Q4 2024 EQT Corp Earnings Call
JL: Thank you for standing by. My name is JL and I will be your conference operator today. At this time, I would like to welcome everyone to the EQT Q4 2024 quarterly results conference call. All lines have been placed on mute to prevent any background noise.
JL: After the speaker's remarks, there will be a question and answer session.
JL: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.
JL: If you would like to withdraw your question, press star 1 again.
Speaker Change: I would now like to turn the conference over to Cameron Horwitz, Manager-Director, Investor Relations and Strategy. You may begin.
Cameron Horwitz: Good morning and thank you for joining our fourth quarter and year-end 2024 Earnings Results Conference call.
Speaker Change: With me today are Toby Rice, President and Chief Executive Officer, and Jeremy Knop, Chief Financial Officer.
Cameron Horwitz: 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.
Cameron Horwitz: I'd like to remind you that today's call may contain forward-looking statements.
Cameron Horwitz: 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 most recent Form 10-K and Form 10-Q, and in subsequent filings we make with the SEC.
Cameron Horwitz: We do not undertake any duty to update any forward-looking statements.
Cameron Horwitz: 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.
Toby Rice: Thanks, Cam, and good morning, everyone. 2024 was a transformational year for EQT, marked by both record-setting operational accomplishments and bold strategic positioning at unprecedented speed.
Toby Rice: The highlight of the year was closing of the Equitrans acquisition in July, which created America's only large-scale integrated natural gas company.
Toby Rice: After only six months, our integration process is now 90% complete with synergies captured to date exceeding base case expectations, building on our growing track record of value enhancing M&A followed by successful efficient integration.
Toby Rice: Our rapid execution speed has driven the capture of more than $200 million of annualized base synergies, or 85% of our forecasted plan. Our 2025 budget also reflects much faster-than-expected impact from our midstream compression investments.
in Upstream Operations.
Toby Rice: Our teams shattered multiple company efficiency records last year, resulting in a 20% increase in completed lateral footage per day relative to 2023.
Toby Rice: These efficiency gains are carrying over into 2025, allowing us to drop from three to two frac crews in April as we are choosing to prioritize cost savings instead of production growth.
Toby Rice: It is important to note that until recently, we planned to run a third frac crew for the most of 2025, highlighting our continued momentum into the end of the year.
Toby Rice: As a result of these efficiency gains, we expect our 2025 average well cost to fall by approximately $70 per foot compared to 2024.
Toby Rice: Additionally, well productivity continues to improve, which drove 65 BCF of production outperformance in 2024, had we not curtailed volumes in response to market conditions.
Toby Rice: Our production would have exceeded the high end of our original guidance by 3%. We expect this performance will carry into 2025 in the form of more volume and a higher price environment without having to increase activity or capital.
Toby Rice: During the fourth quarter, BQT's operational momentum resulted in outperformance across the board. We delivered production at the high end of guidance and CAPEX 7% below the low end of guidance.
Toby Rice: Our tactical contentment strategy improves realized pricing, and once again, the teams kept operating expenses in check, driving costs to the low end of guidance.
Toby Rice: These results showcase the unparalleled earnings power of our integrated low-cost platform and underscore EQT's unrivaled free cash flow durability even at low gas prices.
Toby Rice: Turning to reserves, pro forma for our non-operated asset sales, EQT's year-end 2024 approved reserves were essentially unchanged year-over-year at approximately 26 TCFE.
Toby Rice: despite the SEC price deck dropping from $2.64 to $2.13 per million BTU, underscoring the resiliency of our premier low-cost Appalachian Reserve base.
Toby Rice: At strict pricing, the PB10 of our approved reserves totals approximately $28 billion.
Toby Rice: However, this value only includes three years of our more than 30 years of future inventory and excludes the value associated with our third-party midstream revenue.
Toby Rice: at MVP and Hammerhead Pipelines and our 1.2 BCF per day of premium firm sales deals with the major utilities in the Southeast market.
