EQT Reports Third Quarter 2024 Results and Announces Non-Operated Asset Divestiture
EQT reported Q3 2024 financial results and announced the sale of non-operated assets. Key highlights include: sales volume of 581 Bcfe, exceeding guidance despite 35 Bcfe of curtailments; capital expenditures of $558 million, below guidance; and integration of Equitrans Midstream being over 60% complete with $145 million in annualized base synergies. The company announced an agreement to sell remaining non-operated natural gas assets in Northeast Pennsylvania for $1.25 billion in cash. Financial results showed a net loss of $301 million compared to net income of $81 million in Q3 2023, with adjusted EPS of $0.12 versus $0.30 year-over-year.
EQT ha riportato i risultati finanziari del terzo trimestre 2024 e ha annunciato la vendita di attivi non operativi. I punti salienti includono: un volume di vendite di 581 Bcfe, superiore alle previsioni nonostante 35 Bcfe di limitazioni; spese in conto capitale di 558 milioni di dollari, inferiori alle aspettative; e l'integrazione di Equitrans Midstream è oltre il 60% completata con sinergie annualizzate di 145 milioni di dollari. L'azienda ha annunciato un accordo per vendere gli ultimi attivi non operativi di gas naturale in Pennsylvania orientale per 1,25 miliardi di dollari in contante. I risultati finanziari hanno mostrato una perdita netta di 301 milioni di dollari rispetto a un utile netto di 81 milioni di dollari nel Q3 2023, con un EPS rettificato di 0,12 dollari rispetto a 0,30 dollari anno su anno.
EQT reportó los resultados financieros del tercer trimestre de 2024 y anunció la venta de activos no operativos. Los aspectos más destacados incluyen: un volumen de ventas de 581 Bcfe, superando la guía a pesar de 35 Bcfe de limitaciones; gastos de capital de 558 millones de dólares, por debajo de la guía; y la integración de Equitrans Midstream está completada en más del 60% con sinergias básicas anualizadas de 145 millones de dólares. La empresa anunció un acuerdo para vender los activos restantes de gas natural no operativos en el noreste de Pennsylvania por 1.25 mil millones de dólares en efectivo. Los resultados financieros mostraron una pérdida neta de 301 millones de dólares en comparación con un ingreso neto de 81 millones de dólares en el tercer trimestre de 2023, con un EPS ajustado de 0.12 dólares frente a 0.30 dólares año tras año.
EQT는 2024년 3분기 재무 결과를 발표하고 비운영 자산의 매각을 발표했습니다. 주요 내용은 다음과 같습니다: 판매량이 581 Bcfe로, 35 Bcfe의 제한에도 불구하고 가이드를 초과했습니다; 자본 지출이 5억 5800만 달러로, 가이드 아래에 있습니다; 그리고 Equitrans Midstream의 통합이 60% 이상 완료되어 연간 1억 4500만 달러의 기본 시너지가 발생하고 있습니다. 회사는 펜실베이니아 북동부의 남은 비운영 천연 가스 자산을 12억 5000만 달러에 현금으로 판매하기로 합의했습니다. 재무 결과는 2023년 3분기 순이익 8100만 달러에 비해 3억 100만 달러의 순손실을 보여주었으며, 조정 EPS는 0.12 달러로 전년 0.30 달러에 비해 감소했습니다.
EQT a annoncé les résultats financiers du troisième trimestre 2024 et a révélé la vente d'actifs non exploités. Les principaux points à retenir comprennent : un volume de ventes de 581 Bcfe, dépassant les prévisions malgré 35 Bcfe de réductions; des dépenses d'investissement de 558 millions de dollars, en dessous des prévisions; et l'intégration d'Equitrans Midstream étant complétée à plus de 60 % avec des synergies de base annualisées de 145 millions de dollars. L'entreprise a annoncé un accord pour vendre les actifs restants de gaz naturel non exploités dans le nord-est de la Pennsylvanie pour 1,25 milliard de dollars en espèces. Les résultats financiers ont révélé une perte nette de 301 millions de dollars comparée à un bénéfice net de 81 millions de dollars au troisième trimestre 2023, avec un BPA ajusté de 0,12 dollar contre 0,30 dollar d'une année sur l'autre.
EQT hat die finanziellen Ergebnisse für das dritte Quartal 2024 veröffentlicht und den Verkauf von nicht betriebenen Vermögenswerten angekündigt. Zu den wichtigsten Highlights gehören: ein Verkaufsvolumen von 581 Bcfe, das die Prognosen übertrifft, trotz 35 Bcfe an Einschränkungen; Investitionsausgaben von 558 Millionen US-Dollar, die unter den Erwartungen liegen; und die Integration von Equitrans Midstream ist zu über 60 % abgeschlossen, mit jährlichen Basissynergien von 145 Millionen US-Dollar. Das Unternehmen gab bekannt, dass es die verbleibenden nicht betriebenen Erdgasvermögen in Nordost-Pennsylvania für 1,25 Milliarden US-Dollar in bar verkaufen wird. Die finanziellen Ergebnisse zeigten einen Nettoverlust von 301 Millionen US-Dollar im Vergleich zu einem Nettoertrag von 81 Millionen US-Dollar im 3. Quartal 2023, mit einem bereinigten EPS von 0,12 US-Dollar gegenüber 0,30 US-Dollar im Jahresvergleich.
