EQT Reports Fourth Quarter and Full Year 2022 Results and Provides 2023 Guidance

PITTSBURGH: EQT Corporation (NYSE: EQT) today announced financial and operational results for the fourth quarter and full year 2022 as well as financial and operational guidance for 2023.

Fourth Quarter and Recent Highlights:

Repurchased 5.9 million shares of common stock for $200 million subsequent to the end of fourth quarter 2022 at an average price of $33.86 per share; repurchased 20.4 million shares of common stock for $622 million since the inception of the repurchase program at an average price of $30.48 per share

Retired $283 million of senior note principal during and subsequent to the end of fourth quarter 2022; retired over $1.1 billion of debt principal since the beginning of 2022

Awarded Gold Standard rating by United Nations' Oil & Gas Methane Partnership 2.0

Completed $28 million pneumatic device replacement program one year ahead of schedule, eliminating approximately 9,000 natural gas-powered pneumatic devices and reducing methane emissions by 70 percent compared to 2021

Announced Appalachian Methane Initiative (AMI) collaboration to further enhance methane monitoring throughout the Appalachian Basin

Full Year 2022 Highlights:

Generated approximately $3.5 billion of net cash provided by operating activities, nearly $2 billion of free cash flow,(1) and returned almost $1.7 billion to shareholders via base dividend, share repurchases and debt retirement

Total proved reserves of 25.0 Tcfe, up slightly year-over-year, and total discounted after-tax future net cash flows of $40 billion, an increase of $23 billion compared to 2021

Announced agreement to acquire Tug Hill and XcL Midstream, which is anticipated to lower corporate free cash flow breakeven(2) gas price by approximately $0.15 per MMBtu

Entered into hedge positions for 2023 and 2024 covering 62% of production with weighted-average floors of $3.37 per MMBtu and 10% with weighted-average floors of $4.20 per MMBtu, respectively

Doubled '22–'23 share repurchase authorization to $2.0 billion and raised year-end 2023 debt retirement target from $2.5 billion to $4.0 billion(3)

Added to S&P 500 Index, joining the top companies across all sectors of the U.S. economy

Achieved investment grade ratings from S&P and Fitch and upgraded to positive outlook at Moody's

Announced Appalachian Regional Clean Hydrogen Hub (ARCH2) collaboration with the State of West Virginia and leading energy & technology companies

President and CEO Toby Z. Rice stated, "EQT achieved an impressive suite of milestones in 2022 across all aspects of our business. We generated significant free cash flow, materially improved our balance sheet and returned meaningful capital to shareholders via our base dividend and share repurchases. Our 2022 reserve report underscores the consistency and repeatability of our large-scale combo development approach and highlights the tremendous value potential at EQT with an after-tax PV-10(1) of $40 billion. We also completed our pneumatic device replacement program a full year ahead of schedule and at a cost of approximately $6 per metric ton of CO2e abated, which materially de-risks our path to net zero by 2025."

Rice continued, "Our 2022 achievements represent yet another positive step of the journey we've been on since taking over the helm of EQT in 2019. Over this period, our team continued to improve asset productivity, strengthened our balance sheet, evolved our hedging strategy and added to our successful M&A track record, creating a durable, free cash flow focused business model that will thrive in all natural gas price scenarios. These efforts will inevitably show through in 2023 and beyond and position EQT to create differentiated, through-cycle value for all our stakeholders."

 (1) A non-GAAP financial measure. See the Non-GAAP Disclosures section of 

this news release for the definition of, and other important information regarding, this non-GAAP financial measure.

 (2) 

 Defined as the average Henry Hub price needed to generate positive free

cash flow through 2027 under a maintenance production plan; assumes ($0.50) average differential and excludes cash taxes.

 (3) 

 Based on debt principal retired between January 1, 2022 and December 31,

 2023. 

Fourth Quarter 2022 Financial and Operational Performance

 Three Months Ended December 31, ($ millions, except average realized price and EPS) 2022 2021 Change Total sales volume (Bcfe) 459 527 (68) Average realized price ($/Mcfe) $ 2.87 $ 2.68 $ 0.19 Net income attributable to EQT $ 1,712 $ 1,805 $ (93) Adjusted net income attributable to EQT (a) $ 167 $ 155 $ 12 Net income $ 1,714 $ 1,806 $ (92) Adjusted EBITDA (a) $ 679 $ 766 $ (87) Diluted earnings per share (EPS) $ 4.28 $ 4.33 $ (0.05) Adjusted EPS (a) $ 0.42 $ 0.37 $ 0.05 Net cash provided by operating activities $ 1,064 $ 1,171 $ (107) Adjusted operating cash flow (a) $ 622 $ 741 $ (119) Capital expenditures, excluding noncontrolling interests $ 396 $ 319 $ 77 Free cash flow (a) $ 226 $ 422 $ (196) (a) A non-GAAP financial measure. See the Non-GAAP Disclosures section of 

this news release for the definition of, and other important information regarding, this non-GAAP financial measure.

