Earnings call transcript Q4 2022

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Operator

Good morning, and thank you for attending today's EQT Q4 2022 Quarterly Results Conference Call. My name is Jason, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call and opportunity of question and answers at the end. [Operator Instructions]

I would now like to pass the conference over to our host, Cameron Horwitz Managing Director, Investor Relations & Strategy.

begin. may You

Cameron Horwitz

Khani, thank website year-end and are joining fourth be and our Relations Rice, for updated The Good call prepared a today's question-and-answer Investor results session you conference and will beginning David Officer; Executive this XXXX and Toby on today of Financial moment, call. to with a quarter portion has Officer. President replay and our morning, Dave available Chief for posted Chief With follow. Toby and remarks reference An investor website, evening. In will presentation been present today's we their slides certain our to discussion. the will me during

with could remind call our the make Please forward-looking refer that subsequent forward-looking today's these contain Factors filings to earnings factors statements. statements measures. XX-K may because like our of Actual financial in in in presentation, including you disclosures not section financial in the regarding for differ future duty release, materially of may non-GAAP presentation our GAAP to certain such any we most investor yesterday's Today's earnings Form do the call from forward-looking I'd release reconciliations Risk statements. events recent to the to most described investor important contain results and also update comparable SEC. We and measures. and measures, undertake

With that, call I'll Toby. the to turn over

Toby Rice

briefly eye said, of emissions to the extremely off on its our generating morning, our proved our cost towards natural by our everyone. value positive last want we be good and accomplishments. drive intensity achieved EQT proud price geopolitical and milestones XXXX shareholders. to downs, and in ball never ups gas through meaningful I year year efficiency, structure, reducing Cam, reflect That for lowering relentless our a am and the Thanks, improving the tremendous and volatility. took marked

of executed and our billion returns free dividend investment-grade business, stock repurchases. strategy $X to Index $X.X we return ratings. via cash capital EQT added side generated billion was retirement, we achieved credit our almost share shareholder debt and XXX financial a base the of of On with flow, S&P the

challenging On of implemented position lessons successfully oil will cycle hauling the times structurally that we into hole reduced of service despite infrastructure early environment, a initiatives and and factor front, the continued and record field year sand the learned achieved drill in eclipsed efficiency times almost completion on that performance part latter have XXXX, operations flowback drilling improve gains Southwest basin by top the from Appalachia. leveraging for by X XX%, Northeast Appalachia costs out our a meaningful

on we Tug all front, checks the midstream of share cash accretion NAV control Hill integration. guiding operational structure of a accretive per XcL improved M&A Midstream free our principles, M&A announced the our including the free and business and flow in cost which through our strengthening and while acquisitions durability the of flow material boxes reduction On of cash through

in billion to $X.X business, every XX,XXX paid nearly owners last to mineral social the royalties in relates our in it of out positive the impact EQT As country. year over roughly state

our made ahead year, volunteered during replacement last announced initiative, and OGMP and a ARCHX. partnership Partnership, of decarbonization in we form employees we Hub Gas Oil headed the the donations or over emissions to Regional initiative, in launch our Our the collaboration bear Appalachian Methane from the rating organization leadership our device Building XX,XXX $X or a Hydrogen of methane address standard the Appalachian global gold to pneumatic also schedule, the almost and XXXX. year received Clean childhood hours efforts, on million completed among full

Over free over our another our achievements yet the added sheet, period, this on to team taking strategy we've our balance journey hedging strengthened asset our in since evolved of XXXX. track productivity, the and XXXX through price XXXX been durable successful improved and create will for creating M&A These stakeholders. has record, GT position step will inevitably positive thrive focused all represent scenarios. beyond helm Our in in all cash of our a efforts EQT and through-cycle flow business show that to of differentiated natural value gas model

lowered by taking to to X,XXX metric our vehicles COX equivalent covering The nearly The engineer substantial at off milestone as XXXX of on previously marked effort we wells X,XXX this impact of coordinated is pneumatic eliminated effort in roughly emissions our our annual natural XX% XXXX which levels As execute and X pad projects from compared emissions XXX,XXX to mentioned, XXX gas to carbon ability road. over XX,XXX passenger equivalent a of sites scale. net nearly by testament tons XXX% EQT's another production efficiently significant and to our operations. our we footprint is the as powered is reduced methane path devices

effort a year a of completed cost schedule this Our of at full million. $XX team ahead

cost This the equates lowest our abatement carbon at of carbon to a the cost position just abatement highlighting ton, $X per end of curve globally.