Toby Rice: The total value of our approved reserves at strip pricing plus these other core assets equates to roughly our current enterprise value. That means investors can own EQT today and essentially get our peer-leading inventory depth for free, underscoring what is still an unrivaled value proposition for investors.
Toby Rice: Shifting to our 2025 outlook, we are initiating a production guidance range
Toby Rice: of 2175 to 2275 BCFE with a midpoint that is 125 BCFE above the preliminary 2025 volume outlook referenced last quarter. This strong outlook is driven by robust well-performance, completion efficiency gains, and earlier-than-expected benefits from compression investments.
Toby Rice: We will continue running just 2-3 rigs and recently elected to drop from 3-2 frack crews beginning in April to prevent our efficiency gains from tipping the business into growth mode. This minimal level of activity juxtaposed against our 7 plus BCF a day of gross production
underscores our operational momentum and our world-class assets.
Toby Rice: As it relates to our investments, we have established a 2025 maintenance capital budget of $1.95 to $2.1 billion.
Toby Rice: We have also allocated $350 to $380 million to value-creating growth projects beyond maintenance, including $130 million in Equitrans compression investments.
Toby Rice: Is down nearly 10% per unit of production compared to 2024, when normalized for curtailments and approximately 15% below 2023 levels, we expect.
Toby Rice: Our continued efficiency gains and compressing investments will drive this number down even further over the coming years at strip pricing, we expect EQT to generate approximately $2 $6 billion of free cash flow in 2025, $3 3 billion in 2026, and approximately $15 billion cumulatively.
Toby Rice: Over the next five years.
Toby Rice: To wrap up material efficiency gains robust well performance in equity <unk> integration momentum continued to drive outperformance across the board the momentum within EQT is at its highest level. Since we took over the company in 2019, and we are excited to continue showcasing the power of our platform in 2025 and beyond with that I will now.
Jeremy Knop: Turn the call over to Jeremy.
Jeremy Knop: Thanks, Tobey I'll start with the highlights of our fourth quarter results.
Jeremy Knop: First we delivered sales volumes of 605 Bcf at the high end of guidance driven by operational momentum that Tony discussed.
Jeremy Knop: Normalized for curtailments production would have come in at approximately 632 Bcf.
Jeremy Knop: Or six nine Bcf per day, a tangible demonstration of our operational momentum.
Jeremy Knop: While on the topic of production it is worth noting that we experienced less than one bcf of freeze offs. During the polar vortex events last month compared with 13 Bcf during winter storm Elliott in 2022.
Jeremy Knop: Greater alignment and collaboration with our new midstream colleagues drove this step change improvement in performance.
Jeremy Knop: Turning to pricing or differential came in 13 since tighter than the midpoint of our guidance range as we curtailed volumes early in the quarter during the weakest periods of local pricing before surging volumes back when pricing strengthened.
Jeremy Knop: This is the second consecutive quarter of material realized pricing outperformance due to tactical curtailments underscoring, how our curtailment strategy creates shareholder value without disrupting operations or impairing productive capacity in a volatile market.
Jeremy Knop: To further demonstrate the value of this strategy amid cold winter weather and strong local pricing in January we opened up chokes on many of our wells providing customers additional volume to meet winter demand, while simultaneously exposing more production to high local pricing.
Jeremy Knop: Year to date in 2025, we've realized $20 million of revenue uplift from this strategy, while delivering record levels of company production.
Jeremy Knop: Fourth quarter operating costs came in at $1 <unk> per Mcf at the low end of our guidance range due to production outperformance and gathering LOE and G&A expenses below expectations.
Jeremy Knop: Capex of $583 million was 7% below the low end of our guidance range due to efficiency gains and lower midstream spending.
Jeremy Knop: It's worth noting that aggregate capex during the second half of 2024 came in nearly $200 million below the midpoint of our expectations.
Jeremy Knop: Again, it tangibly, highlighting our capital efficiency momentum.