- Integration of Equitrans delivering $145 million in annualized base synergies
- Sales volume exceeded guidance at 581 Bcfe
- Agreement to sell non-operated assets for $1.25 billion cash
- Operating costs below guidance at $1.07 per Mcfe (pro forma)
- Average realized price improved by $0.10 per Mcfe year-over-year
- Net loss of $301 million compared to $81 million profit in Q3 2023
- Adjusted EPS declined to $0.12 from $0.30 year-over-year
- Free cash flow negative at -$121 million
- Total debt increased to $13.8 billion from $5.8 billion at year-end 2023
Insights
The Q3 2024 results reveal significant developments for EQT. Key highlights include: $1.25 billion non-operated asset sale agreement, sales volume of 581 Bcfe exceeding guidance and capital expenditures of
The company's financial position shows some strain with total debt at
The operational metrics demonstrate strong execution with lower-than-expected operating costs at
Market positioning remains solid with increased transmission capacity through MVP and improved gathering costs. The
Third Quarter 2024 and Recent Highlights:
- Integration of Equitrans Midstream Corporation (Equitrans) more than
60% complete just three months following the transaction closing; actions taken to date estimated to result in of annualized base synergies, de-risking more than$145 million 50% of total base plan synergies - Sales volume of 581 Bcfe, above the high-end of guidance driven by continued operational efficiency gains and strong well performance, despite approximately 35 Bcfe of total net curtailments
- Capital expenditures of
; pro forma(1) capital expenditures of$558 million , below the low-end of guidance driven by efficiency gains and lower-than-expected midstream and pad spending$573 million - Differential
per Mcf tighter than mid-point of guidance as tactical curtailments match supply with demand in real-time and maximize value without sacrificing operational efficiencies$0.10 - Total per unit operating costs of
per Mcfe; pro forma(1) total per unit operating costs of$1.14 per Mcfe, below the low-end of guidance driven by lower-than-expected LOE and SG&A expense$1.07 - Announced agreement to sell remaining non-operated natural gas assets in
Northeast Pennsylvania for in cash$1.25 billion - Became the first traditional energy producer of scale in the world to achieve net zero Scope 1 and 2 GHG emissions;(2) eliminated or offset over 900,000 metric tons of CO2e in just five years
President and CEO Toby Z. Rice stated, "The third quarter was hallmarked by the closing of our strategic acquisition of Equitrans, which transformed EQT into America's only large scale, vertically integrated natural gas business. Since closing the Equitrans acquisition, our integration team has been firing on all cylinders, with more than
Rice continued, "Between asset-level cash flows since acquiring this position in 2021, and the two divestitures announced this year, we expect to realize approximately
(1) | "Pro forma" refers to results for the three months ended September 30, 2024 as though the Equitrans Midstream Merger had been completed on July 1, 2024 (see Pro Forma Financial Information below). |
(2) | References herein to EQT being "net zero" are based on (i) EQT's 2023 Scope 1 GHG emissions, as reported to the |
Third Quarter 2024 Financial and Operational Performance
Three Months Ended | |||||
($ millions, except average realized price and EPS) | 2024 | 2023 | Change | ||
Total sales volume (Bcfe) | 581 | 523 | 58 | ||
Average realized price ($/Mcfe) | $ 2.38 | $ 2.28 | $ 0.10 | ||
Net (loss) income attributable to EQT | $ (301) | $ 81 | $ (382) | ||
Adjusted net income attributable to EQT (a) | $ 69 | $ 126 | $ (57) | ||
Diluted (loss) income per share (EPS) | $ (0.54) | $ 0.20 | $ (0.74) | ||
Adjusted EPS (a) | $ 0.12 | $ 0.30 | $ (0.18) | ||
Net (loss) income | $ (297) | $ 81 | $ (378) | ||
Adjusted EBITDA (a) | $ 832 | $ 521 | $ 311 | ||
Net cash provided by operating activities | $ 593 | $ 455 | $ 138 | ||
Adjusted operating cash flow (a) | $ 522 | $ 443 | $ 79 | ||
Capital expenditures | $ (558) | $ (445) | $ (113) | ||
Free cash flow (a) | $ (121) | $ (2) | $ (119) |
(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 consolidated operating costs on a per unit basis.(a)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
Per Unit ($/Mcfe) | 2024 | 2023 | 2024 | 2023 | |||
Gathering | $ 0.20 | $ 0.63 | $ 0.44 | $ 0.66 | |||
Transmission | 0.43 | 0.32 | 0.37 | 0.33 | |||
Processing | 0.13 | 0.11 | 0.13 | 0.11 | |||
Lease operating expense (LOE) | 0.09 | 0.08 | 0.09 | 0.07 | |||
Production taxes | 0.07 | 0.04 | 0.08 | 0.04 | |||
Operating and maintenance (O&M) | 0.07 | — | 0.04 | — | |||
Selling, general and administrative (SG&A) | 0.15 | 0.11 | 0.14 | 0.12 | |||
Operating costs | $ 1.14 | $ 1.29 | $ 1.29 | $ 1.33 | |||
Production depletion | $ 0.91 | $ 0.84 | $ 0.90 | $ 0.83 |
(a) | References in this release to the "Company" refer to EQT Corporation together with its consolidated subsidiaries. As used throughout this release, per unit operating costs reflect, for each period presented, the consolidated amount of such operating cost for the Company (aggregated irrespective of business segment) divided by total sales volume of natural gas and liquids (Mcfe). |
Gathering expense per Mcfe decreased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to the Company's ownership of the gathering and transmission and storage assets acquired in EQT's acquisition of Equitrans in July 2024 (the Equitrans Midstream Merger) and the Company's ownership of the additional interest in gathering assets located in
Transmission expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to additional contracted capacity, including on the Mountain Valley Pipeline (the MVP), which commenced long-term firm capacity obligations on July 1, 2024.
