EQT - Earnings call transcript Q1 2019

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Operator

Greetings, welcome to EQT Corporation's Q1 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I'll now turn the conference over to your host, Blake McLean, Senior Vice President of Investor Relations and Strategy. ahead. go Please

Blake McLean

President morning, IT conference Good President you for President, Senior all Chief Blue Officer; Thank Executive Safety. Jenkins, With and me today's Vice Vice Smith, Sue call. Officer; Business McNally, Chief today joining Financial Executive and Development, you. Commercial, Jimmi thank and and are and Rob

replay will with telephone will Operating Gould, confirmation number their Executive Vice for appointed available seven In the replay addition, replayed a and Officer be us Rob, of seven-day this In is joins newly period days call present it's call XXX-XXX-XXXX pleasure Jimmi evening. our The to for moment, today. remarks. our a for The will website. the a The prepared XXXXXXXX. for and on be have Chief code also Gary today's Gary beginning President Sue

turn contain most updated for to also reconciliations now comparable including Actual release that SEC including certain may on forward-looking Form call regarding under press non-GAAP remind and to our Following in may refer the contain as these to December by measures, this ended like also variety statements Today's XX-Q's disclosures remarks measures. to the for statements. and the morning's may subsequent release XX, financial press Factors we today's GAAP XXXX, Form also I'd described Risk file I'd such will available today's factors, in from website. of to these call questions. a Rob. possibly with over year materially, your results future you our which are those like call due on to take and forward-looking XX-K differ, events important our financial measures, the please

Rob McNally

Thank and everyone. you, good morning, Blake,

a discussed their can step be transformation. achieving On would enthusiasm transformation the when talented doing of the natural challenging, know I we committed change play producer. you that have to dedication hard our and minute to our pure thank to into professionals sometimes and goals. employees I in jump ahead we ongoing for we Before EQT's are leading a a earnings continued February, gas group take for call work, Company's like quarter, and ongoing much already a into closer what's right, our but

reconstituted and four As Equitrans. to from public part the transformation the one received team, address of of of sum consistent through feedback structure to the the with leadership our spin-off we entities simplified parts down corporate shareholders, discount simplification transactions and work EQT's midstream from our

on call. low in capitalize to and to the That shifted substantial also our the path best base free importantly, and cost on focus excited the which on largely divestitures. cultural The year, to is We more progress operational our to team driven up winter that of by specifically continues Executive XXXX which due executing up operations. XXX stand proactively that collaborative Adding frac winter This our production conditions is EQT's emphasis and new announced embedded and provides asset it has critical action made have what plan and the been handling. volume remote cash the quarter and we and both We water when improved additional generate January. and outlined in in fourth tanks perspectives planning approach of flow. to results simply, water first and of in driving fresh and sustainable often high production momentum, our we real and performance the is earnings on talent coupled quarter be with are weather significant Production from during efficiency with Bcfe, and on update a improved rigorous free strong generation. on guidance for financial to the were shareholders. resulting change Board XX% operations, wells you focus operations directly optimization safety in is proactive flow we The The operational first road I'm plan financial results. this impact building, momentum which EQT's hauling leading able improved tangible advanced forward is to shift adjusted in with down we world-class to cash operated attributable many model, to water bottoms our minimize operational positive the operational leads culture. to now logic and and and locations corporate fleet. were delivered helping signs quarter, the benefiting strong Put with these quarter in target sales level dangerous of production, that are in and instrumental were crew in in first drive above over we to beat positive changes efficiency

brought through real-time issues us tuning drilling Said February we that reduce our fourth fine March. they X.XX performance have X.XX days was incorporated to XXXX. and January, days first-quarter and per prevent future XX% support and way, in wellbore of also center, better X.XX our procedures, properties fourth quarter that operation thousand another in while in to We've the X.XX geometries, of drilled. days design. in mud the In to of days quarter drilling. hole assisted of XX-hour per problems engineering assembly from bottom the down thousand simplification of foot continue than the allowed XXXX, a averaged foot We identifying days We

to per On the stages day frac continued crew our side, also improve. per

averaged we is crew late pad that implemented This to due For and logistics planning in XXXX. year. more were largely of did quarter improvements the the we first in than last stages per quarter, XX%

that historically we to with Additionally, operations. vendors our partnered identify inefficiencies slowed down have

time. have significant achieved is improvement we XX% result, in improvements progress. up a year-over-year fantastic As operating A

