From Pittsburgh Business Times

Activist shareholders Toby Rice and Derek Rice, locked in a public battle for control of EQT Corp. laid out in greater detail their plans for the Pittsburgh-based driller. The Rices claimed EQT’s management and board failed in vision, design and execution.

The Rice brothers, shareholders of EQT (NYSE: EQT) after Rice Energy’s acquisition in 2017, said they went public after their offers to help and their concerns went largely ignored. Toby Rice, who had been Rice Energy’s president and COO, told a conference call with analysts and journalists that EQT was plagued by what he called baggage: Bureaucracy, silos and older systems.

“These are issues that the company must address in order to reach its full potential,” said Toby Rice.

Toby Rice said EQT has the highest costs among its peers in the Appalachian basin and the current management team — led by CEO Rob McNally and Chairman Jim Rohr — don’t have the experience or track record. He said up to 15 former Rice Energy executives are ready to jump in and a new board is required. Candidates who have been put up for election have been picked to run before the next annual meeting if EQT doesn’t accede to the Rice Team’s demands.

“This transformation is not going to come from legacy leadership,” Toby Ricesaid.

The Rices amplified their proposals beyond the previous headline, which had focused on cutting well costs and making EQT a low-cost natural gas producer with an extra free cash flow of $500 million a year beyond EQT’s projections. They said EQT needed to boost its technology and planning to become more data-driven, real-time and optimized with better well-design and execution.

“These are not pie-in-the-sky initiatives but rather opportunities we capitalized on while running Rice Energy,” Toby Rice said.

They also pushed back on EQT’s claims, made during a conference call last month, that the Appalachian basin had changed, particularly when it comes to service costs, since the third quarter of 2017 when Rice Energy was still in business. Toby Rice said the team has a firm understanding of service costs and presented data that EQT’s well costs are up 5 percent since 2017 while other natural gas companies have seen their service costs drop 36 percent.

“We are highly confident that Rice’s results can be replicated across EQT’s asset base because it’s essentially the same asset,” Toby Rice said.

EQT, which responded in depth to the Rice plan last month after the board presentation, released a brief statement Tuesday afternoon:

“We disagree with the analysis put forward by the Rices and look forward to continuing our discussions directly with shareholders. EQT remains focused on reducing costs and generating substantial free cash flow to create further value for EQT shareholders.”

The call and EQT’s board response sets up a potential showdown in the spring in the voting for director candidates and the company’s annual meeting in Pittsburgh.

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