emissions company our of meaningful achieve to to net strategic profile emissions device our the replacement pneumatic materially scope a X most program net coveted derisks as the the view our natural for zero zero of point, that world decades We at world asset gas will in our by the of for a will the first X And path molecules EQT's be on GHG execution come. among successful EQT in to remain shareholders which and basis. ensuring scale energy XXXX. The

all efficiency eliminate the that also cleanest methane emissions natural individual enhance of Appalachia methane In we monitored results initiative, available approach Basin. doubt further accountability transparent from in the emitters, and launch greater to we gas will identification aerial the AMI, it monitoring the This Appalachian success, allow of fugitive a the reporting. the coordinated will in AMI throughout remedy traditional sector to is promote emissions agnostic addition our methane or will monitoring form to with Methane to publicly only Appalachian recently satellite basin-wide emissions of surveys through energy and methane world. believe not reduction for spearheaded potential any

in to parent-child our accuracy in reserve our forecasting team XXXX, laid range track positive aimed regularly inventory. projections generate Included via the performance creating within XX well to initiatives performance a core record strong Bcfe impacts minimizing several well productivity have These for at in of systematically and report the implemented multiple years foundation underscoring were reserves taking number our When up This this XXXX to year-over-year EQT the is deep we accuracy. large-scale revisions, consistency achieved report. trends reflected over predictable than performance repeatability Tcfe our from is Turning initiatives our team a as our XXX with solid of reserve consistent, more the development. than of have in proved long-term combo modestly past more

net the share At future note our to per reserves, after debt. SEC current Marcellus bookings for core is secondary value year-end the NYMEX also associated proved which $XX.X our with We Lower reserve price XX% undeveloped subtracting have essentially targets. Btu, equates after-tax per of billion, million deck accounts $X.XX our $XXX formation proved XXXX, no meaning we of

equates $XX reserve EQT setup core ascribe favorable locations X,XXX gas of proved XXX XX% remaining our locations. shown deducting underscores value share billion from to As value to at net and our We $X.XX debt. billion just after-tax X after risk Gas, per greater inventory on of presentation, $XX $XX at proved Slide believe ranges to which extremely or this $XXX of risk/reward investor to as the net for stock roughly our than reserves XXX

approximately to net budget third-party forecast. up capital $X.X a turning XX to development setting XXX from which billion is our of XX% are accounts our shifted Hill pending spending of line we in This XXXX, contemplates Tug $X.X XXXX year, to wells, Reserve XXXX. as XXXX excluding kills roughly into this Looking XX billion constraints acquisition. in XXX for

lease is and comprises X% other, capitalized items including Land XX%. facilities, midstream and in

Our of $XX and midstream into million $XX shifted $XXX-plus for XX% have new for from for roughly that for million new includes budget well and service assumes XX% inflation TIs year-over-year million science, XXXX design ventures. oilfield $XX approximately XXXX million to

is Bcfe solid to getting confidence Our production by January year. early X run giving rate this production consistent is operational our to commentary and XXXX in trends us XXX of of in completion Tcf back efficiency We've seen year. execution which quarter of middle with guidance per throughout the the our X.X the prior QX in

end natural gas $X.XX our the That the slow to implied guidance low to deteriorate. continue of our midpoint where equates efficiency At prices said, all-in ranges, of our should scenario per the XXXX contemplates cadence a capital approximately production we Mcfe. guidance year our for range

capital and run XXXX levels. efficiency improve with our normalizes Given kills XXXX as the XX% till shifting go-forward a be will CapEx on our rate associated into basis, X% nonrecurring in by we to declines catch-up and XXXX expect capital from to count beyond, to

of $XXX On investor gas at implying flow range Slide protection EBITDA to a price our $X.X we book free prices. flow XX% range roughly XX%. to will production with from provides we of approximately operating outlooks and natural similar per this a X% Btu. a cash flow at flow project $X.X downside as to hedged XX cash free cash cash roughly our our at $X of various We year average XXXX range, $X of adjusted from range $X.XX at adjusted provided Recall price floor free presentation, flow gas a of billion billion significant cash hedge weighted $X million have EBITDA, yield million gas billion and XXXX

risk-adjusted all natural generation gas GACE XX of peers compelling highest the As commodity scenarios. on price reasonable cash Slide presentation, highlighted to free EQT the across with exposure among offers most the our flow XXXX

book, Btu, and structure country. below the is gas flow natural the in per the approximately peer is producers cash in well-positioned $X.XX among in lowest and which of XXXX With EQT's average our corporate the all our million hedge reductions free breakeven roughly price cost XX%

low-cost value flow the and equates generation cumulative underscores for cash I'd pricing, do breakeven opportunistically and XXXX proposition in so generate embedded at Tug to The recent decline no EQT $XX number assumes current market flow this our value also repayment shareholders, countercyclically greater Hill our impact the gas billion, cash we XXXX, positions with our in repurchase lower of further Even the at which XcL debt our is than us free from and which near-term from programs. via capitalization approximately will assets, shares. midstream significant is of resiliency to Hill to strip to threshold. continue excluding and expected note share forecasted our free Tug to XXX% generation our natural

have program buyback capitalizing year the retired $XX than at the reduced diluted average XX.X X.X shares of late million as convertible via million we an outstanding we $XXX of by million share. repurchased beginning fully price Since initiating share. We per more note the a shares we have retired our X% less $XX since on or we of with price per current approximately shares average nearly in an than year. Along have shares the at over X little million a in environment repurchases, are of XXXX, our stock

