|
EQT Reports Third Quarter 2015 Earnings
Low commodity prices continue to overwhelm strong operational
results
EQT Corporation (NYSE: EQT) today announced third quarter 2015 net
income attributable to EQT of $40.8 million, or $0.27 per diluted share
(EPS), compared to third quarter 2014 earnings of $98.6 million,
or $0.65 EPS. The reported results were favorably impacted by the
recognition of gains on natural gas hedging contracts for other periods.
After excluding the impact of these derivative transactions, the
adjusted net loss for the quarter was $50.2 million, or negative
$0.33 adjusted EPS, compared to adjusted EPS of $0.50 in the third
quarter of 2014. Adjusted operating cash flow attributable to EQT was
$156.3 million in the third quarter 2015; $135.0 million lower than the
same period last year. The non-GAAP financial measures are detailed and
reconciled in the Non-GAAP Disclosures section of this news release.
Highlights:
-
Production sales volume was 27% higher
-
Realized natural gas price was 42% lower
-
Midstream net revenue was 17% higher
-
Cash balance of $ 1.7 billion
-
A $1.5 billion undrawn, unsecured revolver
RESULTS BY BUSINESS
EQT Production
EQT Production achieved sales volume of 156.3 Bcfe in the third quarter
2015, 27% higher than the third quarter 2014; however, the increase in
revenue from the higher volume was more than offset by a 55% lower
average realized sales price compared to the same quarter last year, at
$1.21 per Mcfe. Adjusted net operating revenue for the quarter (a
non-GAAP financial measure) was $188.5 million, which was 43% lower.
Adjusted operating loss for the third quarter (a non-GAAP financial
measure) was $72.0 million, compared to adjusted operating income of
$107.9 million last year, excluding noncash gains on hedges of $128.3
million applicable to other periods and $32.1 million, respectively.
EQT Production’s total operating expense for the quarter was $325.2
million, which was $53.5 million higher than the same period last year
and consistent with the significant growth in sales volume.
Depreciation, depletion, and amortization (DD&A) was $30.2 million
higher. Transportation and processing expenses were $16.2 million
higher; exploration expense was $4.6 million higher; selling, general
and administrative (SG&A) was $3.9 million higher and lease operating
expense (LOE), excluding production taxes, was $1.6 million higher.
Production taxes; however, were $3.0 million lower consistent with the
lower average unhedged price.
The Company drilled (spud) 37 gross wells during the third quarter 2015,
which included 31 Marcellus wells, with an average length-of-pay of
5,800 feet; four Upper Devonian wells, with an average length-of-pay of
6,900 feet; and two dry Utica wells, with an average length-of-pay of
4,000 feet.
Guidance
The Company reiterates its 2015 guidance for production sales volume of
595 – 605 Bcfe, including liquids volume of 9,000 – 10,000 MBBls. The
Company also expects an average differential to the NYMEX natural gas
price of negative $0.30 –$0.40 per Mcf for the full year and fourth
quarter 2015.
EQT Midstream
EQT Midstream’s third quarter 2015 operating income was $113.0 million,
21% higher than the third quarter of 2014. Net operating revenue was
$195.3 million, 17% higher than the same period last year. Gathering
revenue was 23% higher at $125.9 million, resulting from an increase in
gathered volume. Transmission revenue increased by 12% to $62.7 million.
Operating expenses for the quarter were $82.2 million, which was $9.4
million higher than the same period last year, consistent with the
growth of the business. Per unit gathering and compression expense
decreased by 14%, as volume continued to grow faster than expenses.
Guidance
The Company is reiterating the 2015 midstream earnings before interest,
taxes, depreciation, and amortization (EBITDA) of $555 – $575 million.
Realized Price
In the third quarter, the Company’s average realized price was $2.12 per
Mcfe, 42% lower than the $3.63 per Mcfe realized in the third quarter
2014 – with $1.21 per Mcfe allocated to EQT Production and $0.91 per
Mcfe allocated to EQT Midstream.
OTHER BUSINESS
EQT Midstream Partners, LP (NYSE: EQM) / EQT GP Holdings, LP (NYSE:
EQGP)
On May 15, 2015, EQT GP Holdings, LP, an EQT Corporation company,
completed its initial public offering. EQT Corporation owns a 90%
limited partner interest in EQGP, which holds EQT’s partnership
interests in EQM.
For the third quarter of 2015, EQT recorded earnings of $59.4 million,
or $0.39 per diluted share, attributable to the publicly held limited
partner interests in EQGP and EQM.
On October 20, 2015, EQM announced a cash distribution to its
unitholders of $0.675 per unit for the third quarter of 2015. EQGP also
announced a cash distribution to its unitholders of $0.104 per unit for
the third quarter of 2015.
The results for EQM and EQGP were released today and are available at www.eqtmidstreampartners.com.