Processing expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to increased volumes from the development of liquids-rich areas and increased processing expense from the liquids-rich assets acquired in EQT's acquisition of upstream assets from THQ Appalachia I, LLC and gathering and processing assets from THQ-XcL Holdings I, LLC in August 2023 (the Tug Hill and XcL Midstream Acquisition).
Production tax expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to increased
O&M expense per Mcfe increased for the three months ended September 30, 2024 as a result of the Company's operation of gathering and transmission and storage assets acquired in the Equitrans Midstream Merger.
SG&A expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due primarily to higher personnel costs due to increased workforce headcount, including as a result of the Equitrans Midstream Merger.
Production depletion expense per Mcfe increased for the three months ended September 30, 2024 compared to the same period in 2023 due to increased sales volume and higher annual depletion rate.
Pro Forma Financial Information
The Equitrans Midstream Merger closed on July 22, 2024, and, as such, the Company's results of operations for the three months ended September 30, 2024 include the results of operations of the assets acquired for the period subsequent to the closing date.
The following table presents certain pro forma combined financial information for the three months ended September 30, 2024 presented as though the Equitrans Midstream Merger had been completed on July 1, 2024. Such pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the Equitrans Midstream Merger occurred on July 1, 2024 nor is such information indicative of future consolidated results of operations.
Three Months Ended September 30, 2024 | |||
EQT Corporation | Pro Forma | ||
Per Unit ($/Mcfe) | |||
Gathering | $ 0.20 | $ 0.10 | |
Transmission | 0.43 | 0.43 | |
Processing | 0.13 | 0.13 | |
LOE | 0.09 | 0.09 | |
Production taxes | 0.07 | 0.07 | |
O&M | 0.07 | 0.08 | |
SG&A | 0.15 | 0.17 | |
Operating costs | $ 1.14 | $ 1.07 | |
Production depletion | $ 0.91 | $ 0.91 | |
Selected financial information ($ in millions) | |||
Pipeline, net marketing services and other revenues | $ 117 | $ 142 | |
Capital contributions to equity method investments | $ (85) | $ (160) | |
Capital expenditures | $ (558) | $ (573) |
(a) | "Pro forma" refers to results for the three months ended September 30, 2024 as though the Equitrans Midstream Merger had been completed on July 1, 2024. |
Liquidity
As of September 30, 2024, the Company had
As of September 30, 2024, total debt and net debt(1) were
(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. |
Sale of Remaining Non-Operated Assets
EQT announced it has entered into an agreement with Equinor
Jefferies LLC acted as a financial advisor to EQT. Kirkland & Ellis LLP is serving as EQT's legal counsel on the transaction.
Fourth Quarter 2024 Guidance
Production | Q4 2024 | |
Total sales volume (Bcfe) | 555 – 605 | |
Liquids sales volume, excluding ethane (Mbbl) | 4,100 – 4,400 | |
Ethane sales volume (Mbbl) | 1,350 – 1,500 | |
Total liquids sales volume (Mbbl) | 5,450 – 5,900 | |
Btu uplift (MMBtu/Mcf) | 1.060 – 1.070 | |
Average differential ($/Mcf) | ( | |
Resource Counts | ||
Top-hole rigs | 1 – 2 | |
Horizontal rigs | 2 | |
Frac crews | 2 – 3 | |
Midstream Revenue ($ Millions) | ||
Third-party revenue | ||
Mountain Valley Pipeline (MVP) ($ Millions) | ||
Distributions from MVP | ||
Capital contributions to MVP | ||
Per Unit Operating Costs ($/Mcfe) | ||
Gathering | ||
Transmission | ||
Processing | ||
Upstream LOE | ||
Production taxes | ||
Midstream operating and maintenance (O&M) | ||
SG&A | ||
Total per unit operating costs | ||
Capital Expenditures ($ Millions) | ||
EQT maintenance | ||
EQT strategic growth | ||
Equitrans | ||
Total capital expenditures |
Third Quarter 2024 Earnings Webcast Information
The Company's conference call with securities analysts begins at 10:00 a.m. ET on Wednesday, October 30, 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 October 25, 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. With the additional hedges added since July and pro-forma for the recently announced non-operated asset sale, the Company is now approximately
Q4 2024 (a) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | |||||
Hedged Volume (MMDth) | 377 | 332 | 336 | 281 | 281 | ||||
Hedged Volume (MMDth/d) | 4.1 | 3.7 | 3.7 | 3.1 | 3.1 | ||||
Swaps – Short | |||||||||
Volume (MMDth) | 304 | 250 | 290 | 281 | 95 | ||||
Avg. Price ($/Dth) | $ 3.18 | $ 3.49 | $ 3.11 | $ 3.26 | $ 3.27 | ||||
Calls – Long | |||||||||
Volume (MMDth) | 13 | — | — | — | — | ||||
Avg. Strike ($/Dth) | $ 3.20 | $ — | $ — | $ — | $ — | ||||
Calls – Short | |||||||||
Volume (MMDth) | 91 | 188 | 46 | — | 137 | ||||
Avg. Strike ($/Dth) | $ 4.23 | $ 4.19 | $ 3.48 | $ — | $ 5.49 | ||||
Puts – Long | |||||||||
Volume (MMDth) | 73 | 82 | 46 | — | 186 | ||||
Avg. Strike ($/Dth) | $ 3.54 | $ 3.19 | $ 2.83 | $ — | $ 3.30 | ||||
Option Premiums | |||||||||
Cash Settlement of Deferred Premiums (millions) | $ — | $ — | $ — | $ — | $ (45) |
(a) October 1 through December 31. |
The Company has also entered into transactions to hedge basis. The Company may use other contractual agreements from time to time to implement its commodity hedging strategy.