Along to of total par. This $XXX we update a of with principal underscores beginning the more balance and since billion repurchases, last retired cost to XXXX also at sheet. our an takes an our of commitment our million retirement incremental XX% have since debt average than equity bulletproof $X.X the debt of

leverage gas game for our opportunistically times $X.XX our at goal achieving X into repurchases as we remains returns Looking shareholder progress towards to will maximize we ahead, a will lean equity conservative returns to and times methodically price shareholders. of consistent plan X.X for

we beyond shareholder strip, through current for at returns we free greater flow debt have so firepower project and repurchase than our billion cash of mentioned we current previously, and equity XXXX As above $XX material authorizations.

and relates Hill responding are closing to to to the process the request FTC's remain acquisition, second the it Tug pending currently in acquisition. we the committed As of

lower as the flow highlighted gas structure EQT free in Tug announcement greater shareholders the assets with we per prices. Recall, natural Hill's cash at generate share low-cost deal to accretion

durable in at XX through of the free EGT's X% flow flow Hill the share Tug before accretive on through more is compared cash well-structured factoring and transactions. lowest the time analysis latest most demonstrating approximately acquiring focus with synergies the XXXX shows in per XX% than announcement deal importance cost free Our of cash

progress of Hill forma guidance via most approach become year, note its EQT Btu. hedges layered gas energy to proud significant the we world. XXXX the also flow we purchase accomplishments the around as late through the will benefit provide We full our price with cleanest $X agreement which I as closing. of pursuit lowest on floors To last at per half update transaction timing extremely with our purchase closing roughly volumes up, the Tug upon to with We producer the of will million The closing. made market at the adjustment more am covering midyear plan details renegotiation of pro reliable and in and XXXX in of sum cost, to

acquisition and gas of price through financial natural price years have been deliberately the on this business it downs value for will today, stakeholders. value EQT and the commodity pullback, natural we cycle. we operational as have of can Notwithstanding to all over future efforts continue such of past Our the efforts of recent our and the sculpted that and relentless the ups and parts thrive never our the crystallize are bullish as proposition we gas our several

and company. our back in urgency this as repayment be been goals excited an year. see with company from our life. sheet and these announced debt his promising are contributions and team and over with so and move heart capital moving professionalism a at a Before integral of his our designing grade our to ratings grateful XXXX, but positioned he colleague We to many on since EQT clear through challenging facilitating to came to company the friend him thankful next EQT immensely leadership week, not did for time. help and strategy, record for future around the earlier contributed I'm a thoughtfulness. part out only turning plans. has a the his successfully transitioning tackled a we delivered. into and time to achieved later of a investment and as phase Dave our executing include his seen you and efforts, to projects this and objectives position credit may balance turn He will to in I'm him pivotal have Dave Dave EQT Dave improving us call allocation we with Dave, had

I'll guys. now over call to you, turn the

David Khani

spent grateful Thanks, this at a leaving on strong have last is having left accomplished a we I've the the a in working on sheet. for have team. three proven unique company Toby. EQT of years that It model of how part with and exceptional short has amazed time, been years much be proud honor a organization truly will a period such to I you and development evolution. and world-class am can and and am EQT asset culture, to company to an has that the been balance with been see mark come. will this base value my trajectory create shareholder I

with I investor as As months of announcement I smooth mentioned for facilitate stay fully help seeing the APP to I forward the week, and engaged transition, will next several look this upcoming at a in you many events.

for guidance. despite quarter Bcfe. Now and before our guidance Sales hedging to of fourth roughly of XXXX approximately summarize sheet weather-related volumes were and XXX Bcfe, midpoint the briefly I'll in our full with balance fourth our the range line impact XX discussing numbers turning results. year quarter

Our quarter adjusted per Mcfe, $X.XX Mcfe. costs $X.XX and total the were resulting and our billion $X.XX in operating an margin unit per for operating were revenues of or per $X.XX operating

total at in Capital was expenditures $X.XX billion takes cash Full flow slightly of our free XXXX quarter $X.X generation expenditures, million, which million of operating Fourth midpoint range. to billion guidance $XXX were cash midpoint acquisitions, approximately in XXXX million, to capital billion. flow cash the was free below $X.XXX the excluding adjusted guidance $X.XX came range. $XXX and flow our in interests the with $XXX our line quarter, excluding fourth noncontrolling billion,

million our working by a receipt $XXX was the requirements. driven saw quarter, E-Train, tailwind election capital lower which of prices option from also and decreasing cash from during declining a receivables margin We accounts

efficiency to capital TIL that was production. in at expected quarter per from $X.XX per Mcfe the up due limitations This Our in year the in negatively our quarter lower for earlier count. third infrastructure impacted Mcfe, the $X.XX by driven XXXX third-party came

