EQT Corporation

followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. I would now like to turn the conference over to Cameron Horwitz, Managing Director, Investor Relations and Strategy. Please go ahead.

Cameron Horwitz Good morning and thank you for joining our first quarter 2024 earnings results conference call. With me today are Toby Rice, President and Chief Executive Officer, and Jeremy Tinope, Chief Financial Officer. In a moment, Toby and Jeremy will present their prepared remarks with a question and answer session to follow. An updated investor presentation has been posted to the investor relations portion of our website, and we will reference certain slides during today's discussion. A replay of today's call will be available on our website beginning this evening. I'd like to remind you that today's call may contain forward-looking statements. Actual results and future events could materially differ from these forward-looking statements because of factors described in yesterday's earnings release, in our investor presentation, the risk factor section of our Form 10-K, and in subsequent filings we make with the SEC. We do not undertake any duty to update any forward-looking statements. Today's call also contains certain non-GAAP financial measures. Please refer to our most recent earnings release and investor presentation for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Toby.

Thanks, Cam, and good morning, everyone. Last month, we announced our agreement to acquire Equitrans Midstream, a transaction that will transform EQT into America's first vertically integrated large-scale natural gas business. As we described in our conference call last month, this deal catapults EQT to the absolute low end of the North American natural gas cost curve, providing free cash flow durability in the low parts of the commodity cycle, while simultaneously unlocking unmatched price upside by mitigating defensive hedging needs, thus providing investors with peer-leading risk-adjusted exposure to natural gas prices. This combination is anticipated to drive our long-term free cash flow break-even price to approximately $2 per million BTU, which is 75 cents below the peer average and $1.50 below the marginal cost of supply in the Hainesville. This gap between EQT and both average and marginal natural gas producers is a sustainable advantage. which is rare to find among any commodity business and ensures EQT is best positioned to create through cycle value for shareholders, while other producers are forced to either chase commodity prices with the drill bit in a similar fashion to what has led to historical industry value destruction or defensively hedge a significant amount of production, thus limiting the ability to capture value in the upcycle. Along with the material cost structure advantage, the combination of EQT and Equitrans will also create an integrated well-to-what solution that will help enable and power growing demand associated with the data center and artificial intelligence booms that are burgeoning across the southeast and mid-Atlantic regions of the United States. Our base case view suggests the proliferation of data centers, along with growth in other electricity-intensive markets, such as electric vehicles, to drive an incremental 10 BCF per day of natural gas demand by 2030, while there is a plausible upside case that could take this number up to 18 BCF per day. This means growth in the power generation segment could exceed LNG exports as a bullish demand catalyst for the natural gas market this decade, and this structural baseload demand growth story resides at the doorstep of our asset base. Our 1.2 BCF a day of capacity on MVP, along with the long-term firm sales arrangements we announced with investment-grade utilities last year, means EQT's low-emissions natural gas will be a key facilitator of the data center build-out occurring in the southeastern United States and will give us significant exposure to premium Transco zones 4 and 5 price points. Due to the confluence of LNG facilities pulling gas south on Transco and power demand growth in the southeast, we expect this region will become even more desirable than the Gulf Coast later this decade. As a result, we intend to pursue an expansion of MVP through additional compression to increase capacity from two to two and a half BCF per day, which will provide additional affordable, reliable, and clean Appalachian natural gas to our downstream utility customers. On top of the tremendous opportunity to service customers in the Southeast, where we already have first-mover advantage through our record-sized physical gas supply deals with utilities we announced last fall, EQT is ideally situated to meet significant growth in power demand within PJM as well. Our analysis suggests the combination of data center build-outs and additional coal retirements could generate up to 6 BCF a day of incremental natural gas power demand in our own backyard by 2030. Whether it's in the southeast or at the doorstep of our asset base in Appalachia, EQT is well-positioned to capture this thematic tailwind through our material inventory depth and integrated business model that will create a one-stop shop to provide clean, reliable, and affordable natural gas that will be foundational to meeting America's power needs as we embark on what will be a transformational journey into the age of AI. Turning briefly to first quarter results, the significant operational momentum we achieved last year has carried into 2024, which facilitated better than expected results across our drilling and completion teams in Q1. The continuation of highly efficient operational execution, along with strong well performance and lower than expected LOE associated with our water infrastructure investments drove out performance relative to consensus expectations across every major financial metric during the first quarter. We continue to find new, innovative ways to push the envelope of what is possible, and I want to thank our entire crew for their relentless pursuit of operational excellence. Shifting gears, last week we announced an agreement with Equinor to sell a 40% undivided interest in our non-operated natural gas assets in Northeast Pennsylvania. Consideration is comprised of $500 million of cash and upstream and midstream assets worth more than $600 million. implying EQT is receiving total value north of $1.1 billion in this transaction. For perspective, we attributed approximately $1.1 billion of value to 100% of the Northeast PA non-op assets when we originally acquired them as part of our ALTA acquisition. And the assets have already generated free cash flow in excess of that amount in the past two years. So this transaction marks an incredibly successful outcome for shareholders and a strong start to our deleveraging plan. The upstream assets we are receiving include approximately 26,000 net acres in Monroe County, Ohio, directly offsetting EQT operated existing core acreage in West Virginia. We are also receiving an average working interest of 14% in more than 200 producing wells that EQT currently operates in Lycoming County, Pennsylvania, along with a 16.25% interest in the EQT operated Seeley and Warrensville Gathering Systems servicing this acreage. Following the closing of this transaction, EQT will own 100% of the Seeley and Warrensville Gathering Systems, which aligns with our strategy of lowering cost structure via vertical integration. I'd also note our teams have identified significant operational synergy potential across the operated assets, as well as longer-term upside associated with the liquids-rich Marcellus in Monroe County. The non-operated assets we are selling have forecasted 2025 net production of approximately 225 million cubic feet per day, while the operated assets we are receiving have forecasted 2025 net production of approximately 150 million cubic feet per day. Comparing the $1.1 billion of total value to the 225 million cubic feet per day of total production we are selling implies a roughly $4,900 per MCF flowing production multiple while looking at metrics using net divested production and comparing this to the $500 million of cash consideration equates to roughly $6,700 for flowing MCFD production multiple. We believe these attractive transaction metrics speak to the value of the high-quality natural gas assets, which are increasingly being coveted by international buyers looking to get exposure to the U.S. natural gas market. This transaction highlights that we are wasting no time jump-starting the deleveraging plan we laid out with the Equitrans announcement and creating additional shareholder value in the process. The sale of our remaining 60% interest in these non-operated upstream assets and the option to monetize regulated or non-core midstream assets at Equitrans gives us tremendous confidence in our ability to achieve our debt repayment goals and we look forward to updating the market as we make additional progress on this front. To sum up, First quarter results demonstrate a continuation of peak performance at EQT. Our announcement of the Equitrans acquisition is a once in a lifetime opportunity to vertically integrate one of the highest quality natural gas resource bases in the world, creating a one-stop shop to provide natural gas that will meet the growing data center and power generation needs at the doorstep of our asset base. And our recent transaction with Equinor illuminates significant hidden value embedded in our non-operated natural gas assets and gets us off to an extremely strong start towards achieving our deleveraging goals. I'll now turn the call over to Jeremy.