Hedging
During the quarter, the Company added to its hedge position. The
Company's total natural gas production hedge position through 2017 is:
|
|
|
2015**
|
|
2016***
|
|
2017***
|
|
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
|
|
$
|
–
|
|
$
|
3.15
|
|
Average Cap Price per Mcf (NYMEX)*
|
|
$
|
7.19
|
|
$
|
–
|
|
$
|
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 approximately 35 Bcf that includes a NYMEX ceiling
price of $4.88 per 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.
|
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 income by segment, as reported
in this news release, to the consolidated operating income reported in
the Company’s financial statements:
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
EQT Production
|
|
$
|
56,360
|
|
$
|
140,036
|
|
|
$
|
175,317
|
|
|
$
|
561,930
|
|
|
EQT Midstream
|
|
|
113,010
|
|
|
93,600
|
|
|
|
350,942
|
|
|
|
265,196
|
|
|
Unallocated expense
|
|
|
685
|
|
|
(2,133
|
)
|
|
|
(8,411
|
)
|
|
|
(14,061
|
)
|
|
Operating income
|
|
$
|
170,055
|
|
$
|
231,503
|
|
|
$
|
517,848
|
|
|
$
|
813,065
|
|
Unallocated expense is primarily due to certain incentive compensation
and administrative costs that are not allocated to the operating
segments.
Marcellus Horizontal Well Status (cumulative since inception)
|
|
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|
|
|
9/30/15
|
|
6/30/15
|
|
3/31/15
|
|
12/31/14
|
|
9/30/14
|
|
Wells spud
|
|
828
|
|
797
|
|
759
|
|
722
|
|
669
|
|
Wells online
|
|
642
|
|
604
|
|
560
|
|
533
|
|
479
|
|
Wells complete, not online
|
|
65
|
|
60
|
|
45
|
|
21
|
|
31
|
|
Frac stages (spud wells)*
|
|
22,232
|
|
21,045
|
|
20,044
|
|
18,802
|
|
16,591
|
|
Frac stages online
|
|
15,904
|
|
14,664
|
|
13,394
|
|
12,472
|
|
10,653
|
|
Frac stages complete, not online
|
|
2,075
|
|
1,972
|
|
1,347
|
|
592
|
|
1,117
|
*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 September 30, 2015.
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
(thousands, except per share information)
|
|
|
2015
|
|
|
|
2014
|
|
|
Net income attributable to EQT, as reported
|
|
$
|
40,787
|
|
|
$
|
98,555
|
|
|
Add back / (deduct):
|
|
|
|
|
|
Asset impairments
|
|
|
6,576
|
|
|
|
2,210
|
|
|
Hedging ineffectiveness gain
|
|
|
–
|
|
|
|
(34,348
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
(161,263
|
)
|
|
|
(1,821
|
)
|
|
Cash settlements received on derivatives not designated as hedges
|
|
|
32,099
|
|
|
|
1,604
|
|
|
Premiums paid for derivatives that settled during the period
|
|
|
(1,029
|
)
|
|
|
–
|
|
|
Tax impact (26.4% and 32.8% effective tax rate for 2015 and 2014,
respectively)
|
|
|
32,623
|
|
|
|
10,604
|
|
|
Adjusted net (loss) income attributable to EQT
|
|
$
|
(50,207
|
)
|
|
$
|
76,804
|
|
|
Diluted weighted average common shares outstanding
|
|
|
152,854
|
|
|
|
152,330
|
|
|
Diluted EPS, as adjusted
|
|
$
|
(0.33
|
)
|
|
$
|
0.50
|
|
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 the
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA (a non-GAAP supplemental financial measure reconciled below).