XX% XXXX average For peer production approximately gas averaged the which third-party our issues is impacting last capital $X.XX full per Mcfe, roughly year. just below the year the noted despite group efficiency

to core liquidity. believe the operating credit forward. last Recall, this A over ample credit philosophy balance and achieving Turning differentiated we strong for create tenet We is to moving positive sheet. have milestones company's our profile GT a several saw sheet value to will year, including ratings. opportunities balance investment-grade

the year leverage fourth with $X.X net on to $X fourth at that with the times We our Our in of cash from inclusive of will quarter balance to in billion acquisition. the notes portion the exited hand continue quarter down debt X.X exiting billion cash billion help and offering used year improvements of the the times XX-month from of $X.XX sheet XXXX be net in a pending X.X Hill and ago. proceeds Tug trailing fund

our towards returns at retired of $X.XX As expense. progress Since of Toby We've interest of debt incremental open $XXX senior an billion which has update annual our more average price at capital of actively our an principal, mentioned, we have retirement last $X.X eliminated nearly principal we via par. continue initiatives. unveiling $XX now than since purchases note debt framework, market million retired million

hedging. to Moving

hedge of per currently price best provides exposure. MMBtu. while our of to provide price average average to covered Our our now a pricing to gas position ceiling of volumes hedged have hedge investors the with and XXXX have Since weighted per at cash we MMBtu our scenarios which our added of private weighted that philosophy a $X.XX with $X.XX XXXX also floor average XX% prices. XX downside maintaining our XXXX risk-adjusted update, book and our weighted per last hedge an with significant underscores We seeks protection XX% natural flow $X.XX exposure Xs, production evolving of MMBtu, gas

As nearly significant our we it hedges, of basis relates XXXX to widening covered differentials. material of Appalachian protection basis, against XX% production have potential providing any via

see term, power structural Over long for to growth and it to local the retirements. reasons coal-fired basis, PJM in by relates we medium demand incremental optimism most notably as driven power

the incremental from last transportation added $XXX We portfolio $XXX pricing to to Midwest. been to we a million west have Coast day expanding FT firm benefited capture dynamics. also our million favorite and as portfolio we've an including further Recall, have associated year, and able gas to ship Gulf million the $XXX

to expand capitalize peer-leading ahead, opportunities seen transportation trend other as existing expect Looking additional us firm depth the operators capacity. we've on FT of we allows to our inventory our position Appalachian releasing

our XXXX, our For market we local Coast, MDP Gulf local XX%. XX% is now to model eased. exposure start-up midpoint will XX% mix at roughly half of XX% take to an be in the second expected which the Note approximately XXXX, basin Midwest XX% and

reminder, our begin declining gathering to contractually independent of providing XXXX a success, as a margins cash tailwind our As in free rates wide. flow further MPC's

Turning guidance. to

We to XXXX. X.X midpoint expect range XXXX the production Ts from roughly Ts to flat with volumes X.X with compared

As rate incremental Bcfe growth online quarterly decline. that production in quarter of low activity to by a were maintenance natural should XXXX tied the of prices we year, in we bring to run last the we expect XXX our with gas midyear. sequential moderating potential pills the the delayed our second scenarios achieving and that production contemplate end of our variety continue planning Note lines

to billion, XXXX Tug $X.X $X.X acquisition. budget We of Hill pending setting billion the are excluding capital the

contracting XX% providing XX% strategy, access Our budget position. to supply our strong oil year-over-year and with service beds, cost chain in inflation,

not opportunity half the activity the see This this decline some has price second the year, With into of XXXX. relief outlook. in been likely our gas-directed of factored we drilling for

base projected our wells associated our achieved shallowing in million periods. outlook to book with cash adjusted insulation improvements $XXX-plus flow of NYMEX XXXX to of to various our in and the carry decline line from and past cost drive capital XX% to prices. X% and XX hedge and XXXX by efficiency free in over EBITDA, operating anticipate deck, material investor gas gas along flow the XXXX from at X% PDP thus natural On is into we Slide dynamic, yield cash Aided cash for have This anticipated at approximately free we at our provided several ranges of budget turning not to our XXXX that flow years, mentioned, million billion slipped XX%. $XXX XXXX free improvement we a our cash third-party beyond. from to forward constraints Toby is As of flow $X into implying $X $X with gas

to it of As relates $X we of federal NOLs these XXXX XXXX pricing, of billion end taxes, cash NOLs current at and as cash expect to our roughly bulk had the the offset strip taxes. we of

to rate strip XXXX beyond, free approximately be $XXX X% tax cash would XX% which cumulative income in pricing million low in our operating to fully cash current XXXX $XXX range X% Our the or million increasing at flow is outlook. of to captured and

to allocation. Turning capital

Recall have price million We have shares eliminated an retired authorization last year. note $XX buyback our convertible via XX over we at repurchases of of shares average that million share. now per X.X additional

We lowered since with So billion total, we've of in shares beginning firepower billion have still than share fully more authorization. current under remaining our XXXX. $X.X retire by $X our to diluted count significant X%

of mentioned we've progress framework. also our capital significant principal our debt As retirement billion to debt with since previously, retired initiating $X.X made return

tug which assuming to our $X.XX balance acquisition, sheet to X of $X.X by to for further pro X.X continue forma absolute billion bulletproof times, will gas times the our NYMEX target debt-to-EBITDA a We price. debt taking

and our ahead, million low-cost than XXXX further base for differentiated greater $XX achieve flow plenty from retirement to firepower our equity debt anticipated Looking we of goal through provide cash opportunistic protection and have and buyback book and which free structure XXXX exceed equity an authorizations. of cash dividend cumulative buybacks downside towards will our hedge with and debt we XXXX allocate flow, retirement free