Jeremy Knop: On the midstream side third party pipeline revenue was $166 million, 7% above the high end of guidance.
Jeremy Knop: <unk> capital contributions of $60 million or 14% below the low end of guidance and MVP distributions of $53 million were in line with expectations.
Jeremy Knop: EQT has generated $756 million of net cash provided by operating activities and $588 million of free cash flow during the fourth quarter. Despite Henry hub averaged just $2 81 per.
Jeremy Knop: <unk> Btu underscoring the unparalleled nature of our low cost business model during all parts of the commodity cycle.
Jeremy Knop: Turning to the balance sheet during the fourth quarter, we delivered on our asset sale process. A year ahead of schedule to Derisk, our balance sheet and positioned our hedge book for a rising price environment.
Jeremy Knop: In December we closed on the sale of our remaining non operated northeast, Pennsylvania assets in midstream joint venture.
Jeremy Knop: Proceeds from these transactions totaled $4 7 billion, which.
Jeremy Knop: Which we used to fully repay our term loan fund the repayment of senior notes and pay down our credit facility.
Jeremy Knop: We exited 2024 with $9 3 billion of total debt and $9 1 billion of net debt compared to $13 8 billion and $13 7 billion, respectively. At the end of the third quarter.
Jeremy Knop: It's worth noting that our net debt at year end reflects the impact of $475 million of working capital usage during the quarter, the bulk of which should reverse in 2025.
Jeremy Knop: At strip pricing, we expect to exit 2025 with net debt of approximately $7 billion.
Jeremy Knop: Comfortably below our target of seven 5 billion.
Jeremy Knop: In the medium term, we plan to reduce our absolute debt balance towards $5 billion to bulletproof, our balance sheet and credit ratings. So that we can play offense. During the next down cycle when others are forced to play defense for.
Jeremy Knop: For reference this debt balance equates to approximately five times free cash flow.
Jeremy Knop: $2 75, Henry hub price, which is a price point, where many of our peers, our free cash flow neutral to negative.
Jeremy Knop: Turning to hedging our rapid asset sale execution and bullish outlook for pricing in 2025, and 2026 positioned us to add no incremental hedges during this quarter.
Jeremy Knop: Recall, we tactically sculpted our hedge book to have material upside to improving macro conditions. Later this year, our hedge percentage falls to approximately 40% in Q4 with 100% of our hedges, becoming white collars with ceilings of $5 50 Btu.
Jeremy Knop: Btu in November.
Jeremy Knop: We remain unhedged in 2026 and beyond providing investors full exposure to an increasingly bullish setup for prices.
Jeremy Knop: Our position at the low end of the cost curve acts as a structural hedge which in turn facilitates unmatched exposure to high price scenarios by eliminating our need to financially hedge is.
Jeremy Knop: As previously communicated we plan to approach future hedging patiently and Opportunistically in order to capture asymmetric SKU in the options market in essence, this approach positions us to monetize volatility and realized higher than average gas prices through the cycle.
Jeremy Knop: Turning to the macro landscape two years of low commodity prices resulted in upstream underinvestment.
Jeremy Knop: This supply backdrop combined with an unusually cold winter ramping LNG exports and robust power demand has catalyzed an inflection in natural gas prices over the past quarter.
Jeremy Knop: While gas prices have already <unk>, we think there is still room to run and cannot recall as wide of a disconnect between the equity and commodity markets as we are observing today.
Jeremy Knop: The haynesville is suffering from years of under investment and increasingly scarce inventory depth.
Jeremy Knop: And we believe will be much slower to respond in the commodity markets are pricing.
Jeremy Knop: Appalachia is largely pipeline constrained and there are no new pipelines out of the Permian until late 2026.
Jeremy Knop: Simply put it will take too long to increased gas production to meet the step change increase in demand during such a short time and we believe the market may have to balance inventories through demand destruction at the hands of higher prices in 2025 and 2026.