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
table below reconciles 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 September
30, 2015.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
Net Income
|
|
$
|
100,233
|
|
|
$
|
132,294
|
|
|
$
|
385,148
|
|
|
$
|
481,493
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization
|
|
|
208,227
|
|
|
|
175,578
|
|
|
|
599,791
|
|
|
|
484,908
|
|
|
Deferred income tax expense (benefit)
|
|
|
116,967
|
|
|
|
47,724
|
|
|
|
(78,958
|
)
|
|
|
102,301
|
|
|
Asset impairments, non-cash
|
|
|
6,576
|
|
|
|
2,210
|
|
|
|
35,004
|
|
|
|
8,729
|
|
|
Hedging ineffectiveness gain
|
|
|
–
|
|
|
|
(34,348
|
)
|
|
|
–
|
|
|
|
(13,075
|
)
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(161,263
|
)
|
|
|
(1,821
|
)
|
|
|
(209,114
|
)
|
|
|
16,058
|
|
|
Cash settlements received (paid) on derivatives not designated as
hedges
|
|
|
32,099
|
|
|
|
1,604
|
|
|
|
70,874
|
|
|
|
(9,232
|
)
|
|
Non-cash gain on Nora asset exchange
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(37,749
|
)
|
|
Non-cash gain on disposition
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(3,598
|
)
|
|
Non-cash incentive compensation
|
|
|
13,193
|
|
|
|
12,262
|
|
|
|
41,622
|
|
|
|
33,072
|
|
|
Other items, net
|
|
|
(3,262
|
)
|
|
|
(170
|
)
|
|
|
(8,538
|
)
|
|
|
(4,381
|
)
|
|
Operating cash flow:
|
|
$
|
312,770
|
|
|
$
|
335,333
|
|
|
$
|
835,829
|
|
|
$
|
1,058,526
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back (deduct) :
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
(68,579
|
)
|
|
|
41,192
|
|
|
|
64,389
|
|
|
|
83,419
|
|
|
Net cash provided by operating activities
|
|
$
|
244,191
|
|
|
$
|
376,525
|
|
|
$
|
900,218
|
|
|
$
|
1,141,945
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands)
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
Operating cash flow (a non-GAAP measure reconciled above)
|
|
$
|
312,770
|
|
|
$
|
335,333
|
|
|
$
|
835,829
|
|
|
$
|
1,058,526
|
|
|
(Deduct) add back
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA (a)
|
|
|
(80,561
|
)
|
|
|
(45,440
|
)
|
|
|
(218,981
|
)
|
|
|
(101,830
|
)
|
|
Exploration expense (cash)
|
|
|
1,600
|
|
|
|
1,396
|
|
|
|
5,014
|
|
|
|
3,748
|
|
|
Drilling program reduction charges, cash
|
|
|
3,529
|
|
|
|
–
|
|
|
|
8,697
|
|
|
|
–
|
|
|
Current taxes on transactions (b)
|
|
|
–
|
|
|
|
–
|
|
|
|
150,425
|
|
|
|
72,788
|
|
|
Non-recurring tax benefits
|
|
|
(81,031
|
)
|
|
|
–
|
|
|
|
(50,669
|
)
|
|
|
–
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
156,307
|
|
|
$
|
291,289
|
|
|
$
|
730,315
|
|
|
$
|
1,033,232
|
|
|
(a)
|
|
Adjusted EQT Midstream Partners EBITDA and noncontrolling interest
portion of adjusted EQT Midstream Partners EBITDA are non-GAAP
supplemental financial measures reconciled below.
|
|
(b)
|
|
Amount represents current tax expense related to the sale of the
Northern West Virginia Marcellus Gathering System (NWV Gathering)
and the sale of EQGP units in its initial public offering.
|
EQT Production Adjusted Net Operating Revenues
The table below reconciles EQT Production adjusted net operating
revenues, a non-GAAP supplemental financial measure, to EQT Corporation
total operating revenues, as derived from the statements of consolidated
income to be included in EQT’s report on Form 10-Q for the quarter ended
September 30, 2015.
EQT reports gain (loss) for hedging ineffectiveness and gain (loss) on
derivatives not designated as hedges within total operating revenues in
the statements of consolidated income.
EQT Production adjusted net operating revenues 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 net operating revenues should not be considered as an
alternative to EQT Corporation total operating revenues presented in
accordance with GAAP. EQT Production adjusted net operating revenues as
presented excludes the revenue impact of changes in the fair value of
derivative instruments prior to settlement and is net of transportation
and processing costs. Management utilizes EQT Production adjusted net
operating revenues to evaluate earnings trends because the measure
reflects only the impact of settled derivative contracts and thus does
not burden the revenue from natural gas sales with the often volatile
fluctuations in the fair value of derivatives prior to settlement. EQT
Production adjusted net operating revenues also reflects third-party
transportation and processing costs as deductions from operating
revenues because management considers the net price realized for sales
of products, after the costs of processing and transporting the product
to sales points, to be an indicator of the quality of earnings
period-over-period. Management also considers this to be an indicator of
how well EQT is utilizing its transportation and processing contracts.
The sale price for natural gas is significantly impacted by the market
in which the gas is sold and the expense incurred to transport and
process the gas is important in evaluating the quality of earnings
period-over-period because the cost of reaching a higher priced market
may exceed the incremental price benefit of that market as compared to
the market where the gas is produced. This is particularly important to
natural gas producers in the Appalachian Basin given pipeline
constraints and the impact on pricing in the area. Management further
believes that EQT Production adjusted net operating revenues as
presented provides useful information for investors for evaluating
period-over-period earnings and is consistent with industry practices.