Non-GAAP Disclosures
This news release includes the non-GAAP financial measures described below. These non-GAAP measures are intended to provide additional information only and should not be considered as alternatives to, or more meaningful than, net income attributable to EQT Corporation, net income, diluted earnings per share, net cash provided by operating activities, total operating revenues, total debt, or any other measure calculated in accordance with GAAP. Certain items excluded from these non-GAAP measures are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital, tax structure, and historic costs of depreciable assets.
As a result of the completion of the Equitrans Midstream Merger, the Company adjusted its non-GAAP measures of adjusted EBITDA and free cash flow. In particular, adjusted EBITDA (and the related non-GAAP financial measure of adjusted EBITDA attributable to EQT) has been changed to include distributions received from equity method investments, and free cash flow (and the related non-GAAP financial measure of free cash flow attributable to EQT) has been changed to exclude capital contributions to equity method investments. In addition, certain prior period amounts have been recast for comparability.
Adjusted Net Income Attributable to EQT and Adjusted Earnings per Diluted Share (Adjusted EPS)
Adjusted net income attributable to EQT is defined as net income attributable to EQT Corporation, excluding loss (gain) on sale/exchange of long-lived assets, impairments, the revenue impact of changes in the fair value of derivative instruments prior to settlement and certain other items that the Company's management believes do not reflect the Company's core operating performance. Adjusted EPS is defined as adjusted net income attributable to EQT divided by diluted weighted average common shares outstanding. The Company's management believes adjusted net income attributable to EQT and adjusted EPS provide useful information to investors regarding the Company's financial condition and results of operations because it helps facilitate comparisons of operating performance and earnings trends across periods by excluding the impact of items that, in their opinion, do not reflect the Company's core operating performance. For example, adjusted net income attributable to EQT and adjusted EPS reflect only the impact of settled derivative contracts; thus, the measures exclude the often-volatile revenue impact of changes in the fair value of derivative instruments prior to settlement.
The table below reconciles adjusted net income attributable to EQT and adjusted EPS with net income attributable to EQT Corporation and diluted earnings per share, respectively, the most comparable financial measures calculated in accordance with GAAP, each as derived from the Statements of Condensed Consolidated Operations to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands, except per share amounts) | |||||||
Net (loss) income attributable to EQT Corporation | $ (300,823) | $ 81,255 | $ (187,818) | $ 1,233,177 | |||
Add (deduct): | |||||||
Loss (gain) on sale/exchange of long-lived assets | 10,117 | 1,511 | (309,865) | 17,814 | |||
Impairment and expiration of leases | 12,095 | 6,419 | 58,963 | 22,290 | |||
Gain on derivatives | (66,816) | (177,906) | (234,660) | (1,167,144) | |||
Net cash settlements received on derivatives | 288,136 | 255,804 | 1,037,321 | 625,051 | |||
Premiums paid for derivatives that settled during the period | (4,971) | (65,216) | (44,565) | (232,128) | |||
Other expenses (a) | 279,751 | 36,209 | 328,913 | 69,265 | |||
(Income) loss from investments | (34,242) | 546 | (36,674) | (5,310) | |||
Loss (gain) on debt extinguishment | 365 | 1,089 | 5,651 | (55) | |||
Non-cash interest expense (amortization) | 4,206 | 3,538 | 10,309 | 10,397 | |||
Tax impact of non-GAAP items (b) | (118,734) | (17,494) | (228,312) | 159,318 | |||
Adjusted net income attributable to EQT | $ 69,084 | $ 125,755 | $ 399,263 | $ 732,675 | |||
Diluted weighted average common shares outstanding | 563,956 | 416,190 | 484,526 | 401,859 | |||
Diluted EPS | $ (0.54) | $ 0.20 | $ (0.39) | $ 3.08 | |||
Adjusted EPS | $ 0.12 | $ 0.30 | $ 0.82 | $ 1.82 |
(a) | Other expenses consist primarily of transaction costs associated with acquisitions and other strategic transactions, costs related to exploring new venture opportunities and executive severance. For the nine months ended September 30, 2024, other expenses included a nonrecurring corporate litigation expense. |
(b) | The tax impact of non-GAAP items represents the incremental tax expense/benefit that would have been incurred had these items been excluded from net income attributable to EQT Corporation, which resulted in blended tax rates of |