$X.XX of XXXX, of gas hedging. negative over cost at ROCE of average from structure by the per of approximately EQT investor to X% natural the impact average underscores deck, XX several conclude Slide which MMBtu, realized inclusive economic past achieved price highlighting has of improvements the XXXX our an generated I'll we of years an

$X.XX profile by XXXX with an we've million, reduced exemplified with our corporate as spring roughly into XX% roughly was sustainability price value gas $XXX realized the creation environment. over costs our return $X of of business. operating prices natural this current our model ROCE At in to strip a our improvement coming natural in jumped highlighting potential years, our MMBtu. Over should just pricing, the loads improve gas This improving annual per period, at and ROCE the

I'll call now to for concluding the Toby some turn back remarks.

Toby Rice

through Dave. today's X on I to efforts, gas reduction EQT To to execution conclude Thanks, strategic of scenarios; relentless track points. One, all few thrive remarks, of the natural reiterate emissions, our the surface two, prepared achieve GHG a of the accretive to the positioned X on recognizing M&A to only market meaningful cost have and want producer is balanced value to profile purposely of become price our is believe Scope and natural emissions gas. hedging strategy and scale scratching we first energy we in net opportunities, the EQT

on report performance XXXX our and consistency proved underscores tremendous base of strategy peer-leading reserve significant in value Three, well our inventory based reserve upside the development our trends positive depth. the our combo with inherent

return gas outlook capital on over structurally gas coming price well a bullish opportunistic ahead Our us decades. has strategy capitalize to of weakness the temporary natural positioned

sustainability XXXX our of parts the of offers U.S. through as all natural risk-adjusted all and the business best gas flow And lowest commodity breakeven the of NYMEX lastly, EQT among underscores prices cash the X to cycle. natural of prices producers, gas free which exposure

open to to call like questions. the now I'd

Operator

from question Umang with Our Instructions] Choudhary is Goldman first [Operator Sachs.

is line Your open. now

Umang Choudhary

everything forward for cash quarter. I hope Dave, the begin you First, options. given question, low within and best after breakeven to next for year, the the and guess free have you as to engaging first next thank and flow your we the touch and stay this release, also wish in look you some

reduction? about how opportunities would repurchase between share So allocation debt flow and you cash think

Toby Rice

Yes. Great question.

into see to think our our asset seen And shift to capital continue we place of a And be going in and a of see towards fixed past over in debt That's hands grow our value will durable approach equity to opportunistic will What allocation with then I you'll holders. the you'll that prioritization you've the us continue to So continue us has paydown. the obviously, time. that been buybacks. that be dividend the put story is look plans.

David Khani

just add you as to our Yes. targets, flow free And percentage I'd that time. equity see could hit cash increasing debt we the of our towards

Umang Choudhary

love would the gas then on thoughts your natural outlook. latest And

-- you extent supply how thinking what with any strategy that -- hedging? market thoughts expecting the can what's change update is given are And you the are M&A the then how around the shaping you can given it from on On a then response, the to the and age. any -- way your on around does up approach you you prosecute going

David Khani

Yes.

has gas volatility So early XXXX. since tripled

to going that's think we so continue. And

so And hedging strategy X.X Edge that our -- our encapsulates strategy really volatility.

So everybody has directions. to remember, volatility both moves in

we collars. way we hedges the upside the white structure our risk-adjusted of put with in why our And so kind that's

now little a back on starting to cost is gas going cut there. gas in mid-year got put and that and It's we see take as far the we little anticipated aggressive to As much kind while higher oversupplied, place to as of a right now, of a hedge right producers more obviously activity. we and get why

burn and down You're also coming as absorbing seeing of some coal this well.

in demand industrial some absorb demand some some system well. of up pick the chemical see as We'll that's up that as and well back ethane the to as pick increasing as power as well of industry start the will the destocking and

market we to this the going stage get get balanced to that for it's and way XXXX. to do, should think to through to to But going set take we more some probably time kind market. better it's balanced producers year where a get stage if the reacting I of set So a the we anticipate

Toby Rice

to protection giving specifically, And I is think also designed while Yes. our hedging us to commodity us strategy give prices. exposure the on our regards downside great to comments strategy, Dave's in

see you'll that us So to approach. execute continue

We the real relates XXX feel future. As per to back to will to back prices to be get we'll place it of ability gas we what will production we continue a that rate. in if capacity you're our think to back. quarter will happy activity levels, where view like prices capacity get prices give is our respond in if year or plan that that But move Bcf to seeing this run putting more us capacity production have gas see be time in to prudent that that's us the decline with our

an to M&A on going continue. basis, So we're

You'll see approach there. no the on change

per share. financial which NAV per One hasn't high-quality sure our of price the But factor, environment making M&A is approach the the benefits you're low the flow other in on been our to low-cost, of that. low commitment seeing is showing and assets accretion see characteristics we share a key on just buying cash of cost really up with deals today,

so continue strategy. of reinforce M&A element we'll our to And that

Operator

Our with next Sam Research. Wolfe from comes Margolin question

line is open. now Your

Sam Margolin

remark designs. And like it's exactly manage I that with wanted on PDP declines? if XX it's going looking the or is Slide outcome you're maybe of outcomes Or some to like specific well little talk just about going ask what new to a extension approach, bit about comment? a whether with about at for type this on