bits by of utilized EQT feet continued the These rigs, the period, now really the out great we during strategically in and all-time drill of have week over a and by first drilling of proud in as the some quarter XXXX record day We efficiencies. particularly drill-outs. our XXXX are operational fluid hole well quarter as we in times plugs set XX% We This improvements the an days with our just simplify drill-out as we XXX discuss contractors out and process. XX in average by by XXXX per versus and dynamics a being our out to last frac increased cleaning to per of XX-hour progress. improvements refining collaboratively operational was improved design, changes implemented first like that three our and scheduling our assembly plugs. optimize quarter, working result off I'd plugs nearly cut accomplished bottom

into and Going and to achieve we more our rigs we had XXXX, operational growth under targets. near-term volume contract needed

increase will XX effort ongoing were to wells drilled result operational costs, successfully efficiencies approximately and our horizontal able being of rig reduce a in XXXX. penalty negotiate count, our we to part As fewer reduction which free, to in early horizontal

XXXX. As a result, we will wells also spud fewer approximately in XX

view. by efficiency as Additionally, And bit and are year capital partners they impact have changes us to to and turned our XXXX our venture more point is optimal we within from now the count. These into in due achieved the XXXX a wells to XXXX. we enhance our XXXX frac seven but move of plan will an operational closer efficiency timing. completion will that been expenditures, full be This capital development crew a all news during volumes activity or good to frac resource a and cadence not of operational joint count move same with finally, operations, gains fewer of capital XX wells non-operated expected result in line approximately as efficiency will

capturing three the driving cash appointed system. Over the XX% which in This cost months savings, $XX out of fourth of million $XXX fall annual identified in are a and we we've target lot of initiative, about have new last team into XX% aimed is the cost quarter talked already million which initiative. at XXXX, our incremental target our was now

have in around of that cost. drive addition, largely elimination procurement process pursuing projects enhanced will are but projects of XXX are centered services. identified over In and we organization the redundancies, and designs an organization, scale, vary goods further and engineering down These as

of will officially additional the our identify With Operating great work to help operator cash as team, with target we to next Chief cost ideally flow reductions Gary addition in are suited cost As a further continued million the seasoned in further you efficiently operate existing achieve of the reduce our we joining business five removing and this the a appointment more that $XXX he proven from track confident as to over is generation. to all us Gould know, opportunities team years. week and he of March, cost Gary a our is Gary leadership is our free Officer. announced achieve accelerate we record, and

committed cost-cutting and As to on as keeping you go. are we these updated identify progress quantify we measures, we

additional strong share thoughts our EQT. Before first Gary detail I financial Gary? call Jimmi on on to provides quarter turn first Company him to to to the would what like his over the drew and Sue results,

Gary Gould

good to new Chief join as Officer. everyone. to and Thanks, EQT's you Operating Rob, morning, here and and glad very I'm today Executive be President Vice

years lowest position And the development, I'm President partner and EQT most is meet pleased Chesapeake, about of assets. shale And very Resources significant excited this to months experiences I to will And looking for career Exxon. at ahead and knowledge I for has free thank to applying And Marcellus me flow here lot our of These cost, the I'm in back in to to further I'm ConocoPhillips, I'm This come. basin. drive week. Vice well future. cash and I forward of want Resource I here earlier Rob rest various Resources to believe this a world-class received our positions the in develop company I acreage to the efficiently situated as the entire glad reductions. warm Continental generate forward recently welcome in development Resources. much leadership, the EQT efficient and our heart Also, the Burlington management most team And weeks shareholders our join on next we contiguous at excellence play. be operational Senior at footprint to the Production of and getting I here road Before held to EQT. with a the to of in I and cost many become about served team collaborative my company. the and efficiencies Development the taught future at everyone discuss with asset look

call Now Sue. the I'll turn over to Jimmi

Jimmi Sue Smith

Gary, some will free EQT quarters two comments, our has good begin our efforts morning. by I financial in million materializing and to the approximately are of generated improve earlier highlighting past flow. continued Rob's in operations that To In Thanks, echo results. cash $XXX

effort concerted to line is first improve our quarter Our with turned in expenditures with that expectations, of efficiencies our resulted capital to more were in feet first shift with of compared state XXXX. XX% line in to steady operations, combined quarter pay which down

full-year our by hit on as $XXX of of $X.X With to as to XXXX. free through $X.XX billion. of flow expected well capital the expenditure strip of million cash XX% expect be adjusted $X.X this our Target based our March $XXX cumulative for expected as $X.XX cash billion guidance excited our guidance We reiterate still cumulative adjusted progress our flow full successful five XX, and free year to implementation We're million initiative, cash is free year billion of flow adjusted billion. pricing to

expectations. have quarter full-year was increased Bcfe. XXXX Now more our first of XX which to volume our Bcfe guidance Bcfe Bcfe, into reflect to range, by our a I'd range to like our X,XXX we To X,XXX provide volumes above little XXX insight