Adjusted EBITDA and Adjusted EBITDA Attributable to EQT
Adjusted EBITDA is defined as net income excluding interest expense, income tax (benefit) expense, depreciation, depletion and amortization, loss (gain) on sale/exchange of long-lived assets, impairments, the revenue impact of changes in the fair value of derivative instruments prior to settlement and certain other items that the Company's management believes do not reflect the Company's core operating performance. Adjusted EBITDA attributable to EQT is defined as adjusted EBITDA less adjusted EBITDA attributable to noncontrolling interests. Adjusted EBITDA attributable to noncontrolling interests is defined as the proportionate share of adjusted EBITDA attributable to the Company's consolidated subsidiaries that is not wholly-owned by the Company. The Company's management believes that these measures provide useful information to investors regarding the Company's financial condition and results of operations because they help facilitate comparisons of operating performance and earnings trends across periods by excluding the impact of items that, in their opinion, do not reflect the Company's core operating performance. For example, adjusted EBITDA reflects only the impact of settled derivative instruments and excludes the often-volatile revenue impact of changes in the fair value of derivative instruments prior to settlement. In addition, adjusted EBITDA includes the impact of distributions received from equity method investments, which excludes the impact of depreciation included within equity earnings from equity method investments and helps facilitate comparisons of the core operating performance of the Company's equity method investments.
The table below reconciles adjusted EBITDA and adjusted EBITDA attributable to EQT with net income, the most comparable financial measure as calculated in accordance with GAAP, as reported in the Statements of Condensed Consolidated Operations to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands) | |||||||
Net (loss) income | $ (297,432) | $ 80,730 | $ (185,130) | $ 1,233,097 | |||
Add (deduct): | |||||||
Interest expense, net | 158,299 | 60,427 | 268,390 | 146,856 | |||
Income tax (benefit) expense | (104,870) | (126,853) | (124,790) | 217,975 | |||
Depreciation, depletion and amortization | 589,299 | 446,886 | 1,542,031 | 1,230,255 | |||
Loss (gain) on sale/exchange of long-lived assets | 10,117 | 1,511 | (309,865) | 17,814 | |||
Impairment and expiration of leases | 12,095 | 6,419 | 58,963 | 22,290 | |||
Gain on derivatives | (66,816) | (177,906) | (234,660) | (1,167,144) | |||
Net cash settlements received on derivatives | 288,136 | 255,804 | 1,037,321 | 625,051 | |||
Premiums paid for derivatives that settled during the period | (4,971) | (65,216) | (44,565) | (232,128) | |||
Other expenses (a) | 279,751 | 36,209 | 328,913 | 69,265 | |||
(Income) loss from investments | (34,242) | 546 | (36,674) | (5,310) | |||
Distributions from equity method investments | 2,212 | 1,457 | 11,187 | 18,073 | |||
Loss (gain) on debt extinguishment | 365 | 1,089 | 5,651 | (55) | |||
Adjusted EBITDA | 831,943 | 521,103 | 2,316,772 | 2,176,039 | |||
Less: Adjusted EBITDA attributable to noncontrolling interests | 7,805 | 732 | 7,339 | 4,254 | |||
Adjusted EBITDA attributable to EQT | $ 824,138 | $ 520,371 | $ 2,309,433 | $ 2,171,785 |
(a) | Other expenses consist primarily of transaction costs associated with acquisitions and other strategic transactions, costs related to exploring new venture opportunities and executive severance. For the nine months ended September 30, 2024, other expenses included a nonrecurring corporate litigation expense. |
Adjusted Operating Cash Flow, Free Cash Flow, Free Cash Flow Attributable to EQT
Adjusted operating cash flow is defined as net cash provided by operating activities less changes in other assets and liabilities. Free cash flow is defined as adjusted operating cash flow less accrual-based capital expenditures excluding capital expenditures attributable to noncontrolling interests. Free cash flow attributable to EQT is defined as free cash flow excluding the proportionate share of free cash flow attributable to the Company's consolidated subsidiaries that is not wholly-owned by the Company.
The Company's management believes adjusted operating cash flow, free cash flow and free cash flow attributable to EQT provide useful information to investors regarding the Company's liquidity, including the Company's ability to generate cash flow in excess of its capital requirements and return cash to shareholders.