Full Year 2022 Financial and Operational Performance

 Years Ended December 31, ($ millions, except average realized price and EPS) 2022 2021 Change Total sales volume (Bcfe) 1,940 1,858 82 Average realized price ($/Mcfe) $ 3.17 $ 2.50 $ 0.67 Net income (loss) attributable to EQT $ 1,771 $ (1,143) $ 2,914 Adjusted net income attributable to EQT (a) $ 1,262 $ 300 $ 962 Net income (loss) $ 1,781 $ (1,142) $ 2,923 Adjusted EBITDA (a) $ 3,523 $ 2,332 $ 1,191 Diluted EPS $ 4.38 $ (3.54) $ 7.92 Adjusted EPS (a) $ 3.11 $ 0.83 $ 2.28 Net cash provided by operating activities $ 3,466 $ 1,662 $ 1,804 Adjusted operating cash flow (a) $ 3,366 $ 2,029 $ 1,337 Capital expenditures, excluding noncontrolling interests $ 1,427 $ 1,094 $ 333 Free cash flow (a) $ 1,939 $ 935 $ 1,004 (a) A non-GAAP financial measure. See the Non-GAAP Disclosures section of 

this news release for the definition of, and other important information regarding, this non-GAAP financial measure.

Per Unit Operating Costs The following table presents certain of the Company's production-related operating costs on a per unit basis.

 Three Months Ended December 31, Years Ended December 31, Per Unit ($/Mcfe) 2022 2021 2022 2021 Gathering $ 0.70 $ 0.65 $ 0.68 $ 0.66 Transmission 0.33 0.27 0.31 0.28 Processing 0.10 0.10 0.10 0.10 Lease operating expense (LOE) 0.07 0.08 0.08 0.07 Production taxes 0.07 0.06 0.07 0.05 Exploration — — — 0.01 SG&A 0.12 0.10 0.13 0.11 Total per unit operating costs $ 1.39 $ 1.26 $ 1.37 $ 1.28 Production depletion $ 0.85 $ 0.89 $ 0.85 $ 0.89 

Gathering expense increased on a per Mcfe basis for 2022 compared to 2021 due primarily to higher gathering rates on certain variable rate contracts calculated based on the price of natural gas and decreased utilization of lower overrun rates due to the natural decline of producing wells and fewer wells turned-in-line (TIL), partly offset by the lower gathering rate structure on the assets acquired in the Company's acquisition of Alta Resources in 2021 (the Alta Acquisition).

Transmission expense increased on a per Mcfe basis for 2022 compared to 2021 due primarily to higher rates on and lower credits received from the Texas Eastern Transmission Pipeline, additional capacity acquired in the Alta Acquisition and additional capacity acquired on the Rockies Express Pipeline in September 2021.

Production taxes increased on a per Mcfe basis for 2022 compared to 2021 due to increased West Virginia severance taxes, which resulted primarily from higher prices, and increased Pennsylvania impact fees, which resulted from additional wells spud in 2022, including those acquired in the Alta Acquisition, higher prices and inflation.

SG&A expense increased on a per Mcfe basis for 2022 compared to 2021 due primarily to higher long-term incentive compensation costs, which resulted primarily from changes in the fair value of awards due to the increase in the price per share of the Company's common stock, as well as increased labor costs driven by an increase in the number of the Company's total permanent employees.

Liquidity

As of December 31, 2022, the Company had no credit facility borrowings and $25 million of letters of credit outstanding under its $2.5 billion credit facility. Total liquidity as of December 31, 2022 was approximately $4.0 billion.

As of December 31, 2022, total debt and net debt(1) were $5.7 billion and $4.2 billion, respectively, compared to $5.6 billion and $5.5 billion, respectively, as of December 31, 2021.

 (1) A non-GAAP financial measure. See the Non-GAAP Disclosures section of 

this news release for the definition of, and other important information regarding, this non-GAAP financial measure.

Pending Tug Hill and XcL Midstream Acquisition The Company previously announced its agreement to acquire Tug Hill's upstream assets and XcL Midstream's gathering and processing assets (the Acquisition) for consideration of approximately $2.6 billion in cash and 55.0 million shares of EQT common stock, as adjusted pursuant to customary closing purchase price adjustments.