XXX free of for year. I our $XXX the both of Bcfe the second the in and increases sequential fourth quarter range be quarter. I our free between $XX highlighted with negative to volumes to cadence quarter. negative the adjusted adjusted which We our earnings million cash In third XXX and call, On second the third expect million and guided for last flow flow cash modest Bcfe

quarters. the activity than for to quarters we be will will we range, construction expect slightly increased the months, capital year, guide for the remainder on crews. and of flow continue both expect adjusted the summer higher we especially of With expenditures the be than cadence cash our for slightly second respect While the that third quarter the during first to midpoint better this free our

and capital lower quarter to $XXX of we drilling closer expenditures reduce state be with savings our realization fourth lower, one rig. full reflecting as fewer Our steady our cost million, will activity to

line the guidance, is in previous with alongside Regarding per may our unit detailed expectations. each expenses cash fluctuate volume, quarter full-year guidance but

quarter XXXX per share, first or first quarter $X.XX $XXX share EQT net or Focusing to the results, XXXX. in adjusted million per income on $X.XX the quarter reported of million of $XXX compared

$XXX adjusted million, flow free was XX% year-over-year. cash quarter First up

As the is would accordance NGLs and increased in have noted for million $XXX quarter quarter, made from related of the quarter. $XX number and million the up volume. in adjusted an and million million proxy primarily were free in Sales approximately this press not our on litigation SEC with release of $X for which gas, reserve rules, $X cash oil flow XXXX, natural of first sales expenses

However, was loss as XXXX. in this offset designated by a improvement derivatives not on hedges

significant due as expenses This Our releases by in operating result our net sales of not line result increased a gas marketing in is fewer not and the XXXX. down contractual as volume. used primarily a item generally service to to be cash X% unit revenues were of decreased expected also divestitures XXXX. Per of to capacity transport

basis, In was of last compared as and XXXX, first the lower higher per divestitures expense gathering was to addition, quarter on a unit the LOE of year. a result

As reduction were included mentioned at cost in production the I and in in expensive group assets our We to costs not and savings personnel because during a those assets the year-end, LOE. the divested operate, initiatives quarter. first force did charges did realize operated volumes not gathering result our the incur divested saving but gathering of as SG&A cost only

offset the of recorded related However, this quarter first to by reduction was benefit a incentive in compensation forfeited awards. XXXX

in on the per would XXXX, first quarter unit quarter compared of litigation million a of SG&A flat basis $X the been the Excluding have XXXX. to recorded reserve first

liquidity a few pricing update, quarter Before would moving about standard comments I to our to like make first dynamics.

Mcfe, decrease liquid $X.XX of and price was first $X.XX result in realized the a to per XXXX. of sales Our higher This in XXXX. average due differential price lower a lower primarily the the a at to for quarter first was divestitures in compared as quarter

average quarter. materialize gas daily gas open daily Northeastern quarter XXXX versus the portion our lower did differential to States. of during first was higher month, quarter. Our cold the of to compared our first lowered especially also a leave We resulted differential the as XXXX, down resulted not in peaks, capture of in for which gas weather In during $X.XX pricing on winters, compared most The United average these to in a pricing XXXX. in pricing the portfolio daily lower the the guidance

still noted As Mcfe. will anticipate a in our be average release morning, $X.XX full year a differential we we this to negative per negative $X.XX

trailing At X.X in to million reduced this quarter cash $XXX to the on EQT's Midstream flow drawn with times. million million our a net Moving when revolver under We is net from and debt is billion EBITDA just cash, just is in our which $XXX XX reduction year-end. position. X.X leverage value $X.X investment months for of under debt level, in and times of the $XX liquidity adjusted our Equitrans ended and

to reduce divestiture and Equitrans back expect leverage future of times the that, our pass leverage. of continue will target I still stake proceeds use from call to X to a We Rob. to X.X With to

Rob McNally

Thank you, Jimmi Sue.

world-class world-class for the have like displayed entire asset open up reiterate our reflect operational only work on to of we hard we organization. we efficiency. quarter a I'd that but I'm a focus Before group strong the have dedication employees. extremely do and first results the Not proud also call throughout enhanced our Q&A, base, of

