EQT Energy Q3 2024 Earning Call Summary

1) Historical and Forecast Production Levels for Natural Gas

• Q3 2024 production: 581 Bcfe, 4% above guidance; without curtailments, estimated at 616 Bcfe.

• Q4 2024 guidance increased to 555–605 Bcfe due to robust well results and fewer curtailments.

• 2025 production target remains flat at 2,100 Bcfe post-Equinor asset sale.

2) Operational Efficiency and Achievements

• Integrated Equitrans water system led to record completions efficiency (10% above previous).

• Completion efficiency up 35% year-over-year, aiming for 50% improvement in 2025.

• Water network integration expected to save $70 million over two years, with $15 million investment.

• Potential to reduce frac crews from three to two by 2025, saving $50-$60 million annually.

3) Production Curtailments

• "We've been turning on and off up to a Bcfe a day on a near-daily basis in response to pricing."

• “Curtailments tactically executed to optimize pricing, adding a $0.10 differential boost.”

4) TIL and DUC Wells

• The company expects deferred TILs and short-cycle DUCs to reactivate with pricing above $3.00–$3.50/MMBtu.

5) Hedging Strategy and Breakeven Costs

• 2025 hedge book: 60% hedged at an average floor of $3.25/MMBtu, with a collar up to $5.50/MMBtu.

• Breakeven price down to $1.00/MMBtu, enabling free cash flow at $2.00/MMBtu.

6) Rig and Frac Crew Numbers

• Potential reduction to two frac crews, holding 7 Bcfe/day of production steady.

7) Infrastructure: Pipelines, LNG, and Energy Projects

• New pipeline integration with Equitrans, enhancing water and gas transportation.

• MVP (Mountain Valley Pipeline) expected to reach full capacity by December 2024–February 2025.

• Increased in-basin connectivity to Southeast markets, with a plan to expand MVP by compression in 2027.

8) Market Activity and State of the Market

• Market volatility anticipated to remain high with lower lows and higher highs.

• Targeting price realization improvements by strategically curtailing during low-price environments.

• Observes growing natural gas demand in power generation due to coal retirements and data center expansion.

9) Power Markets, Coal Retirements, AI Power Demand

• Expects 80 GW of coal capacity to retire by 2030, with 50–80% of new generation filled by natural gas.

• Data centers, especially for AI, driving substantial demand for gas-powered generation, particularly in the Southeast U.S.

• Mitsubishi gas turbine orders up 50%; GE’s orders increased 90%, signaling reliance on gas power.

Key Numbers, Dates, or Periods

• 2024 production target: 555–605 Bcfe for Q4.

• 2025: Flat production guidance at 2,100 Bcfe.

• 2025 hedging level: 60% at $3.25/MMBtu floor.

• MVP pipeline: Full operational capacity expected between December 2024 and February 2025.

• Efficiency gains aim for $50-$60 million in annual savings and potential reduction to two frac crews in 2025.

• Coal retirement impact: Estimated 10 Bcfe/day in additional gas demand by 2030.