Toby Rice

increase the but The through the work come developing. science the going in an economics the does mean on of EUR basis, some performance ultimate is that projects I of foot in Yes. we're have science any we're lowering F&D we costs. associated of that the with per doing to improve do is the approach that our increasing effect

that towards we determination that need monitoring well receive service we'll decision. this pair us period date part the Insight to the of cost inflation a have in really the continue we the middle is for with that design, make year. for now. economics ground right also, full through signs with that of this And and expectations the we'll So make to up a on

come an as you we'll back we So information. to with update get this

Sam Margolin

And levels then activity if back a now a current you nearing inflation. or that just actually if that activity because some were I of just cost think the of the levels you a the And just kind here, characterize of price mentioned outlook of -- you with that you respect more do thought market we it's as services follow-up that just overheated, market right sort some your if And severity so could see side drive unit give service on lower. could little plateau mentioned the conditions? are would maybe wonder you the of to just

Toby Rice

market Yes, prices, But I the the to think anticipate pullback commodity some activity with X months, specifically. it's in reductions. a hot been last do we see

already seeing here producer marginal the in Haynesville. what from U.S. consider we and You're the the it

should translate a the lower levels weeks, -- the costs they're monitoring we'll So future, that next and closely. I in service be few And activity how in ultimately, have and we'll think view to the down. coming on that over better next

Operator

Our next Cowen. question is from David Deckelbaum with

Your line now is open.

David Deckelbaum

curious EQT, Tug back when timing Congrats, might ramp have the thought otherwise year, hoping David, in just also Hills allocated Virginia. been large that the just core ask risks of the I'd half the XXXX where around But sort bit in suppose legacy or year activity TILs. sort informs about next you're a how of planning, doing of was best just ramp. closing would to that there of of you towards of chapter. incremental color you're about obviously have like West been luck timing how on I I this EQT maybe of the a is of what you the envision a which little function thinking

Toby Rice

Yes.

it there. slides we've we QX, hitting per efficiencies the by day production day. really gotten targets thing to of levels and stages completed really completion we're of relates capacity our to sort at per showed And is performance how footage the looking our back As historical one

So and the on guiding the reaching pace target. be watching factor we'll that will of that be really that,

toil it activity always running that As something activities on our weren't planning we 'XX. that level, we changing to going in to planning on were be with was this activity relative probably incorporated be and Hill levels would acquisitions, the to Tug relates the transaction

we planned, we're deal we'll sort executing closed. So and when of that adjust as gets

David Deckelbaum

of on were there the a assume $XXX right it's price I expectation say, And the the would million end is you're not, to if level. seeing the adjustment? close, a production is And if everything purchase be year, that still day, in this let's

David Khani

Well, yes.

price So midyear the last at was year. purchase set

that the -- flow any that will each in cash effectively takes close. to change so price free will And this lower month

to marketplace, whatever -- don't decide So they then free But if response this if that lock they their benefit activity. changing to we they're a half cash impacts to know that change free know hedges to the good We add us. at activity of on in change that cash and will production did that to do they flow $X the gas of portion flow.

is this will now So -- close our and right midyear. that expectation

David Deckelbaum

a quick one. just And

difference XXX guess, only the and next longer several for just the view your or the through, benefit years, in just to term EQT 'XX, level this Just only breakeven corporate the hedges your of confirm, between is XX year, right? I

David Khani

much we're yes, gas before lower we just don't and free show a flow. price generate we trying Correct, cash that to

Operator

Neal with from comes Truist. Dingmann question next Our

Your now is open. line

Neal Dingmann

Dave, and definitely wondering you potentially year mentioned specifically. level you a based your first wondering D&C -- plan? just inflation would I'm on question costs really on What's great thanks cost, relate see prices. your pressures well. just incremental what how probably to how comfort all you're potential for that on this the what sensitive and change But You with D&C help. to does when been other is that gas as thinking how First, my time, -- And is

Toby Rice

at When you locked percentage Yes. exposure got services market. to at and in do you the what of that to have look look spot sensitivity what is have we the we

locked rigs in. those are from the big at Looking items frac crews, and picture

procure. this to would XXX of back up about we're year the We that have frac in days that show half looking

a of that. there's good procurement this how And on first is big to that showing out from markets to of before little item see steel us, think -- are got bit perspective a hopefully half planning there through exposure market we we've for the another of time the the pretty spot, On loosening we're year. So shakes for we're there some signs price. some steel, it which and but

there as good. then far feel feel And and environment as positioned price for to a locked procure are like concerned, rest hopefully, those service steel. I and better the So largely we're sand and in is water

is country. of thing of a we is getting in part basin the to One about that that's Appalachia, important the something sand, parts other because been large really has sand the that of that's note I'd say it procure in the market than the White. different what people in is sand coming Permian. that sand Northern are we're not Wisconsin, from A lot seeing backers

not been So price inflation in as little as country. hasn't the it's a it's as -- much service other exposed places bit

be hopefully we're So environment good a a advantage and sensitivities see and how take cost service feel year. of better cost of in the of like can position this we and second that's in the flexible sort service half