|
Calculation of EQT Production adjusted net
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
operating revenues
|
|
September 30,
|
|
September 30,
|
|
$ in thousands (unless noted)
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
EQT Production total operating revenues, as reported on segment page
|
|
$
|
381,538
|
|
|
$
|
411,687
|
|
|
$
|
1,127,319
|
|
|
$
|
1,297,593
|
|
|
(Deduct) add back:
|
|
|
|
|
|
|
|
|
|
Gain for hedging ineffectiveness
|
|
|
–
|
|
|
|
(34,348
|
)
|
|
|
–
|
|
|
|
(13,075
|
)
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(160,458
|
)
|
|
|
(832
|
)
|
|
|
(209,881
|
)
|
|
|
13,036
|
|
|
Net cash settlements received (paid) on derivatives not designated
as hedges
|
|
|
33,170
|
|
|
|
3,040
|
|
|
|
69,714
|
|
|
|
(5,895
|
)
|
|
Premiums paid for derivatives that settled during the period
|
|
|
(1,029
|
)
|
|
|
–
|
|
|
|
(3,054
|
)
|
|
|
–
|
|
|
EQT Production transportation and processing, as reported on segment
page
|
|
|
(64,739
|
)
|
|
|
(48,561
|
)
|
|
|
(187,008
|
)
|
|
|
(144,622
|
)
|
|
EQT Production adjusted net operating revenues, a non-GAAP measure
|
|
$
|
188,482
|
|
|
$
|
330,986
|
|
|
$
|
797,090
|
|
|
$
|
1,147,037
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales volumes (MMcfe)
|
|
|
156,296
|
|
|
|
123,342
|
|
|
|
448,545
|
|
|
|
339,601
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
1.21
|
|
|
$
|
2.69
|
|
|
$
|
1.78
|
|
|
$
|
3.38
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production total operating revenues, as reported on segment page
|
|
$
|
381,538
|
|
|
$
|
411,687
|
|
|
$
|
1,127,319
|
|
|
$
|
1,297,593
|
|
|
EQT Midstream total operating revenues, as reported on segment page
|
|
|
198,579
|
|
|
|
173,856
|
|
|
|
599,235
|
|
|
|
502,427
|
|
|
Less: intersegment revenues, net
|
|
|
(3,102
|
)
|
|
|
(6,820
|
)
|
|
|
(7,592
|
)
|
|
|
(33,504
|
)
|
|
EQT Corporation total operating revenues, as reported in accordance
with GAAP
|
|
$
|
577,015
|
|
|
$
|
578,723
|
|
|
$
|
1,718,962
|
|
|
$
|
1,766,516
|
|
EQT Production Adjusted Operating (Loss) Income
The table below reconciles EQT Production adjusted operating
(loss) income, 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
quarter ended September 30, 2015.
EQT reports gain (loss) for hedging ineffectiveness and gain (loss) on
derivatives not designated as hedges within operating income in the
statements of consolidated income.
EQT Production adjusted operating (loss) income 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 (loss) income should not be considered as an
alternative to EQT Corporation operating income presented in accordance
with GAAP. EQT Production adjusted operating (loss) income as presented
excludes the revenue impact of changes in the fair value of derivative
instruments prior to settlement. Management utilizes EQT Production
adjusted operating (loss) income 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. Management further believes that EQT Production adjusted
operating (loss) income as presented provides useful information for
investors for evaluating period-over-period earnings.
|
|
|
Three Month Ended
|
|
|
|
September 30,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
EQT Corporation operating income, as reported in accordance with GAAP
|
|
$
|
170,055
|
|
|
$
|
231,503
|
|
|
Add back / (deduct):
|
|
|
|
|
|
Unallocated expense
|
|
|
(685
|
)
|
|
|
2,133
|
|
|
EQT Midstream operating income, as reported on segment page
|
|
|
(113,010
|
)
|
|
|
(93,600
|
)
|
|
EQT Production operating income, as reported on segment page
|
|
$
|
56,360
|
|
|
$
|
140,036
|
|
|
Add back / (deduct):
|
|
|
|
|
|
Gain for hedging ineffectiveness
|
|
|
–
|
|
|
|
(34,348
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
(160,458
|
)
|
|
|
(832
|
)
|
|
Net cash settlements received on derivatives not designated as hedges
|
|
|
33,170
|
|
|
|
3,040
|
|
|
Premiums paid for derivatives that settled during the period
|
|
|
(1,029
|
)
|
|
|
–
|
|
|
EQT Production adjusted operating (loss) income
|
|
$
|
(71,957
|
)
|
|
$
|
107,896
|
|
Adjusted EQT Midstream Partners EBITDA and Noncontrolling Interest
Portion of 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 equity income, other income,
capital lease payments, and adjusted EBITDA attributable to the Jupiter
Gathering System (Jupiter) and NWV Gathering prior to acquisition. As
used in this news release, noncontrolling interest portion of adjusted
EQT Midstream Partners EBITDA means the portion of adjusted EQT
Midstream Partners EBITDA attributable to the noncontrolling interest
unit holders of EQM and EQT GP Holdings, LP (EQGP). Adjusted EQT
Midstream Partners EBITDA and noncontrolling interest portion of
