EQT Announces 2014 Operational Forecast

EQT Corporation (NYSE: EQT) today announced the Company’s 2014 capital expenditure (CAPEX) forecast of $2.4 billion. The CAPEX forecast includes $1.9 billion for EQT Production, $475 million for EQT Midstream, and the remainder for other corporate items. Funding will be provided by cash-on-hand at year-end, which includes proceeds from the sale of Equitable Gas Company, and cash generated from operations.

EQT’s 2014 CAPEX excludes CAPEX for EQT Midstream Partners, LP (NYSE: EQM), an entity controlled by EQT Corporation and consolidated in EQT’s financial statements. EQT Midstream Partners announced its 2014 financial and CAPEX forecast today in a separate news release, which can be found at www.eqtmidstreampartners.com.

"The 2014 CAPEX program is designed to profitably accelerate the development of our expansive Marcellus position and will result in significant volume growth in 2015. It includes capital to continue the growth of our midstream footprint, and to re-start our drilling plans in the Huron in Kentucky. The Huron has returned to being a profitable play and an added benefit is increased throughput in the Huron gathering system, which will facilitate a future sale to EQT Midstream Partners," stated Dave Porges, Chief Executive Officer.

EQT Production:EQT Production 2014 CAPEX is projected to total $1.9 billion, excluding land acquisitions. The breakdown is $1.6 billion for well development; $50 million for developmental geological and geophysical activities, and the remainder for capitalized overhead, well maintenance and compliance. The 2014 drilling program is expected to support 2015 sales volume of 575 – 600 Bcfe.

Marcellus DevelopmentThe Company plans to spend approximately $1.1 billion on Marcellus well development in 2014 – drilling 186 Marcellus wells with an average lateral length of 4,800 feet. All of the wells will be on multi-well pads to maximize operational efficiency and well economics. Approximately 90% of the Marcellus drilling program will focus on the Company’s two core development areas of southwestern Pennsylvania and northern West Virginia; with the remainder in central Pennsylvania to further de-risk this future development area. EQT Production owns approximately 560,000 net Marcellus acres.

Utica DevelopmentThe Company plans to spend approximately $145 million on Utica well development in 2014 – drilling 21 wells in its liquids-rich acreage located in Guernsey County, Ohio. The 2014 Utica wells are expected to have an average lateral length of 6,500 feet. EQT Production owns approximately 14,000 net Utica acres in Ohio.

Upper Devonian DevelopmentThe Company plans to spend approximately $155 million to drill 30 Upper Devonian wells in 2014, with an average lateral length of 4,000 feet. The Upper Devonian shale formation sits above the Marcellus zone across a substantial portion of EQT’s existing acreage position; to minimize development costs, all Upper Devonian wells drilled in 2014 will share a pad with Marcellus wells. EQT Production owns approximately 170,000 net acres in the Upper Devonian that the Company believes can be developed as a separate zone.

HuronEQT plans to spend approximately $180 million to drill 120 Huron wells in 2014, with an average lateral length of 6,000 feet. In addition to the play being profitable at current prices, a secondary benefit of the Huron drilling program is an increase in produced volumes through the extensive gathering system, facilitating a future sale to EQT Midstream Partners. The Company owns approximately 1.4 million net acres of Huron shale formation in Kentucky and currently has more than 800 producing horizontal wells in the play.

EQT Midstream:EQT Midstream plans to invest $475 million in 2014. The breakdown is estimated to be $345 million for Marcellus gathering infrastructure; and $90 million for upgrades to the Allegheny Valley Connector, a FERC-regulated transmission pipeline that EQT acquired as part of the sale of its utility business, and the remainder for maintenance and compliance activities.

The Marcellus gathering investments are focused on EQT Production's development areas in southwestern Pennsylvania and northern West Virginia, and are expected to increase gathering capacity by 120 MMcf per day in Pennsylvania and 320 MMcf per day in West Virginia.

Hedging:The Company recently added to its hedge position for the next three years, bringing its total natural gas hedge to:

        2014     2015     2016
Fixed Price
Total Volume (Bcf) 218 122 60
Average Price per Mcf* $ 4.35 $ 4.39 $ 4.45
 
Collars
Total Volume (Bcf) 24 23 -
Average Floor Price per Mcf * $ 5.05 $ 5.03 $ -
Average Cap Price per Mcf * $ 8.85 $ 8.97 $ -
 

* The average price is based on a conversion rate of 1.05 MMBtu/Mcf
 

2014 Guidance:Based on current natural gas prices, EQT Corporation's operating cash flow is projected to be approximately $1.5 billion in 2014, which includes $55 million for distribution to EQT Midstream Partners’ public common unitholders. See the Non-GAAP Disclosures section for important information regarding the non-GAAP financial measures included in this news release.