The Tug Hill assets are anticipated to add approximately 90,000 core net acres, offsetting the Company's existing core leasehold in West Virginia, approximately 800 MMcfe/d of production and 11 years of inventory. The XcL Midstream assets are anticipated to add 95 miles of owned and operated midstream gathering systems that connect to every major long-haul interstate pipeline in southwest Appalachia. The liquids yields and integrated cost structure from the Acquisition are anticipated to improve the durability of the Company's free cash flow generation and are expected to drive down average pro forma free cash flow breakeven by approximately $0.15 per MMBtu through 2027.

The closing of the pending Acquisition remains subject to regulatory approvals, including the termination or expiration of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Proved Reserves The Company reported 2022 total proved reserves of 25.0 Tcfe, an increase of 41 Bcfe, or 0.2%, compared to 2021 due to extensions, discoveries and other additions, partly offset by production and revisions to previous estimates. Proved undeveloped reserves decreased by 254 Bcfe, or 3.3%, compared to 2021, driven by changes to the Company's development schedule which shifted proved undeveloped reserves outside of the Securities and Exchange Commission (SEC) five-year development window. The Company anticipates these proved undeveloped reserves will be added back in future years when they re-enter the development plan.

The following table presents the Company's proved reserves by play.

 Years Ended December 31, 2022 2021 (Bcfe) Proved developed reserves Marcellus 16,718 16,334 Ohio Utica 708 787 Other 88 98 Total 17,514 17,219 Proved undeveloped reserves Marcellus 7,468 7,733 Ohio Utica 17 10 Other 4 — Total 7,489 7,743 Total proved reserves 25,003 24,962 

The following table presents the Company's reserves, standardized measure of discounted future net cash flow (the Standardized Measure) and PV-10 as compared to five-year strip pricing sensitivity.

 Year Ended December 31, 2022 Proved Developed Proved Undeveloped Total (Millions) SEC pricing (a): Reserves (Bcfe) 17,514 7,489 25,003 Standardized Measure $ 28,666 $ 11,399 $ 40,065 PV-10 (b) $ 36,523 $ 14,989 $ 51,512 Five-year strip pricing sensitivity (c): Reserves (Bcfe) 17,482 7,489 24,971 Standardized Measure $ 16,697 $ 5,928 $ 22,625 PV-10 (b) $ 21,301 $ 7,868 $ 29,169 (a) Reserves as of December 31, 2022 are based on a natural gas price 

(NYMEX) of $6.357 per MMBtu. Pricing was determined in accordance with the SEC requirement to use the unweighted arithmetic average of the first-day-of-the-month price for the preceding twelve months without giving effect to derivative transactions. The average adjusted product prices including regional adjustments, weighted by production over the remaining lives of the properties were $76.83 per barrel of oil, $38.66 per barrel of NGLs and $5.543 per Mcf of gas.

 (b) A non-GAAP financial measure. See the Non-GAAP Disclosures section of 

this news release for the definition of, and other important information regarding, this non-GAAP financial measure.

 (c) The prices used in the calculation of the five-year strip pricing 

sensitivity reflects five-year strip pricing as of December 30, 2022 and held constant thereafter using (i) the NYMEX five-year strip adjusted for regional differentials using Texas Eastern Transmission Corp. M-2, Transcontinental Gas Pipe Line, Leidy Line, and Tennessee Gas Pipeline Co., Zone 4-300 Leg for gas and (ii) the NYMEX West Texas Intermediate (WTI) five-year strip for oil, adjusted for regional differentials consistent with those used in the SEC pricing, and holding all other assumptions constant. The average NYMEX five-year strip weighted by production over the remaining lives of the properties was $4.457 per MMBtu of gas and the average NYMEX WTI five-year strip was $66.51 for oil. The average realized product prices weighted by production over the remaining lives of the properties would be $50.13 per barrel of oil, $27.30 per barrel of NGLs and $3.565 per Mcf of gas.

 The NYMEX strip price for proved reserves and related metrics are 

intended to illustrate reserve sensitivities to market expectations of commodity prices and should not be confused with SEC pricing for proved reserves and do not comply with SEC pricing assumptions. The Company believes that the presentation of reserve volume and related metrics using NYMEX forward strip prices provides investors with additional useful information about the Company's reserves because the forward prices are based on the market's forward-looking expectations of oil and gas prices as of a certain date. The price at which the Company can sell its production in the future is the major determinant of the likely economic producibility of the Company's reserves. The Company hedges certain amounts of future production based on futures prices. In addition, the Company uses such forward-looking market-based data in developing its drilling plans, assessing its capital expenditure needs and projecting future cash flows. While NYMEX strip prices represent a consensus estimate of future pricing, such prices are only an estimate and are not necessarily an accurate projection of future oil and gas prices. Actual future prices may vary significantly from NYMEX prices; therefore, actual revenue and value generated may be more or less than the amounts disclosed. Investors should be careful to consider forward prices in addition to, and not as a substitute for, SEC pricing, when considering the Company's reserves.