adjusted EQT Midstream Partners EBITDA are non-GAAP supplemental
financial measures 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 and
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA provide useful information to investors in assessing the
Company's financial condition and results of operations. Adjusted EQT
Midstream Partners EBITDA and noncontrolling interest portion of
adjusted EQT Midstream Partners EBITDA should not be considered as
alternatives 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 and noncontrolling interest
portion of adjusted EQT Midstream Partners EBITDA have important
limitations as analytical tools because they exclude some, but not all,
items that affect EQM's net income. Additionally, because adjusted EQT
Midstream Partners EBITDA and noncontrolling interest portion of
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 and noncontrolling interest
portion of adjusted EQT Midstream Partners EBITDA may not be comparable
to similarly titled measures of other companies, thereby diminishing
their utility. The table below reconciles adjusted EQT Midstream
Partners EBITDA and noncontrolling interest portion of adjusted EQT
Midstream Partners EBITDA to EQM’s net income, as derived from the
statements of consolidated operations to be included in EQM’s report on
Form 10-Q for the quarter ended September 30, 2015.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(thousands, unless noted)
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
Net Income, EQT Midstream Partners
|
|
$
|
94,116
|
|
|
$
|
67,701
|
|
|
$
|
280,741
|
|
|
$
|
181,667
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
11,264
|
|
|
$
|
8,660
|
|
|
$
|
34,361
|
|
|
$
|
20,944
|
|
|
Depreciation and amortization
|
|
|
13,217
|
|
|
|
12,545
|
|
|
|
37,402
|
|
|
|
32,978
|
|
|
Income tax expense
|
|
|
–
|
|
|
|
6,311
|
|
|
|
6,703
|
|
|
|
25,906
|
|
|
Non-cash long-term compensation expense
|
|
|
328
|
|
|
|
779
|
|
|
|
1,133
|
|
|
|
2,584
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Equity income
|
|
$
|
(753
|
)
|
|
$
|
–
|
|
|
$
|
(1,147
|
)
|
|
$
|
–
|
|
|
Other income, net
|
|
|
(1,716
|
)
|
|
|
(806
|
)
|
|
|
(3,599
|
)
|
|
|
(1,634
|
)
|
|
Capital lease payments for AVC
|
|
|
(3,078
|
)
|
|
|
(3,565
|
)
|
|
|
(15,349
|
)
|
|
|
(14,760
|
)
|
|
Adjusted EBITDA attributable to Jupiter prior to acquisition(a)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(34,733
|
)
|
|
Adjusted EBITDA attributable to NWV Gathering prior to acquisition(b)
|
|
|
–
|
|
|
|
(20,178
|
)
|
|
|
(19,841
|
)
|
|
|
(43,236
|
)
|
|
Adjusted EQT Midstream Partners EBITDA
|
|
$
|
113,378
|
|
|
$
|
71,447
|
|
|
$
|
320,404
|
|
|
$
|
169,716
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest ownership percentage(c)
|
|
|
71.1
|
%
|
|
|
63.6
|
%
|
|
|
68.3
|
%
|
|
|
60.0
|
%
|
|
Noncontrolling interest portion of Adjusted EQT Midstream Partners
EBITDA
|
|
$
|
80,561
|
|
|
$
|
45,440
|
|
|
$
|
218,981
|
|
|
$
|
101,830
|
|
|
(a)
|
|
Adjusted EBITDA attributable to Jupiter for the nine months ended
September 30, 2014 was calculated as net income of $20.1 million,
plus depreciation and amortization expense of $2.1 million, plus
income tax expense of $12.5 million.
|
|
(b)
|
|
Adjusted EBITDA attributable to NWV Gathering for the nine months
ended September 30, 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. Adjusted EBITDA
attributable to NWV Gathering for the three and nine months ended
September 30, 2014 was calculated as net income of $11.2 million and
$23.6 million, respectively, plus depreciation and amortization
expense of $2.7 million and $6.2 million, respectively, plus income
tax expense of $6.3 million and $13.4 million, respectively.
|
|
(c)
|
|
Represents weighted average noncontrolling interest ownership
percentage for the period, which considers the impact of the 9.9%
noncontrolling interest in EQGP.
|
Q3 2015 Webcast Information
The Company's conference call with securities analysts begins at 10:30
a.m. Eastern Time today and will be broadcast live via the Company's web
site at http://www.eqt.com,
and on the investor information page of the Company’s web site at http://ir.eqt.com,
with a replay available for seven days following the call.
EQT Midstream Partners, LP and EQT GP Holdings, LP, for which EQT
Corporation is the parent company, will also host a joint earnings
teleconference with security analysts today, beginning at 11:30 a.m.
Eastern Time. The call will be broadcast live via http://www.eqtmidstreampartners.com,
with a replay available for seven days following the call.
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.
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.
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.