The table below reconciles adjusted operating cash flow, free cash flow and free cash flow attributable to EQT with net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated Cash Flows to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands) | |||||||
Net cash provided by operating activities | $ 592,989 | $ 454,583 | $ 2,070,697 | $ 2,554,464 | |||
Increase in changes in other assets and liabilities | (70,703) | (11,831) | (192,830) | (533,834) | |||
Adjusted operating cash flow (a) | 522,286 | 442,752 | 1,877,867 | 2,020,630 | |||
Less: | |||||||
Capital expenditures | (557,889) | (444,585) | (1,683,011) | (1,386,736) | |||
Capital contributions to equity method investments | (85,196) | — | (87,804) | (5,000) | |||
Free cash flow (a) | (120,799) | (1,833) | 107,052 | 628,894 | |||
Less: Free cash flow attributable to noncontrolling interests | 4,106 | 755 | 3,640 | (2,014) | |||
Free cash flow attributable to EQT | $ (124,905) | $ (2,588) | $ 103,412 | $ 630,908 |
(a) | Included in adjusted operating cash flow and free cash flow for the three and nine months ended September 30, 2024 is the impact of |
Production Adjusted Operating Revenues
Production adjusted operating revenues (also referred to as total natural gas and liquids sales, including cash settled derivatives; and, prior to the Equitrans Midstream Merger, was referred to as adjusted operating revenues) is defined as total operating revenues, less the revenue impact of changes in the fair value of derivative instruments prior to settlement and pipeline, net marketing services and other revenues. The Company's management believes that this measure provides useful information to investors regarding the Company's financial condition and results of operations because it helps facilitate comparisons of operating performance and earnings trends across periods. Production adjusted operating revenues reflects only the impact of settled derivative contracts; thus, the measure excludes the often-volatile revenue impact of changes in the fair value of derivative instruments prior to settlement. The measure also excludes pipeline, net marketing services and other revenues because it is unrelated to the revenue from the Company's natural gas and liquids production.
The table below reconciles Production adjusted operating revenues with total operating revenues, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated Operations to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands, unless otherwise noted) | |||||||
Total operating revenues | $ 1,283,802 | $ 1,186,102 | $ 3,648,582 | $ 4,865,924 | |||
(Deduct) add: | |||||||
Gain on derivatives | (66,816) | (177,906) | (234,660) | (1,167,144) | |||
Net cash settlements received on derivatives | 288,136 | 255,804 | 1,037,321 | 625,051 | |||
Premiums paid for derivatives that settled during the period | (4,971) | (65,216) | (44,565) | (232,128) | |||
Pipeline, net marketing services and other | (117,234) | (6,313) | (120,748) | (18,214) | |||
Production adjusted operating revenues | $ 1,382,917 | $ 1,192,471 | $ 4,285,930 | $ 4,073,489 | |||
Total sales volume (MMcfe) | 581,414 | 522,700 | 1,622,976 | 1,452,344 | |||
Average realized price ($/Mcfe) | $ 2.38 | $ 2.28 | $ 2.64 | $ 2.80 |
Net Debt
Net debt is defined as total debt less cash and cash equivalents. Total debt includes the Company's current portion of debt, revolving credit facility borrowings, term loan facility borrowings, senior notes and, as of December 31, 2023, the Company's note payable to EQM Midstream Partners, LP (EQM). The Company's management believes net debt provides useful information to investors regarding the Company's financial condition and assists them in evaluating the Company's leverage since the Company could choose to use its cash and cash equivalents to retire debt.
The table below reconciles net debt with total debt, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated Balance Sheets to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
September 30, | December 31, | ||
(Thousands) | |||
Current portion of debt (a) | $ 400,150 | $ 292,432 | |
Revolving credit facility borrowings (b) | 2,297,000 | — | |
Term loan facility borrowings | 497,970 | 1,244,265 | |
Senior notes | 10,598,428 | 4,176,180 | |
Note payable to EQM | — | 82,236 | |
Total debt | 13,793,548 | 5,795,113 | |
Less: Cash and cash equivalents | 88,980 | 80,977 | |
Net debt | $ 13,704,568 | $ 5,714,136 |
(a) | As of September 30, 2024, the current portion of debt included EQM's |
(b) | As of September 30, 2024, revolving credit facility borrowings included |
Investor Contact
Cameron Horwitz
Managing Director, Investor Relations & Strategy
412.445.8454
Cameron.Horwitz@eqt.com
About EQT Corporation
EQT Corporation is a premier, vertically integrated American natural gas company with production and midstream operations focused in the Appalachian Basin. We are dedicated to responsibly developing our world-class asset base and being the operator of choice for our stakeholders. By leveraging a culture that prioritizes operational efficiency, technology and sustainability, we seek to continuously improve the way we produce environmentally responsible, reliable and low-cost energy. We have a longstanding commitment to the safety of our employees, contractors, and communities, and to the reduction of our overall environmental footprint. Our values are evident in the way we operate and in how we interact each day – trust, teamwork, heart, and evolution are at the center of all we do.
EQT Management speaks to investors from time to time and the analyst presentation for these discussions, which is updated periodically, is available via EQT's investor relations website at https://ir.eqt.com.