XXXX, accountability, focus not share successfully collaboration developed thoughtful driving many years and on oversight our comprehensive culture flow, the efficiency to capital per to our shareholders. only With free stronger come. roadmap for and transparency, results We've engaged and active returns reshaped to for we Board, an of maximizing have through but in cash a

financial performance operational shareholders. continue and renewed to Our our as XXXX. forward of is you throughout deliver focus rest And deliver beginning. look strong excited results significant will we just operational the we're that to We the for our value updating

call up we'll point, this questions. at the So open for

Operator

this Thank go sir. from session. Jayaram Instructions] question-and-answer first Our [Operator question with At comes conducting Please be JP time, a you, ahead. today Morgan. we'll Arun

Arun Jayaram

off foot wanted costs to How a on thinking Robin are start Good team. on first outlined your I with that year you're if XXX of based on, guidance call impacting? operational how was D&C lateral this to it I seeing foot thoughts you some and morning, not basis, things how you've per your I'm XXX improvements per the and that about for mistaken, believe lateral are today?

Rob McNally

Hi, Yes. Arun.

and really whether so results that with or the all the So Right. I efficiencies our shade will first in on both would drilling, us the and fourth we've real I'm foot. quarter making XXXX that with of say with mean, unit, per completions I per fronts. a Mcf lower rollouts, progress quarter are really bit we're that they the all seen seen pleased we've in cost positive.

in So for year, and but had the has process up. consistent bias guidance further would and down say the our of it's would not if shade that early to remained pretty cost I it, I the rest

Arun Jayaram

Okay.

question you the the least the you're press Rob, lateral what seeing on lot -- on on lateral release -- as success about, on well is, lateral talked front pushing lengths. you're Could of pushing Second you productivity a lengths... in at the some the comment,

Rob McNally

Yes.

can on based no some so staged keep So, productivity enough. effective length. is that there far laterals, rate far no suggests lengths, productivity in collected of all that that everything suggest data getting degradation seen there with we've make way, degradation the that we've the do But fracs that is thus we we longer we're have of high adjustments still to so lateral that on

So results. the productivity well with pleased

Arun Jayaram

about operator. just thinking early some think a that success Final the plan bring some question, of a at could you and a low-cost Gary, to you benefits go-forward as the on is about -- the you basis? had table obviously, thoughts of you think What being on operating for lot your of you, Continental,

Gary Gould

lot Sure. of had strong a I've good lot been of and results. a teams fortunate to be really on

I think what strong oil was and that have the first attracted gas asset me we to here. position EQT

that hand, several of of in I looks have Marcellus. with the in inventory the years And core We the think future great.

The style impressed and long-term smart, and with be I to when then I week year just approach how earlier collaborative as that, very in And in their me to management And energetic approach team, I with team second maximizing met be collaborative would results. up shareholder found the also the some with operational I matches the exactly Management operations. strong my that's with to here that on I to be very have initiative very focused was, also very Executive and a very smart, very add teamwork value, that them found my also. to I in them leadership. to team their thing lastly, this staff, meet I get the of continue found and

I successful run look multitude the be or leading plays been think at generate oil doing plays, the of in or that, continue a value our that in operations of operations in look Resources if maximize to at we've to always forward and my Chesapeake and whether it shareholder with gas whether companies shareholder or that, maximizing Continental operational here value. you bottom efficiencies plays it before I to and we've background, mind of line some be

Operator

RBC Markets. Scott Capital ahead. of question next comes The go Please from Hanold

Scott Hanold

you for there detailed down, hit point And you going little you same. the capital your think the at of plan the of the and had the Marcellus? wanted CapEx your are stays in just the some tills deck. know kind budget highlighted in cost but PA that in to cost a Did your D&C updated earlier. you I most per efficiencies higher for lateral XX stay I on foot Hey. spuds

of me help you the could square circle that? So around kind

Rob McNally

is There moving sure. a Yes, more few pieces here.

from say thing The thing view. I'd point efficiency really in a schedule the is changes first that, a are capital of good

inventory, the drills of rigs this we because going lay spuds plan but we couple contract what and we lateral expected. drilled we tills drop are down a and just to We So needed earlier down were the rigs under sorry, were that lateral rigs to able than to going really more than able -- for quicker we're build we than thought. DUC had

positive. So The where a piece in more is, efficient that next frac had was our it operations. been

about above stages day more So to XX of And same was than number in XX therefore, frac we're getting planned XXXX or additional we're crews. using done what budgeted. we wells per what the going frac

