EQT Corporation

Thank you for standing by. My name is Danica and I will be your conference operator today. At this time, I would like to welcome everyone to the EQT Q3 2024 quarterly results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Cameron Horwitz, Managing Director, Investor Relations and Strategy. Please go ahead.

Good morning, and thank you for joining our third quarter 2024 earnings results conference call. With me today are Toby Rice, President and Chief Executive Officer, and Jeremy Canope, 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 can materially differ from these forward-looking statements. Because of the factors described in yesterday's earnings release, In our investor presentation, the risk factor section of our most recent Form 10-K and Form 10-Q, 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. The third quarter was hallmarked by the closing of our strategic acquisition of Equitrans Midstream, which transformed EQT into America's only large-scale, vertically integrated natural gas business. This combination has created a differentiated business model among the energy landscape, one that has leading inventory duration at the absolute low end of the North American natural gas cost curve. EQT's position as the lowest cost producer structurally de-risks our business in the low parts of the commodity cycle while simultaneously unlocking unmatched upside to higher price environments by eliminating the need to defensively hedge longer term. We believe these characteristics position EQT to generate disproportionate value for our shareholders regardless of where we are in the commodity cycle. Since we closed the Equitrans acquisition, our integration team has been sprinting ahead with more than 60% of total integration tasks completed in just three months. This remarkable pace is a testament to our proprietary integration system, which has been honed across multiple successful transactions over the past several years. The highly efficient integration pace we've seen to date is resulting in synergy capture occurring quicker than we originally expected. Recall, we had previously assumed base synergies would start accruing by the middle of 2025, but with our integration progress to date, we have already achieved $145 million of annualized financial and corporate cost savings, which is $25 million more than our original underwriting assumptions. Said another way, we have already de-risked more than half of our $250 million base synergies in just three months of owning Equitrans. This rapid pace of base synergy capture, along with longer term system compression upside, further increases confidence in our ability to optimize value from the combined entities. We are also seeing Equitrans employees excited to be integrated into EQT's culture. This is a similar situation to what we observed when we took over EQT in 2019, where the cultural buy-in of our employee base enabled us to create more value than we originally anticipated. I'm extremely excited to see what the combined EQT and Equitrans teams can accomplish together over the coming years. Alongside rapid integration and synergy capture, we are already unlocking operational efficiency gains as a direct consequence of the acquisition. An example of this can be seen in our investor presentation, where we highlight a new EQT record for water delivered to a well site. This record water delivery pace, in turn, facilitated another all-time EQT record for completions pumping time, besting our prior record set earlier this year by 10%. The pace of water delivery is a key factor in completion efficiency. Put simply, the faster you deliver water to the well site, the faster you can frack, which in turn drives down well costs. This record was only possible because of the seamless coordination of our now internal Equitrans water system with EQT's upstream operations, highlighting that optimization of the Equitrans water assets has the potential to drive additional operational efficiencies that we could not have achieved standalone. We also recently completed the connection of EGT's water network in West Virginia with Equitrans' water system in Pennsylvania, which structurally improves our ability to deliver water to well sites. This connection should also save more than $70 million in water disposal costs over the next two years from an investment of just $15 million. Highlighting an example of the type of low risk, high return investment opportunities that are unlocked by the acquisition. Efficient water delivery, along with various other supply chain initiatives are supercharging the recent completion efficiency gains that we highlighted with Q2 results. During the third quarter, we set a new ETT record for completion efficiency, with footage completed per day averaging 35% faster than our 2023 pace. The past two quarters of operational performance, along with our Equitrans integration momentum, are increasing our confidence in a sustainably faster completion space and we see the opportunity to complete 50% more footage per day in 2025 compared to our historic average. With continued success, we may ultimately be able to drop from three to two frac crews over time, which is remarkable given we are able to hold flat seven BCF a day of gross operated production at this activity level. We are still quantifying the potential impacts to our capital budget, but we believe these gains could have the potential to sustainably save approximately $50 per foot, which could translate to $50 to $60 million per year. Shifting gears, we recently announced that EQT has become the first traditional energy producer of scale in the world to achieve net zero scope one and two greenhouse gas emissions. Not only did we accomplish this ahead of our 2025 goal, But we achieved this net zero status across the entirety of our upstream operations, inclusive of the recently acquired Tug Hill, XCL Midstream, and Alta assets, which were not included in the target originally set in 2021. This means that over the past five years, EQT has reduced total Scope 1 and Scope 2 GHG emissions by over 900,000 tons. which is the equivalent of taking approximately 195,000 cars off the road annually. The bulk of these reductions came from structural emissions abatement, including replacing more than 9,000 pneumatic devices, shifting to electric frat fleets, deploying combo development, and installing advanced emissions control devices. For the remaining emissions that are not abatable with current technologies, EQT has generated carbon offsets through forest management projects as opposed to purchasing third-party carbon credits. This was done via our partnership with the state of West Virginia and includes conservation management practices such as the removal of invasive species, wildfire risk monitoring, and native tree and shrub placement, all of which have co-benefits for our local stakeholders. These efforts are verified by West Virginia University ensuring both economic and environmental benefits to the region. Over the life of this partnership, we expect to generate approximately 10 million tons of high-quality carbon offsets at a cost to EQT below $3 per ton, underscoring EQT's capital-efficient path to achieving net-zero emissions. We believe EQT's unique position as the only vertically integrated, low-cost natural gas producer with multi-decade inventory and net zero, scope one and two emissions, will continue to open differentiated ways to maximize the value of each molecule, similar to the long-term supply deals we announced with utilities in the southeast last year. With that, I'll now turn the call over to Jeremy. Thanks, Toby.