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TheStreet Open House

EQT Reports Second Quarter 2012 Earnings

Reconciliation of Adjusted Operating Income:

   

Three Months Ended June 30,

2011
Operating income as reported $ 153,170
(Deduct) / add back
Gain on ANPI transaction (10,129 )
Gain on sale of available-for-sale securities (4,458 )
Reduction of certain non-income taxes   (3,100 )
Adjusted operating income $ 135,483
 

Reconciliation of Adjusted Net Income and Adjusted Earnings Per Diluted Share:

 

Three Months Ended June 30,

2011
Net income as reported $ 87,754
(Deduct) / add back
Gain on ANPI transaction (10,129 )
Gain on sale of available for sale securities (4,458 )
Reduction of certain non-income taxes (3,100 )
Tax impact at 36.4%   6,438  
Adjusted net income $ 76,505
Diluted weighted average common shares outstanding 150,111
Diluted EPS, as adjusted $ 0.51
 

Operating Cash Flow

Operating cash flow is presented as an accepted indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt. The Company also includes this information because management believes that changes in operating assets and liabilities relate to the uncontrolled timing of cash receipts and disbursements, and therefore, may not relate to the period in which the operating activities occurred. Operating cash flow should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with GAAP. The table below reconciles operating cash flow with net cash provided by operating activities, as derived from the statement of cash flows to be included in the Company’s annual report or Form 10-Q for the quarter ended June 30, 2012.

  Three Months Ended

June 30,

  Six Months Ended

June 30,

(thousands) 2012   2011 2012   2011
Net Income $ 31,446 $ 87,754 $ 103,481 $ 210,009
Add back (deduct):
Deferred income taxes 13,694 33,222 53,057 103,938
Depreciation, depletion, and amortization 115,681 81,886 223,206 160,284
Gain on disposition (1,110 ) (22,785 )
Other items, net   (726 )   (15,769 )   8,529     (14,962 )
Operating cash flow: $ 160,095   $ 187,093   $ 387,163   $ 436,484  
 
Add back (deduct):
Changes in operating assets and liabilities   36,220     51,477     31,276     44,600  
Net cash provided by operating activities $ 196,315   $ 238,570   $ 418,439   $ 481,084  
 

Adjusted Cash Flow Per Share

Adjusted cash flow per share is presented because it is a capital efficiency metric used by investors and analysts to evaluate oil and gas companies. Adjusted cash flow per share is not a measure of financial performance under GAAP and should not be considered as an alternative to net cash provided by operating activities or net income per share, both as defined by GAAP, or as a measure of liquidity.

 

Three Months Ended June 30,

  Six Months Ended

June 30,

(thousands) 2012   2011 2012   2011
Operating cash flow (a non-GAAP measure reconciled above) $ 160,095 $ 187,093 $ 387,163 $ 436,484
Add back:
Exploration expense   1,887   1,198   3,715   2,573
Operating cash flow and exploration expense $ 161,982 $ 188,291 $ 390,878 $ 439,057
 
Diluted weighted average common shares outstanding   150,149   150,111   150,200   150,034
Adjusted cash flow per share $ 1.08 $ 1.25 $ 2.60 $ 2.93
 

Net Operating Revenues and Net Operating Expenses

Net operating revenues and net operating expenses, both of which exclude purchased gas costs, are presented because they are important analytical measures used by management to evaluate period-to-period comparisons of revenue and operating expenses. Purchased gas cost is typically excluded by management in such analysis because, although subject to commodity price volatility, purchased gas cost is mostly passed on to customers and does not have a significant impact on the Company’s earnings.

  Three Months Ended

June 30,

  Six Months Ended

June 30,

(thousands) 2012   2011 2012   2011
Net operating revenues $ 298,137 $ 327,541 $ 664,031 $ 684,998
Plus: purchased gas cost   39,667   40,250   123,733   155,488
Operating revenues $ 337,804 $ 367,791 $ 787,764 $ 840,486
 
Net operating expenses $ 216,733 $ 174,371 $ 430,441 $ 334,201
Plus: purchased gas cost   39,667   40,250   123,733   155,488
Total operating expenses $ 256,400 $ 214,621 $ 554,174 $ 489,689
 

Q2 2012 Webcast Information

EQT Corporation will host a live webcast with security analysts today, beginning at 10:30 a.m. Eastern Time. The topic of the webcast will be financial results, operating results and other matters with respect to the second quarter of 2012. The webcast will be broadcast live via EQT’s website, http://www.eqt.com and on its investor page at http://ir.eqt.com. A replay will be available for seven days following the call.

In addition, investor presentations and discussion materials are available via EQT’s website. These materials are updated periodically.

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