Production
       
Total Production Sales Volume (Bcfe) 460 – 480
Liquids Volume1 (Mbbls) 6,800 – 6,900
Marcellus Volume2 (Bcfe) 360 – 370
Other Volume (Bcfe) 100 – 110

 
Marcellus / Upper Devonian / Utica Rigs 7 – 9
Top-Hole Rigs 7 – 9
Huron Rigs 3 – 4
 
Unit Cost ($ / Mcfe)

LOE
$0.13 – $0.15

Production Taxes
$0.13 – $0.15

SG&A
$0.21 – $0.23

DD&A
$1.33 – $1.35
 
Midstream Revenue Deductions ($ / Mcfe)

Gathering to EQT Midstream
$0.72 – $0.76

Transmission to EQT Midstream
$0.18 – $0.22

Third-party gathering and transmission
$0.23 – $0.27

Third-party processing
$0.13 – $0.17
 

Midstream
Net Operating Revenues ($MM)
Gathering $395 – $405
Transmission $220 – $230
Storage, Marketing, Other $25 – $30
 
Unit Cost ($ / Mcfe)

Gathering and transmission
$0.20 – $0.23

SG&A
$0.13 – $0.15
 

Financial
Cash-on-hand at year-end 2013 $850 – $950
 
EBITDA
EQT Midstream Partners $170 – $175
Other Midstream         $285 – $295
Total Consolidated Midstream $455 – $470
Total Production         $1,220 – $1,260
Total EBITDA         $1,675 – $1,730
 

1
   

The 2014 sales volume guidance converts natural gas liquids to Mcfe at a 6 Mcfe per barrel ratio, consistent with how we will report sales volumes prospectively.

2

Includes Upper Devonian volumes
 

Year-end Earnings InformationThe Company intends to release full-year 2013 earnings and host a live webcast for security analysts on February 13, 2014. The webcast will be available at www.eqt.com and will begin at 10:30 a.m. ET.

NON-GAAP DISCLOSURES EBITDA and Operating Cash FlowAs used in this news release, EBITDA means earnings before interest, taxes, depreciation, and amortization expense. As used in this news release, operating cash flow means net cash provided by operating activities, less changes in operating assets and liabilities. EBITDA and operating cash flow are not financial measures calculated in accordance with generally accepted accounting principles (GAAP).

EBITDA is a non-GAAP supplemental financial measure that Company management and external users of the Company’s financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: (i) the Company’s performance versus prior periods; (ii) the Company’s operating performance as compared to other companies in its industry; (iii) the ability of the Company’s assets to generate sufficient cash flow to make distributions to its investors; (iv) the Company’s ability to incur and service debt and fund capital expenditures; and (v) the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Operating cash flow is a non-GAAP supplemental financial measure that is presented as an accepted indicator of 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 timing of cash receipts and disbursements that the Company may not control, and therefore, may not relate to the period in which the operating activities occurred. Accordingly, operating cash flow should not be considered as a substitute for net cash provided by operating activities prepared in accordance with GAAP.

About EQT Corporation:EQT Corporation is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, and transmission. EQT is the general partner and significant equity owner of EQT Midstream Partners, LP. With more than 120 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology – designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint. Through safe and responsible operations, EQT is committed to meeting the country’s growing demand for clean-burning energy, while continuing to provide a rewarding workplace and enrich the communities where its employees live and work. EQT shares are traded on the New York Stock Exchange as EQT.

Cautionary StatementsThe Company is unable to provide a reconciliation of projected EBITDA to projected net income, the most comparable financial measure calculated in accordance with GAAP, because of uncertainties associated with projecting future net income. Similarly, the Company is unable to provide a reconciliation of its projected operating cash flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP, because of uncertainties associated with projecting future net income and changes in assets and liabilities.

Disclosures in this news release contain certain forward-looking statements. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this news release specifically include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the Company and its subsidiaries, including guidance regarding the Company's strategy to develop its Marcellus and other reserves; projected operating cash flow, including the portion to be distributed to the EQT Midstream Partners’ (the Partnership) public common unitholders; projected EBITDA; drilling plans and programs (including the number, type, feet of pay and location of wells to be drilled, acreage type, number and type of drilling rigs, number of multi-pad wells, and the availability of capital to complete these plans and programs); infrastructure programs (including the timing, cost and capacity of the transmission and gathering expansion projects and the availability of capital to complete these programs); production sales volume and growth rates (including liquids sales volume and growth rates); projected unit costs and projected gathering, transmission and third-party processing revenue deductions to EQT Midstream; gathering and transmission volume and growth rates; projected capital expenditures, capital budget and sources of funds for capital expenditures, including asset sales (dropdowns) to the Partnership; and expected cash on hand at the end of 2013. These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. The risks and uncertainties that may affect the operations, performance and results of the Company's business and forward-looking statements include, but are not limited to, those set forth under Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2012, as updated by any subsequent Form 10-Qs.

Any forward-looking statement speaks only as of the date on which such statement is made and the Company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

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