Netherland, Sewell & Associates, Inc. an independent consulting firm hired by management, reviewed 100% of the total net natural gas, NGLs and oil proved reserves attributable to EQT as of December 31, 2022.

2023 Outlook In 2023, the Company expects total sales volume of 1,900 – 2,000 Bcfe. The Company expects capital expenditures, excluding noncontrolling interests, to total $1,700 – $1,900 million in 2023, including $1,400 – $1,535 million planned for reserve development. Included in the 2023 capital expenditures budget is greater than $100 million of capital associated with delayed 2022 wells which are now expected to be TIL in 2023. During 2023, the Company plans to TIL 110 – 150 net wells, including 17 – 24 net wells expected to be TIL in the first quarter of 2023. Inclusive of the Company's advantaged hedge position, the Company estimates a 2023 NYMEX Henry Hub free cash flow breakeven price of approximately $1.65 per MMBtu. All guidance items exclude the impact of the pending Acquisition.

 2023 Guidance Production Q1 2023 Full Year 2023 Total sales volume (Bcfe) 425 - 475 1,900 - 2,000 Liquids sales volume, excluding ethane (Mbbl) 2,300 - 2,500 8,900 - 9,300 Ethane sales volume (Mbbl) 1,500 - 1,600 6,500 - 6,700 Total liquids sales volume (Mbbl) 3,800 - 4,100 15,400 - 16,000 Btu uplift (MMBtu/Mcf) 1.045 - 1.055 1.045 - 1.055 Average differential ($/Mcf) $0.00 - $0.10 ($0.75) - ($0.50) Resource Counts Top-hole Rigs 1 – 2 Horizontal Rigs 1 – 2 Frac Crews 3 – 4 Per Unit Operating Costs ($/Mcfe) Gathering $0.64 - $0.66 $0.64 - $0.66 Transmission $0.33 - $0.35 $0.33 - $0.35 Processing $0.09 - $0.11 $0.08 - $0.10 LOE $0.07 - $0.09 $0.08 - $0.10 Production taxes $0.05 - $0.07 $0.05 - $0.07 SG&A $0.13 - $0.15 $0.13 - $0.15 Total per unit operating costs $1.31 - $1.43 $1.31 - $1.43 Capital Expenditures ($ Millions) (a) $475 - $525 $1,700 - $1,900 (a) 

 Excludes capital expenditures attributable to noncontrolling interests.

Fourth Quarter and Full Year 2022 Earnings Webcast Information The Company's conference call with securities analysts begins at 10:00 a.m. ET on Thursday February 16, 2023 and will be broadcast via live webcast. To access the live audio webcast, visit the Company's investor relations website at ir.eqt.com. A replay will be archived and available for one year in the same location after the conclusion of the live event.

 Hedging (as of February 10, 2023) The following table summarizes the approximate volume and prices of the Company's NYMEX hedge positions. The difference between the fixed price and NYMEX price is included in average differential presented in the Company's price reconciliation. Q1 2023(a) Q2 2023 Q3 2023 Q4 2023 2024 Hedged Volume (MMDth) 300 305 309 296 206 Hedged Volume (MMDth/d) 3.3 3.4 3.4 3.2 0.6 Swaps – Long Volume (MMDth) 45 41 42 14 — Avg. Price ($/Dth) $ 6.19 $ 4.77 $ 4.77 $ 4.77 $ — Swaps – Short Volume (MMDth) 45 41 42 42 2 Avg. Price ($/Dth) $ 2.97 $ 2.53 $ 2.53 $ 2.53 $ 2.67 Calls – Long Volume (MMDth) 46 40 40 40 51 Avg. Strike ($/Dth) $ 3.43 $ 2.72 $ 2.72 $ 2.72 $ 3.20 Calls – Short Volume (MMDth) 238 300 303 197 255 Avg. Strike ($/Dth) $ 9.42 $ 4.85 $ 4.85 $ 4.69 $ 5.07 Puts – Long Volume (MMDth) 299 304 308 268 204 Avg. Strike ($/Dth) $ 4.50 $ 3.39 $ 3.39 $ 3.51 $ 4.21 Fixed Price Sales Volume (MMDth) 1 1 1 — — Avg. Price ($/Dth) $ 2.43 $ 2.38 $ 2.38 $ — $ — Option Premiums Cash Settlement of Deferred Premiums (millions) $ (98) $ (70) $ (71) $ (92) $ (10) (a) January 1 through March 31. 

The Company has also entered into transactions to hedge basis. The Company may use other contractual agreements to implement its commodity hedging strategy from time to time.