Neal Dingmann

on about better price just Yes, seems in And wondering like -- on is color in area I'm included just Tug maybe month housekeeping. per definitely, in Or are adjusted that included adjustment $XX incremental? it Hill. lastly, mentioned or that the the there. price million to the just for applicant just purchase guys the is better Tug Hill the you I'm wondering, hedges?

David Khani

what just The $XX million, is that you said?

Neal Dingmann

Yes.

in is adjustment, isn't You the is just that wondering, $XX that, I'm per mentioned mentioned Tug regarding Or there included about month you price incremental? that hedges? million that Hill -- purchase the with

David Khani

$XXX believe $XXX half we the it count. generate of the first so year, was of basically probably lower million cash last Half price. the of that X cash. would Well, months share think goes to -- excess to about free I reducing Roughly it of flow so it million in goes purchase last to

if vicinity in that the cash And pace, might flow you year. you the thought that with free their same of hedges, somewhere second half same in we'll trends the have, along so call still

you purchase could price will purchase that maybe talk plus about -- you adjustments So help that price. lower XXX of

hedges just that. will the So solidify

Operator

comes Read from Wells of question next Fargo. Roger The

Your line is now open.

Roger Read

Yes.

you, quick question Just one probably Toby. for

production in about decline of, about going do you it's gas Or prices? let's costs you the -- about part year. breakevens then absolute think something you and end, activity a as below it's latter gas there creates the think more service the ultimately be that maybe in think this the on risk more say, on Just just for prices, to duration out forces average little do and lower you by of headroom

Toby Rice

Yes.

to the activity plays the shale that a to these also gas. in are taking rising Tier on amount That continue is there's that have geology will of thing breakeven place happening breakevens moving of the should the zones couple of other things level, I they're are mature That think United impact geography as increasing the an the will But solidify and basins that that's or X of in operators completing. impact help activity time mature, -- costs. service over the lower also have and in from price is an lowering levels States price. will as the marginal both

all on security. energy has of matters. gas. emissions targets turn if is, the and what turn I'd call important most seeing learned is takeaway one The the transition. of of security their They this mean is there because say concerned, far we're you Russia, for energy energy duration to security, as we for is did other one thing lack thing cannot energy. the looking cheap without that from the And natural Europe learned gone thing as energy Ukraine Europe security. reliable is the I clean And happened backwards in where in And XXXX, lesson

over the the natural only because this strengthen And is for is going security in providing to to time so product key the call we energy Americans think to that world. gas

Operator

Our of next question is from Bank America. John Abbott with

is now open. Your line

John Abbott

Dave, the of thanks wishes echo your Bank team best next all of best your wants America to chapter. for in entire who

first on Hill XcL Our and going question be Midstream the acquisitions. to is Tug

year. acquisitions closing in So of guidance of when when and back at look sort -- you in September these about think you year potentially middle you that last this so the the provided of

out at into on this heading include in spend laid does thoughts your First, the how still thoughts that impact the track you XcL? inflation on midstream on updated is potential breakeven And second, then September the year. of current

David Khani

the So first. you I'll second. take take the

ahead. Go Okay.

Toby Rice

the as was far -- the as second of what part So there? question

David Khani

into our breakeven. Inflation

Toby Rice

Yes.

due their Tug assets the those a liquids thing running cost, fact that with to the low and their I there. they're program why Hill the had was reason midstream key such breakeven the mean, and own really that also they percentage So of

recast we'll a operator what be and like with perspective. other inflation going they're yes, looks every that like CapEx pay to from So

The these is one high-quality assets. pretty say I'd thing are

balance the cost service the a by So we production levels of will time inflation service mitigate bit come effects. seen to hopefully, But over, from needed we've the activity little costs. take more maintain some

David Khani

then some does give you, Yes. there. that -- breakevens incorporate that embedded even look in our incorporate at inflation And if you we long-term

So as of some that midstream as projects together will on of then the working M&A absolutely those were -- continue and through. far those does we concerned, this some and were projects projects are

have to and far the think from Tod until on I update wait see As rest, we'd to as that. get closes this an

John Abbott

forward then gas is think the natural exports. What albeit storage, is our former the about with levels question on spot weakness, second XX% after above losing Despite Freeport year-ago is macro. curve of on? And sort you going do

David Khani

literally in modest I of I'll up, oversupply increase. 'XX. mean Freeport market you the curve have not you've and weather then front oversupply the call ‘XX basically into an had And and very end modest and show in knocking heading oversupplied caused down the

producers cut the because forcing And so a your activity is it's pricing production to basically sending signal to off-line. start

demand So and it's going also up. send to

to And balanced combination supply growth end supply see so impact. try slowing, to which a about of that a off or of get reaction probably a from up market, will coming to day to you're which it's B being create to going going

and into back You'll online. coal demand forced the being in incremental also away the coming B also demand then see stack about from between going an power plus industrial system of

it will take So curve later cause will will happen That 'XX will of the and action. balance if longer. market things that be means happen, come rest will reaction, the will that that it and the the those quicker the doesn't some, down sooner, it

what and get does. that's always will signal there, it pricing So the

Operator

Parks with Tuohy. comes next Noel Our question from

now is line Your open.