XXXX in we'll up a sets So because online. going we which but money to than that going there, it's going -- us to are bit be XXXX till XXXX, early those very very as up -- planned reduction little spend believe will to more capital to XXXX, be drilling. we we're largely less to ready till I into get in seven And wells come the require well them for end well offsets and

So, changes the state would particularly overall, scheduling are of bit and more efficiencies, steady we frac than side. quicker a reflection the the on getting we thought

Scott Hanold

calculations are -- out? because Okay. when the And foot outlook, of seeing around some shake get seeing difficult you are trending down know your with per And I that prior you here. changes But fairly the I of guess, arms you consistent are cost or your everything lateral then. to there's

Rob McNally

frac those Mcfe. cost per side the efficiencies, drilling into on the mean, and lower I translate both Yes. all

So down. per the cost unit is trending

Scott Hanold

in Okay. liquids shift on that an for expectations And did impact have activity, with your the year. then, that

think liquids full bit I little the came a expectation for the down year?

Rob McNally

as the high unit in as that That's Mariner not around to soon. going East related to East well as isn't that's be scheduling, more service

two got it delayed think, believe. I quarters, I

the reason ethane we that have seen down. volumes So come that's

Scott Hanold

Okay, your right what rig alright. so now. is finally, count And then

with efficiencies? to -- to would how through from you these many So drop? are able you able Would go to rigs and

Rob McNally

started to there running and get throughout down seven to planning we and We just faster. then six rigs XX were got year. We year the the

to rigs. are right we were now, We the at sometime there rigs third horizontal quarter. intending originally seven seven down And be in

three sublet rigs. of to able were we the So

Operator

go The of Gene next Transco Please question Stifel. from ahead. comes

Gene Transco

Mountain update on should us ask Pipeline. event? you still of And regulatory and if question give we a terms the can 'XX construction I be Valley about in as an process? project thinking will try XQ to Maybe

Rob McNally

I That's Jane. Equitrans for believe Hi, next the they reporting team. that are Yes. really management week. a question better

And so, is really see public what we information.

our we helpful -- MVP for a really And in-service want see think that's from our we XXXX right and has do is end have our flows, to on maintained significant MVP shareholder bit highly to into still of cash industries we hold to built, XXXX date, this that point Equitrans far a be now the we risks as XX.X% transportation under be, it and important But but But perspective, It's pipe get takeaway it's that the is an very actually what view, we more And one if so a pipe built, own that for a actually stake. not and spreads baked year in certainly is is clear Equitrans, from want capacity get are plans. move that that likely bit will still takeaway is which as a water. capacity we incremental timing. I around our there time because the we know is us, get that forward that EQT done, important and built. don't delay, there little that, if do in there really is, it get to

Gene Transco

remained then unchanged. unchanged, a the have outlook I Okay, remained did XXXX production change, changes in CapEx about for numbers XXXX. -- operational got So plan question it. not XXXX clarification

operational exit some to So in for CapEx 'XX? sort, I in are how rates this translate changes maybe XXXX going was plan or thinking high just lower

Rob McNally

will good improvements in we reflected And we have updated efficiency the in And not on really you see Right. the five drilling year good in would not That's yet efficiency the of that plan. year and a frac in through in gained year see the the will both marginally updated additional that guidance, we're to we wells do, XXXX I plan. to in five side, to capital that be affect be will XXXX wells the point will there benefits not volumes, a XX what on out but flow are and that the as XXXX. XXXX XXXX. start spent And going example will effect there capital XXXX plan, that XX only have limited When XXXX that we be question. and has beyond is, have is and completion we'll we've that five updated that those take

Gene Transco

the just it. role got last as I maybe well. wells future and of the would the and than, your the just less Marcellus? Virginia Utica, that Virginia like And understand the the I in of outlook in see drilled there Utica core if Okay, What's question. Marcellus say, let's may, Ohio production West acreage. portfolio is to I for number Ohio in considerably West asset and

Rob McNally

Yes.

as Ohio Utica, the matches -- drilling we're wells us. Ohio, So, terms but of to a core bit touch in nice It's do can as In it as out, Washington is blocky we it's point different a and position is pipes really good. good Marcellus, and long able rightly well with the quite not it it. economically West that you laterals core it in fewer that and Virginia versus And Ohio little it County, County is Greene up we Marcellus. we're reasonably than which where drill reasonably for in Pennsylvania,