Cash balance and revolver availability are as of September 30, 2015.
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, 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
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; projected
firm pipeline capacity and sales; 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; monetization transactions, including asset
sales (dropdowns) to EQM and other asset sales, joint ventures or other
transactions involving the Company’s assets; the Company’s use of
proceeds from the initial public offering of EQGP common units; the
projected cash flows resulting from the Company’s limited partner
interests in EQGP; internal rate of return (IRR) and returns per well;
projected capital expenditures; the amount and timing of any repurchases
under the Company’s share repurchase authorization; liquidity and
financing requirements, including funding sources and availability;
projected operating revenues, cash flows and cash-on-hand; hedging
strategy; the effects of government regulation and litigation; the
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 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
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(Thousands, except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
358,977
|
|
|
$
|
526,521
|
|
|
$
|
1,306,684
|
|
|
$
|
1,596,894
|
|
|
Pipeline and marketing services
|
|
56,775
|
|
|
50,381
|
|
|
203,164
|
|
|
185,680
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
161,263
|
|
|
1,821
|
|
|
209,114
|
|
|
(16,058
|
)
|
|
Total operating revenues
|
|
577,015
|
|
|
578,723
|
|
|
1,718,962
|
|
|
1,766,516
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
65,033
|
|
|
49,121
|
|
|
187,709
|
|
|
146,019
|
|
|
Operation and maintenance
|
|
32,385
|
|
|
27,944
|
|
|
92,693
|
|
|
80,752
|
|
|
Production
|
|
32,505
|
|
|
33,840
|
|
|
95,353
|
|
|
97,662
|
|
|
Exploration
|
|
8,177
|
|
|
3,606
|
|
|
32,153
|
|
|
12,477
|
|
|
Selling, general and administrative
|
|
60,633
|
|
|
57,131
|
|
|
193,415
|
|
|
169,382
|
|
|
Depreciation, depletion and amortization
|
|
208,227
|
|
|
175,578
|
|
|
599,791
|
|
|
484,908
|
|
|
Total operating expenses
|
|
406,960
|
|
|
347,220
|
|
|
1,201,114
|
|
|
991,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale / exchange of assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,749
|
|
|
Operating income
|
|
170,055
|
|
|
231,503
|
|
|
517,848
|
|
|
813,065
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
2,661
|
|
|
1,004
|
|
|
6,289
|
|
|
6,134
|
|
|
Interest expense
|
|
36,547
|
|
|
35,717
|
|
|
110,596
|
|
|
99,558
|
|
|
Income before income taxes
|
|
136,169
|
|
|
196,790
|
|
|
413,541
|
|
|
719,641
|
|
|
Income tax expense
|
|
35,936
|
|
|
64,496
|
|
|
28,393
|
|
|
239,920
|
|
|
Income from continuing operations
|
|
100,233
|
|
|
132,294
|
|
|
385,148
|
|
|
479,721
|
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,772
|
|
|
Net income
|
|
100,233
|
|
|
132,294
|
|
|
385,148
|
|
|
481,493
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
59,446
|
|
|
33,739
|
|
|
165,398
|
|
|
79,824
|
|
|
Net income attributable to EQT Corporation
|
|
$
|
40,787
|
|
|
$
|
98,555
|
|
|
$
|
219,750
|
|
|
$
|
401,669
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
40,787
|
|
|
$
|
98,555
|
|
|
$
|
219,750
|
|
|
$
|
399,897
|
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,772
|
|
|
Net income
|
|
$
|
40,787
|
|
|
$
|
98,555
|
|
|
$
|
219,750
|
|
|
$
|
401,669
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
152,551
|
|
|
151,557
|
|
|
152,326
|
|
|
151,533
|
|
|
Income from continuing operations
|
|
$
|
0.27
|
|
|
$
|
0.65
|
|
|
$
|
1.44
|
|
|
$
|
2.64
|
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
Net income
|
|
$
|
0.27
|
|
|
$
|
0.65
|
|
|
$
|
1.44
|
|
|
$
|
2.65
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
152,854
|
|
|
152,330
|
|
|
152,789
|
|
|
152,468
|
|
|
Income from continuing operations
|
|
$
|
0.27
|
|
|
$
|
0.65
|
|
|
$
|
1.44
|
|
|
$
|
2.62
|
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
Net income
|
|
$
|
0.27
|
|
|
$
|
0.65
|
|
|
$
|
1.44
|
|
|
$
|
2.63
|
|
|
Dividends declared per common share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
EQT CORPORATION
|
|
PRICE RECONCILIATION
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
(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 $0.18
per Mcf for the nine months ended September 30, 2015 and 2014,
respectively, for the sale of unused pipeline capacity.