Cautionary Statements Regarding Forward-Looking Statements
This news release contains 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 EQT Corporation (EQT) and its consolidated subsidiaries (collectively, the Company), including guidance regarding EQT's strategy to develop its reserves; drilling plans and programs (including the number and type of drilling rigs and the number of frac crews to be utilized by the Company, the projected amount of wells to be turned-in-line and the timing thereof); projected natural gas prices, basis and average differential; the impact of commodity prices on the Company's business; total resource potential; projected production and sales volumes, including liquified natural gas (LNG) volumes and sales; projected production curtailments, including the volume and duration thereof; projected well costs and unit costs; the Company's ability to successfully implement and execute its operational, organizational, technological and environmental, social and governance (ESG) initiatives, including the Company's emissions goals, the timing thereof and the Company's ability to achieve the anticipated results of such initiatives; potential acquisitions, asset sales or other strategic transactions, including the proposed sale of the remaining interest in the Company's non-operated natural gas assets in
The forward-looking statements included in this news release 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, taking into account all information currently known by the Company. 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. These risks and uncertainties include, but are not limited to, volatility of commodity prices; the costs and results of drilling and operations; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; the Company's ability to appropriately allocate capital and other resources among its strategic opportunities; access to and cost of capital; the Company's hedging and other financial contracts; inherent hazards and risks normally incidental to drilling for, producing, transporting and storing natural gas, natural gas liquids (NGLs) and oil; operational risks and hazards incidental to the gathering and transmission and storage of natural gas as well as unforeseen interruptions; cybersecurity risks and acts of sabotage; availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and sand and water required to execute the Company's exploration and development plans, including as a result of supply chain and inflationary pressures; risks associated with operating primarily in the Appalachian Basin; the ability to obtain environmental and other permits and the timing thereof; construction, business, economic, competitive, regulatory, judicial, environmental, political and legal uncertainties related to the development and construction by the Company or its joint ventures of pipeline and storage facilities and transmission assets and the optimization of such assets; the Company's ability to renew or replace expiring gathering, transmission or storage contracts at favorable rates, on a long-term basis or at all; risks relating to the Company's joint venture arrangements; government regulation or action, including regulations pertaining to methane and other greenhouse gas emissions; negative public perception of the fossil fuels industry; increased consumer demand for alternatives to natural gas; environmental and weather risks, including the possible impacts of climate change; risks related to the Company's ability to integrate the operations of Equitrans in a successful manner and in the expected time period and the possibility that any of the anticipated benefits and projected synergies of the Equitrans Midstream Merger will not be realized or will not be realized within the expected time period; and disruptions to the Company's business due to acquisitions, divestitures and other strategic transactions. These and other risks are described under the "Risk Factors" section in EQT's Annual Report on Form 10-K for the year ended December 31, 2023, the "Risk Factors" section to be included in EQT's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, and other documents EQT files from time to time with the Securities and Exchange Commission (the SEC).
Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, EQT does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
EQT CORPORATION AND SUBSIDIARIES STATEMENTS OF CONDENSED CONSOLIDATED OPERATIONS (UNAUDITED)
| |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands, except per share amounts) | |||||||
Operating revenues: | |||||||
Sales of natural gas, natural gas liquids and oil | $ 1,099,752 | $ 1,001,883 | $ 3,293,174 | $ 3,680,566 | |||
Gain on derivatives | 66,816 | 177,906 | 234,660 | 1,167,144 | |||
Pipeline, net marketing services and other | 117,234 | 6,313 | 120,748 | 18,214 | |||
Total operating revenues | 1,283,802 | 1,186,102 | 3,648,582 | 4,865,924 | |||
Operating expenses: | |||||||
Transportation and processing | 440,845 | 554,788 | 1,529,093 | 1,592,934 | |||
Production | 93,842 | 62,858 | 273,042 | 163,963 | |||