Noel Parks

revisions in efficiency on able Wondering, upward general things. to see experience either be anything redesign? you'd you the from reserves, did just or few your type any A from curves,

Toby Rice

Yes.

Bcf of to referring we're what about that's XXX revisions curve type performance and increase the sort in we revisions. said So resulted when an of

didn't factor seen that too anything early that It's work to performance So just in we're we increase have doing. in. an to science bake the on

David Khani

Yes.

more information historical of comfortable us booking benefit. a, and for more That's probably we'll 'XX Netherlands in be beyond uplift have with of person. to to need any kind tool You type call it,

Toby Rice

that theme Yes. be across assured to see And performance around this investors industry to where I to industry hope starting sort at is with degrading of that you're look this well a you're we're in that dependable I assets should very well investors. the high-quality think, -- and to improvements positive reassuring that putting see seeing for results are performance, be translating out, is

Noel Parks

activity side is point, rig just looking at if reference curious your And or course, to is totally as just to the the point, ahead the services, this be continuing wanted I to, sort a what of going either head see Great. service response do we when down. about on next significant of side? frac to ahead But renegotiation

Toby Rice

Yes.

joining were -- be X we're with rigs X for now. will a year that out of right We've good up. this we locked crew currently negotiations have year sort end frac So crews the under the part through frac got sorry, that of middle of X of the or X of frac factories crews, out the

we'll other to So we're is through the continue I'd pressure working cover factor, biggest say and resource I this the work for that's And half. which second we big half on. that steel probably through big year, as that. have of the the first mentioned, we'll

Noel Parks

and of have unit maybe basis And on deal-related on impact after just of more that onetime rough might once when about how a might a to the acquisition, one a steady of close. G&A you more. back the state Thinking many Tug sense quarters closes, can just Hill get give we of sort G&A

David Khani

Sure.

it will So unclosed pull an right G&A and FTC extra to now, process. with tied the we're dealing

that's effectively we were I second what at the probably from is would last would would I to in most with deal close know bet of the the now. quarter. of end could midyear, what we third quarter. say best all by if we hitting But the probably It hit some So say right likely your

Operator

Diamond is Paul question Citi. next Our with from

now line is Your open.

Paul Diamond

reductions with And strategy. a just some quick optionality on guys kind guidance. some you will the question [indiscernible] on and just level? certain -- in get The is a you that there below more side high about wanted pricing? around to of change it XXXX pricing you some sensed numbers Or versus kind or thinking of step if on yearly give then growth it for Perfect should be is the we drops

David Khani

Yes.

of returns not spend going be perspective. start money from out and period duration it about X-, So over one ad and it's produce come a be to X-year probably in matters combination all and to that pricing will going It's we when thinking to quarter. a a

we'll anticipate the and will look at look think at we'll to and the try be. impact forward the So curve we we'll what drop

And so model we'll out.

to be duration decision a a And be but game-time so to We're going drive today, and not price decision. will it that make it's going will it.

Paul Diamond

follow-up. quick just And one

shift As in that a long-term still we your pretty of kind kind move Northeast the Or is $XX versus million fundamentals PA PA more front has the far Southwest versus of million still priorities priorities $XX as supportive to kind there from runner West kind of of been go. the Virginia? any and much Southwest of as

Toby Rice

to Yes. our I the is best returns sooner. schedule designed mean, develop of rate

to is of set. what probably continue And So for future. see you sort going that mix here is into year the this

schedule per wells sort schedule. And factor we have combo lengths, combos, another more and that's of into is lateral out. the surface also laid we move longer impacts So where can the factor could do our that how to

Operator

for the to I'll no back pass remarks. the There are over team call management further questions. closing

Toby Rice

lot a in volatility today. for of Certainly, everybody, environments. your time Thanks, these

really going for yields. to downside built a free the a is flow we'll And exists even very cash to EQT. scenario, the and here, to for I people good the business able look showing look we a that energy low space. double-digit our I structure, cost think EQT generate gas in to is work a and done it's with still natural up at future be promising time we've within really think that at And that differentiation

we'll EQT on our to to employees delivering XXXX. really peak are in at going focused be and here continue work So performance

your for So thanks time.

Operator

call. Thank conference for the concludes That you participation. your

now disconnect your lines. may You

EQT (EQT) 16 Feb 232022 Q4 Earnings call transcript