|
|
UNIT COSTS
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
Sept 30,
|
Sept 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Production segment costs: ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
LOE
|
|
$
|
0.12
|
|
$
|
0.14
|
|
$
|
0.12
|
|
$
|
0.14
|
|
Production taxes
|
|
|
0.09
|
|
|
0.14
|
|
|
0.09
|
|
|
0.15
|
|
SG&A
|
|
|
0.23
|
|
|
0.26
|
|
|
0.24
|
|
|
0.27
|
|
|
|
$
|
0.44
|
|
$
|
0.54
|
|
$
|
0.45
|
|
$
|
0.56
|
|
Midstream segment costs: ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
Gathering and transmission
|
|
$
|
0.17
|
|
$
|
0.18
|
|
$
|
0.17
|
|
$
|
0.20
|
|
SG&A
|
|
|
0.13
|
|
|
0.15
|
|
|
0.13
|
|
|
0.15
|
|
|
|
$
|
0.30
|
|
$
|
0.33
|
|
$
|
0.30
|
|
$
|
0.35
|
|
Total ($/Mcfe)
|
|
$
|
0.74
|
|
$
|
0.87
|
|
$
|
0.75
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
EQT PRODUCTION
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
|
Horizontal Marcellus Play (a)
|
|
|
129,645
|
|
|
97,861
|
|
|
373,522
|
|
|
266,835
|
|
|
Horizontal Huron Play
|
|
|
9,643
|
|
|
9,187
|
|
|
28,177
|
|
|
24,165
|
|
|
Other (b)
|
|
|
17,008
|
|
|
16,294
|
|
|
46,846
|
|
|
48,601
|
|
|
Total production sales volumes (c)
|
|
|
156,296
|
|
|
123,342
|
|
|
448,545
|
|
|
339,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
|
1,699
|
|
|
1,341
|
|
|
1,643
|
|
|
1,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
1.21
|
|
$
|
2.69
|
|
$
|
1.78
|
|
$
|
3.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$
|
0.12
|
|
$
|
0.14
|
|
$
|
0.12
|
|
$
|
0.14
|
|
|
Production taxes ($/Mcfe)
|
|
$
|
0.09
|
|
$
|
0.14
|
|
$
|
0.09
|
|
$
|
0.15
|
|
|
Production depletion ($/Mcfe)
|
|
$
|
1.16
|
|
$
|
1.23
|
|
$
|
1.16
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (DD&A) (thousands):
|
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
$
|
181,857
|
|
$
|
151,576
|
|
$
|
521,741
|
|
$
|
413,794
|
|
|
Other DD&A
|
|
|
2,420
|
|
|
2,455
|
|
|
7,330
|
|
|
7,727
|
|
|
Total DD&A (thousands)
|
|
$
|
184,277
|
|
$
|
154,031
|
|
$
|
529,071
|
|
$
|
421,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands)
|
|
$
|
451,358
|
|
$
|
511,971
|
|
$
|
1,453,647
|
|
$
|
1,855,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Production sales
|
|
$
|
221,080
|
|
$
|
376,507
|
|
$
|
917,438
|
|
$
|
1,297,554
|
|
|
Gain for hedging ineffectiveness
|
|
|
—
|
|
|
|
34,348
|
|
|
—
|
|
|
13,075
|
|
|
Gain (loss) on derivatives not designated as hedges
|
|
|
160,458
|
|
|
832
|
|
|
209,881
|
|
|
(13,036
|
)
|
|
Total operating revenues
|
|
|
381,538
|
|
|
411,687
|
|
|
1,127,319
|
|
|
1,297,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
64,739
|
|
|
48,561
|
|
|
187,008
|
|
|
144,622
|
|
|
LOE, excluding production taxes
|
|
|
18,808
|
|
|
17,166
|
|
|
53,615
|
|
|
47,526
|
|
|
Production taxes
|
|
|
13,698
|
|
|
16,674
|
|
|
41,739
|
|
|
50,136
|
|
|
Exploration expense
|
|
|
8,163
|
|
|
3,593
|
|
|
32,128
|
|
|
12,444
|
|
|
Selling, general and administrative (SG&A)
|
|
|
35,493
|
|
|
31,626
|
|
|
108,441
|
|
|
90,400
|
|
|
DD&A
|
|
|
184,277
|
|
|
154,031
|
|
|
529,071
|
|
|
421,521
|
|
|
Total operating expenses
|
|
|
325,178
|
|
|
271,651
|
|
|
952,002
|
|
|
766,649
|
|
|
Gain on sale / exchange of assets
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,986
|
|
|
Operating income
|
|
$
|
56,360
|
|
$
|
140,036
|
|
$
|
175,317
|
|
$
|
561,930
|
|
|
(a)
|
|
Includes Upper Devonian wells.
|
|
(b)
|
|
Includes 1,731 MMcfe of Dry Utica sales volume for the quarter and
nine months ended September 30, 2015.
|
|
(c)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods.