So quality it that it land is put the But has high -- liquids more and Virginia, rock give cetera, some rules together laws it and content. harder long operations it's more does us West laterals. land In we more like. the to et operate, is of pooling, to are difficult difficult, diversification it around

where But capital a laterals. and there does drilling it Washington both more as in make you'll we with Virginia foot Greene reasonably for on -- West the And deploy XX,XXX see Marcellus. Again, in trying the County Ohio. is us economically we Pennsylvania, to West County land make in we're portfolio progress compete So Virginia, and good well Virginia. not to core quite West as as XX,XXX place position for

Operator

Our from Stewart Howard Weil. Please of go ahead. Holly next Scotia question comes

Holly Stewart

you on Can ahead for? you an mentioned of what question. you what Rob, doing on Scott's day. you're extension budget just had then just guys Maybe give front? And that of per you budgeted that us kind were on stages

Rob McNally

It's Sure. the path. largely -- the around around really it's logistics on

in about times. is in on thoughtful water this trucks design layouts, and unload, efficient waiting So measuring get time out KPIs manner, sand offloading and it's being how changes water, pad on to it's we a manifold most

sure a just the front real when it's kind on around it's to that of So and attention matter. need and to by frac that just on logistics the it. really the is strides that optimization have fairly they sand we've the of paying making logistics small variables that paying the details water made need, they crews the and pad what And attention complex all problems

Holly Stewart

just deck. Okay. the of maybe on of And cost sort slide continuing kind savings

that make think, your cost as Can comments this then maybe just particularly term guys reason. reduction? relates it any ETRN where needs with you system. there? longer lot in could a into a through of of to process I have water that well plays on know of talked that lot do the stands? I you of What that about And water, sort optimization And gathering sort how goes

Rob McNally

Yes.

real it, optimizing much doing of terms water. other -- much, trucks. a pipes, we in impaired So in is as possible trucking we with we how much haven't physically to job at how the than move that's to as not this including there's opposed water better Ultimately, changed manage we're as water, point, move water win

of a have of with in of logistics we where number a is, fronts, activity. better concentration in one manage how are water So on an area we which Equitrans to discussions real

of start difference. really cost. barrels Greene you when via going impaired impaired -- a day, today And think as you we water maybe a that move Pennsylvania. Counties opposed and So water, or opportunity like save in that our about There of XX,XXX core about we to water our in a that a impaired can majority significant and some to of trucks. Right. to half in County water pipe is barrel of something And to it's even $X Washington points our move areas. Green us the water If Washington pipe that's to we is

And think valuable. math it's but doable. do overnight, works. to it's this something isn't it's it going going And I the so, the infrastructure, it's that's -- to when some require And in is that that, very you happen on

hauling I business the the the as the environmental better. opposed is it desirable parts fewer trucking. much Water pipe is have safety on trucks we from road and to one other is dangerous our the advantage water that most of perspective, the this of to think more and

We as zero, economic it, an and minimize can will an safety as we never environmental is it get much to advantage. but

Holly Stewart

the if June one then around And one for I Perfect. any last update maturity? plans your maybe could,

Jimmi Sue Smith

be sell Jimmi a is is would I that We've said that to -- had although it also years, the this sell take ETRN Holly, two debt. all going and we intend along down down years to we've that, said still we're Sure. surprised to reduce if two But we Sue. stake year from holding now.

cover maturities. maturities those that of with $X.X coming plenty Remember, billion and to the up, the we have June So it's revolver. on room

see something those cheaper to the expect or so, than I taken would revolver out revolver. with And the

Operator

question of from Sachs. ahead. Brian Goldman next Our is Please Singer go

Brian Singer

efficiencies wanted cadence lead you're couple efficiency questions a lot. Following greater cash bias, up but that to a year combination free the that scheduling the that phrase in cash not little. free just and will the know to over you over the conclusion of upside flow free translating that year into five cash of you're the on seeing, otherwise kind flow greater five on is -- flow, you and seeing to the I XXXX? the as capital a changes XXXX down as efficiencies a program, necessarily Is of a use improvement the earlier well

Rob McNally

bias I free all equal, think remaining XXXX else in cash toward would what and beyond. better, better is They flow correct. us said you

Brian Singer

for then And Gary. follow-up is my

oil As and improvement recently. the Do shale degree you enter front? an after the apply and expertise and productivity them for you opportunity actively coming you looking back more front the plays worked see Marcellus put to efficiency EQT of or to to shales more apply market? from cost the the what oil on opportunity to at having do the And them see

Gary Gould

Yes.

