEX price is included in average differential presented in the Company's price reconciliation.
Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | ||||||
Hedged Volume (MMDth) | 291 | 362 | 332 | 336 | 71 | 33 | |||||
Hedged Volume (MMDth/d) | 3.2 | 3.9 | 3.7 | 3.7 | 0.8 | 0.4 | |||||
Swaps – Short | |||||||||||
Volume (MMDth) | 246 | 289 | 144 | 290 | 71 | 33 | |||||
Avg. Price ($/Dth) | $ 3.14 | $ 3.21 | $ 3.42 | $ 3.11 | $ 3.34 | $ 3.35 | |||||
Calls – Long | |||||||||||
Volume (MMDth) | 13 | 13 | — | — | — | — | |||||
Avg. Strike ($/Dth) | $ 3.20 | $ 3.20 | $ — | $ — | $ — | $ — | |||||
Calls – Short | |||||||||||
Volume (MMDth) | 62 | 90 | 188 | 46 | — |
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