|
|
|
|
|
|
|
|
EQT MIDSTREAM
|
|
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Net operating revenues (thousands):
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
|
|
|
|
|
|
|
|
Firm reservation fee revenues
|
|
$
|
68,205
|
|
$
|
13,936
|
|
$
|
194,869
|
|
$
|
24,945
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
8,815
|
|
|
16,385
|
|
|
25,567
|
|
|
27,492
|
|
Usage fees under interruptible contracts
|
|
|
48,899
|
|
|
72,116
|
|
|
157,277
|
|
|
230,580
|
|
Total volumetric based fee revenues
|
|
|
57,714
|
|
|
88,501
|
|
|
182,844
|
|
|
258,072
|
|
Total gathering revenues
|
|
$
|
125,919
|
|
$
|
102,437
|
|
$
|
377,713
|
|
$
|
283,017
|
|
|
|
|
|
|
|
|
|
|
|
Transmission
|
|
|
|
|
|
|
|
|
|
Firm reservation fee revenues
|
|
$
|
50,657
|
|
$
|
39,409
|
|
$
|
162,602
|
|
$
|
120,061
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
11,129
|
|
|
13,592
|
|
|
29,706
|
|
|
33,509
|
|
Usage fees under interruptible contracts
|
|
|
897
|
|
|
2,794
|
|
|
3,422
|
|
|
5,854
|
|
Total volumetric based fee revenues
|
|
|
12,026
|
|
|
16,386
|
|
|
33,128
|
|
|
39,363
|
|
Total transmission revenues
|
|
$
|
62,683
|
|
$
|
55,795
|
|
$
|
195,730
|
|
$
|
159,424
|
|
|
|
|
|
|
|
|
|
|
|
Storage, marketing and other net revenues
|
|
|
6,657
|
|
|
8,245
|
|
|
17,792
|
|
|
25,085
|
|
Total net operating revenues
|
|
$
|
195,259
|
|
$
|
166,477
|
|
$
|
591,235
|
|
$
|
467,526
|
|
|
|
|
|
|
|
|
|
|
|
Gathered volumes (BBtu per day):
|
|
|
|
|
|
|
|
|
|
Firm reservation
|
|
|
1,150
|
|
|
231
|
|
|
1,085
|
|
|
129
|
|
Volumetric based services (b)
|
|
|
947
|
|
|
1,455
|
|
|
967
|
|
|
1,399
|
|
Total gathered volumes
|
|
|
2,097
|
|
|
1,686
|
|
|
2,052
|
|
|
1,528
|
|
|
|
|
|
|
|
|
|
|
|
Gathering and compression expense ($/MMBtu)
|
|
$
|
0.12
|
|
$
|
0.14
|
|
$
|
0.12
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
Transmission pipeline throughput (BBtu per day):
|
|
|
|
|
|
|
|
|
|
Firm capacity reservation
|
|
|
1,751
|
|
|
1,219
|
|
|
1,866
|
|
|
1,265
|
|
Volumetric based services (b)
|
|
|
300
|
|
|
598
|
|
|
257
|
|
|
435
|
|
Total transmission pipeline throughput
|
|
|
2,051
|
|
|
1,817
|
|
|
2,123
|
|
|
1,700
|
|
|
|
|
|
|
|
|
|
|
|
Average contracted firm transmission reservation commitments (BBtu
per day)
|
|
|
2,390
|
|
|
1,784
|
|
|
2,567
|
|
|
1,847
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands)
|
|
$
|
130,902
|
|
$
|
136,589
|
|
$
|
368,019
|
|
$
|
333,813
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
$
|
198,579
|
|
$
|
173,856
|
|
$
|
599,235
|
|
$
|
502,427
|
|
Purchased gas costs
|
|
|
3,320
|
|
|
7,379
|
|
|
8,000
|
|
|
34,901
|
|
Total net operating revenues
|
|
|
195,259
|
|
|
166,477
|
|
|
591,235
|
|
|
467,526
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operation and maintenance (O&M)
|
|
|
32,371
|
|
|
27,844
|
|
|
92,399
|
|
|
80,442
|
|
SG&A
|
|
|
26,048
|
|
|
23,324
|
|
|
77,477
|
|
|
64,803
|
|
DD&A
|
|
|
23,830
|
|
|
21,709
|
|
|
70,417
|
|
|
63,848
|
|
Total operating expenses
|
|
|
82,249
|
|
|
72,877
|
|
|
240,293
|
|
|
209,093
|
|
Gain on sale / exchange of assets
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,763
|
|
Operating income
|
|
$
|
113,010
|
|
$
|
93,600
|
|
$
|
350,942
|
|
$
|
265,196
|
|
(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/20151022005202/en/ Copyright Business Wire 2015
Source: Business Wire
(October 22, 2015 - 6:30 AM EDT)
News by QuoteMedia
www.quotemedia.com
|