Gary now So, my been Gould, here I and three think is fourth day. I've this about it's and days

would be that, we you a looking early on I tell that. of will probably So comment But is that. all it's what little certainly at to

value But looking also CapEx, combination continuing optimizing certainly to not when talked shareholder And cost, on in performance about. our of as to value, associated our on side but as to and that production designs make we will continuing look generating the efficiencies costs improvement. looking be are sure operational reducing ourselves LOE designs at that own far production. at we just at quarter-over-quarter with for We therefore will these we've and at compare absolutely we production maximizing to be as order optimizing for and the costs to production look that, and with shareholder associated completions it cost, will capacity and maximizing be comes to look we

quarter the lowest already we I and basin we will think that others make the then cost sure producer. great see results ourselves you here to become also compare from the first to within at EQT

Operator

comes Please ahead. The & Pickering, next question from Sameer of Company. Holt Tudor, Panjwani go

Sameer Panjwani

for the be things to end to trying when this announcement time trying a optimistic second, that the being is think constraints side timeframe midstream to lead back that year to that's needed an I could by XXXX. mentioned previously negotiations the addressed or on the early of Circling much terms of understand of made? execute ongoing triangulate how regarding need be in I'm you've to

Rob McNally

Right.

the our is said there baked resolved what into So are have end what XXXX. constraints and And ongoing. plan is of work the that's by is that, midstream we

can systems one we major our think thought saw and of progress even above we Now throughput what the in quarter prior could do. that make to we we first on we do that, in fact

be Midstream system. is on and longer there's work we happen to that, so other done the -- engineering that low will pipe confident issues that can making ground. work the progress not there negotiations take keep to moving. the tweaking we be waiting a to that resolved, are well having we Equitrans, to with is the before And high and some The bit be pressure has completed are But related those greater before that greater -- has we're we in that put because pressure, permitting have to and be that to system ongoing some are with and is it there do,

will maybe how we at about update progress. that you be least early continue as versus we make our on on optimistic time that or we're fared plan we to So plan. we'll And

Sameer Panjwani

And here start things. helpful. market bit. on that's the then A&D side seen thaw a We've the to Okay, definitely little of

updated leasing prune ability rate to your acreage? update side an for and some your leasing core your of the kind areas of wanted in or of get just maybe also So the your non-core things, to Marcellus willingness get today? thoughts to And on going what

Rob McNally

Yes.

hoping it's assets. somebody side, always So are us willingness to value to around that's to our and more our would that it's and Certainly, A&D on something we to discussions and the that they're of and else pay open non-core we're valuable divest accretive shareholders consider. willing to assets worth we if certainly

in always at interested think there don't back I is the are program. point, think that's in Marcellus drilling Tier open are stuff But further having or Tier further X support either X this but Marcellus that's much to who discussions a of just people back, even realistically X Tier there that if economics our not I in market for those it. we're

leasing. been bit change. fairly rates, it but a consistent. a And there's in On there's change I'd material what I we're area that major don't think It's leasing the not area, say been right. by seeing in any varies

Sameer Panjwani

finally the Okay, the to litigation around this thoughts rationale you're great. morning. some to voting commentary on extent process. Board's provide able announcement your hear And the I'd the be or to then interested

Rob McNally

Yes.

in it how Company. faster much decisions And board proxy really quarter on it line. the And to needs attention run. the to bit do of of to to process the nominees, and do. the this pushed a appropriate we're kind the great going will Rice attempt time is it's frankly, the of just was to than to from feels progress made Board is operational an get And not a what like for what distract real kind we're the about this reviewing ready So get is our nothing. And all preparing materials, normal course

where really we keep that's So our focus. to want

Operator

Energy The next ahead. question of Hall Advisors. is Please go from Heikkinen Michael

Michael Hall

Just operational could versus curious, that maybe kind level like of DUC think handful the on the profile? backlog building course of efficiency It of over kind you How And how the would DUC just if the front. seems the about a here up year. an operational you're comment you of current -- DUC optimal and of normal at to back me. the of to any to in -- in for you that operational counts changes I five like? of year efficiency compare as backlog expect do guess, like look look to exit what like the might kind change optimal frac and -- do rig opposed then, year backlog expect what crew And will that outlook activity these

Rob McNally

Sure. Thanks Michael.