Operating and maintenance | 40,518 | 4,235 | 65,824 | 6,108 | |||
Exploration | 282 | 447 | 2,576 | 2,602 | |||
Selling, general and administrative | 88,470 | 56,942 | 228,730 | 168,999 | |||
Depreciation, depletion and amortization | 589,299 | 446,886 | 1,542,031 | 1,230,255 | |||
Loss (gain) on sale/exchange of long-lived assets | 10,117 | 1,511 | (309,865) | 17,814 | |||
Impairment and expiration of leases | 12,095 | 6,419 | 58,963 | 22,290 | |||
Other operating expenses | 290,174 | 36,209 | 354,337 | 69,265 | |||
Total operating expenses | 1,565,642 | 1,170,295 | 3,744,731 | 3,274,230 | |||
Operating (loss) income | (281,840) | 15,807 | (96,149) | 1,591,694 | |||
(Income) loss from investments | (34,242) | 546 | (36,674) | (5,310) | |||
Other income | (3,960) | (132) | (23,596) | (869) | |||
Loss (gain) on debt extinguishment | 365 | 1,089 | 5,651 | (55) | |||
Interest expense, net | 158,299 | 60,427 | 268,390 | 146,856 | |||
(Loss) income before income taxes | (402,302) | (46,123) | (309,920) | 1,451,072 | |||
Income tax (benefit) expense | (104,870) | (126,853) | (124,790) | 217,975 | |||
Net (loss) income | (297,432) | 80,730 | (185,130) | 1,233,097 | |||
Less: Net income (loss) attributable to noncontrolling interests | 3,391 | (525) | 2,688 | (80) | |||
Net (loss) income attributable to EQT Corporation | $ (300,823) | $ 81,255 | $ (187,818) | $ 1,233,177 | |||
(Loss) income per share of common stock attributable to EQT Corporation: | |||||||
Basic: | |||||||
Weighted average common stock outstanding | 559,603 | 383,359 | 480,354 | 368,936 | |||
Net (loss) income attributable to EQT Corporation | $ (0.54) | $ 0.21 | $ (0.39) | $ 3.34 | |||
Diluted: | |||||||
Weighted average common stock outstanding | 559,603 | 416,190 | 480,354 | 401,859 | |||
Net (loss) income attributable to EQT Corporation | $ (0.54) | $ 0.20 | $ (0.39) | $ 3.08 |
EQT CORPORATION AND SUBSIDIARIES PRICE RECONCILIATION
| |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
(Thousands, unless otherwise noted) | |||||||
NATURAL GAS | |||||||
Sales volume (MMcf) | 547,225 | 491,472 | 1,520,574 | 1,374,527 | |||
NYMEX price ($/MMBtu) | $ 2.15 | $ 2.55 | $ 2.12 | $ 2.68 | |||
Btu uplift | 0.12 | 0.13 | 0.12 | 0.14 | |||
Natural gas price ($/Mcf) | $ 2.27 | $ 2.68 | $ 2.24 | $ 2.82 | |||
Basis ($/Mcf) (a) | $ (0.56) | $ (0.93) | $ (0.40) | $ (0.39) | |||
Cash settled basis swaps ($/Mcf) | (0.09) | 0.12 | (0.10) | (0.08) | |||
Average differential, including cash settled basis swaps ($/Mcf) | $ (0.65) | $ (0.81) | $ (0.50) | $ (0.47) | |||
Average adjusted price ($/Mcf) | $ 1.62 | $ 1.87 | $ 1.74 | $ 2.35 | |||
Cash settled derivatives ($/Mcf) | 0.61 | 0.27 | 0.75 | 0.37 | |||
Average natural gas price, including cash settled derivatives ($/Mcf) | $ 2.23 | $ 2.14 | $ 2.49 | $ 2.72 | |||
Natural gas sales, including cash settled derivatives | $ 1,222,498 | $ 1,053,146 | $ 3,786,058 | $ 3,741,247 | |||
LIQUIDS | |||||||
NGLs, excluding ethane: | |||||||
Sales volume (MMcfe) (b) | 22,253 | 16,629 | 63,393 | 41,805 | |||
Sales volume (Mbbl) | 3,710 | 2,772 | 10,566 | 6,968 | |||
NGLs price ($/Bbl) | $ 35.20 | $ 35.42 | $ 38.18 | $ 35.34 | |||
Cash settled derivatives ($/Bbl) | (0.11) | (1.10) | (0.20) | (1.54) | |||
Average NGLs price, including cash settled derivatives ($/Bbl) | $ 35.09 | $ 34.32 | $ 37.98 | $ 33.80 | |||
NGLs sales, including cash settled derivatives | $ 130,140 | $ 95,120 | $ 401,232 | $ 235,509 | |||
Ethane: | |||||||
Sales volume (MMcfe) (b) | 9,864 | 11,528 | 32,416 | 29,198 | |||
Sales volume (Mbbl) | 1,644 | 1,921 | 5,403 | 4,866 | |||
Ethane price ($/Bbl) | $ 5.56 | $ 5.23 | $ 5.97 | $ 5.90 | |||
Ethane sales | $ 9,135 | $ 10,039 | $ 32,237 | $ 28,699 | |||
Oil: | |||||||
Sales volume (MMcfe) (b) | 2,072 | 3,071 | 6,593 | 6,814 | |||
Sales volume (Mbbl) | 345 | 512 | 1,099 | 1,136 | |||
Oil price ($/Bbl) | $ 61.25 | $ 66.75 | $ 60.43 | $ 59.91 | |||
Oil sales | $ 21,144 | $ 34,166 | $ 66,403 | $ 68,034 | |||
Total liquids sales volume (MMcfe) (b) | 34,189 | 31,228 | 102,402 | 77,817 | |||
Total liquids sales volume (Mbbl) | 5,699 | 5,205 | 17,068 | 12,970 | |||
Total liquids sales | $ 160,419 | $ 139,325 | $ 499,872 | $ 332,242 | |||
TOTAL | |||||||
Total natural gas and liquids sales, including cash settled derivatives (c) | $ 1,382,917 | $ 1,192,471 | $ 4,285,930 | $ 4,073,489 | |||
Total sales volume (MMcfe) | 581,414 | 522,700 | 1,622,976 | 1,452,344 | |||
Average realized price ($/Mcfe) | $ 2.38 | $ 2.28 | $ 2.64 | $ 2.80 |
(a) | Basis represents the difference between the ultimate sales price for natural gas, including the effects of delivered price benefit or deficit associated with the Company's firm transportation agreements, and the NYMEX natural gas price. |
(b) | NGLs, ethane and oil were converted to Mcfe at a rate of six Mcfe per barrel. |
(c) | Also referred to herein as Production adjusted operating revenues, a non-GAAP supplemental financial measure. |
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SOURCE EQT Corporation (EQT-IR)
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