able bit about talked down to In we work that year, to prior us to was the of as earlier. farm out through actually we count, going it three it going DUC being some rise come a terms rigs to the little the

we sometimes want magic from bottlenecks smoothly to view, there's and point I'm not a that need process. And the but that a that have one, an be and ready backlog number is DUCs. don't so are land a terms to make sure drill in sure of make in of DUC to wells We is acreage, bottleneck to of really DUC the considerations so land drilled number on terms sure are it. fracked we I'm operation just not wells build that right. the sure that optimal there some In in We also of holding count, want there's running and

Michael Hall

that needed frac I data yet guess, enough, is the level year for has at long outlook view the with change five rig not on improvements efficiency and the all material crew count that And fully the or counts view? the for of Okay. to in change

Rob McNally

We're seen gains better some only efficiency on. and a than -- quarter what we we while had we have than planned into what this

this run I little rig need forward think change let a before frac we counts. to and more count we

price think this to -- I right environment is or will going drop the this running neighborhood it right crews. we're in actually it seven and That think more hold about. if to commodity and means to but improve one really and crew, efficiencies rig frac the I another be frac continued probably one the maybe now think right neighborhood six rigs is five

Michael Hall

maybe as guys just services or the that. side, pricing And you improvements working partners your one front? seeing just with on end Are on any on that are Okay. follow-up that you movement from guys raw any

Rob McNally

our working not big with providers a There's though is, would number. has Right. in little bit gotten our crews of pricing, been efficiency much improvement What single digit, in better. it's our frac with it's I frac a but and say

we've partners we operations. the that to be longer We -- slow working far mean, really bit improvements. hand-in-hand seen and where we've saying partnership improve us commitments service our I problems of procedures to where down how tell making that we're have the changed efficiency culture changed That's you gone as the operations of and doing good and we've we're what in number causing and gains. big and processes providers a has the term trying as guys our with to are real -- we've really a the seen

that. about excited extremely I'm So

much right And really any than is and efficiency pricing is the gains. the changes I big important more it been bigger move a direction. think that's in

Operator

question next Betty of Suisse. go Please Credit is ahead. Jiang The from

Betty Jiang

on gains weather date of cash production? efficiency impact the guidance gas pricing? to price, a target Maybe is based activity is price Do strip maintain flow cash capable see a said And you where higher just of free think, today. earlier. offsetting Rob, around environment year follow-up free for XXX and is like in to, I to then, which the the on, is based what goal just prices, lieu you flow than of strip lower lower this basically Considering your in

Rob McNally

Yes.

offset off hedging we've And I do would pricing there's a back year. few coming we negative cash partially. say Certainly, flow, in competing aggressive that, efficiency gains also to free I'd here, a have Betty. of So, made that the impact the fairly the say but has part been points that

the least protected recent -- price from And of the recent a from we at so ourselves portion moves.

million still our of million XXXX. guidance in of free $XXX to $XXX flow we cash stand So by

Betty Jiang

negotiations type potentially earlier those measures to alluded Equitrans. cost with possible you up then, really substantial push structure. What make is of lower? about costs a cost midstream the And to part of cash Considering the

Rob McNally

Yes.

think us water. currently I a right, is transmission, other areas includes could other that with revenue there's big number the generate. where Water there's revenue they rates. stream And unit is new portion -- There services of potential we our of or areas a base they it our Gathering broad Equitrans example Equitrans their that where gathering. don't a do for with Equitrans grow a providing over renegotiation broad for midstream is great And then help per you're help us a of our contracts. can that a can lower gathering costs. by

real where and numbers with make it their per And a so I progress costs for Equitrans is to think low has pretty can have base unit when gathering grow have where we costs. we deal And revenue you LOE, ability lower truly Equitrans about the levels, we our to Equitrans. where but there think we're EQT the in and G&A at big and are and the be with transportation ability win-win

Betty Jiang

but we in out about there, it we terms of what Great. magnitude of are throw I'm type -- to could going talking here?

Rob McNally

about maybe costs, or per Well, about right, of you're looking or LOE Mcfe. portions when talking you think gathering of When SG&A, pennies, about transportation pennies nickels plus you're $X.XX you're or at dimes. talking and

cost we in the And improvement potential so there that parts for other of can't structure. significant find is

Operator

further McNally closing at I remarks. this will over Rob are to for no the call There now questions time. turn

Rob McNally

you, updating And free you. to follow-on you Thank questions forward in look have as morning. I quarter. second contact Blake. to you if always, this time the Appreciate the Thank everybody. please feel Okay.

Operator

today's This concludes conference.

You your you Thank participation. lines for this may now your disconnect time. at

EQT (EQT) 25 Apr 192019 Q1 Earnings call transcript