Jeremy Knop: Looking further ahead, we are eyes wide open that nearly five bcf per day of new Permian gas pipelines are slated for completion in late 2026 just.
Jeremy Knop: Just before Qatar brings <unk> six Bcf per day of LNG out of the global market.
Jeremy Knop: With these medium term headwinds and the fact that capital spending would not result in additional production until mid 2026, we do not have plans to invest in production growth this year and data coming inventory imbalance at higher prices as a phenomenon of the timing mismatch of supply and demand.
Amplified by a cold winter and the theme of two little gas storage capacity.
Jeremy Knop: Alongside a broader bullish backdrop for natural gas the underlying fundamentals in Appalachia continues to strengthen.
Jeremy Knop: With the tightening basis, one of the most underappreciated themes.
Jeremy Knop: Robust demand in the southeast region is driven MVP flows to maximum capacity of two Bcf per day. This winter.
Jeremy Knop: Tributes to eastern storage levels, moving from near five year highs last fall.
Jeremy Knop: Near five year lows today as.
Jeremy Knop: As a result, our production is sold into the local into market and our MVP volumes sold at station 165 have received robust pricing.
Jeremy Knop: During the January cold spell station 165 spread to Appalachian price points rose to more than $25 per btu.
Jeremy Knop: Underscoring the tremendous upside option value embedded in our MBP capacity during periods of high demand.
Jeremy Knop: Longer term, we continue to see 6% to seven Bcf per day of incremental Appalachian demand by 2030, driven by load growth coal retirements and pipeline expansions.
Jeremy Knop: At the same time, we believe many producers in Appalachia will see productivity degradation or run out of inventory entirely further tightening local fundamentals MQ.
Jeremy Knop: MQ basis futures are beginning to reflect this reality tightened by approximately 30.
Jeremy Knop: <unk>, 2026% to 2030 over the past two years.
Jeremy Knop: EQT is uniquely positioned to capitalize on the setup as we had the highest quality and longest duration inventory in the basin paired with a replicable world class infrastructure.
These characteristics are investment grade credit ratings and lower emissions credentials make EQT. The go to company for new power projects and position the business for sustainable future production growth.
Jeremy Knop: Turning to capital allocation at recent strip pricing, we expect to generate approximately $2 $6 billion of free cash flow in 2025.
Jeremy Knop: Which we plan to allocate towards debt repayment.
Jeremy Knop: With our balance sheet de risked we plan to steadily and sustainably grow our base dividend over the years ahead and positioned to opportunistically repurchase shares when the market is fearful.
Jeremy Knop: Beyond 2025, our integrated business is ideally situated to support Appalachian demand growth positioning EQT to provide sustainable low risk organic growth for shareholders, a key attribute missing from the industry today.
Jeremy Knop: We are in the process of generating a backlog of low risk high return midstream investments to support this demand growth, which would in turn unlock modest upstream production growth from our decades of high quality inventory.
Jeremy Knop: We are uniquely positioned EQT among the energy landscape offering investors not only the best risk adjusted exposure to natural gas, but also idiosyncratic growth opportunities that should allow us to compound capital and create differentiated value over the long term.
Toby Rice: And with that I will turn it back over to Toby for concluding remarks.
Toby Rice: Thanks, Jeremy for the past five years have been an incredible journey and this time, we have transformed EQT into Americas, only large scale integrated gas producer, becoming the milestone and natural gas company looking forward. We will continue our pursuit of becoming the operator of choice amongst all stakeholders and we've got a great set up in front of us costs are going.
Toby Rice: Down operational efficiency gains continue asset quality shining our inventory is still staying deep capital intensity is improving deleveraging plans are ahead of expectations. The <unk> integration and synergy capture both ahead of schedule.
<unk> midstream growth projects are entering our program in Appalachia fundamentals are strengthening and demand for our product across this country is surging 2025 is poised to deliver a banner year. We're excited to demonstrate the differentiated benefits and earnings power of our business in the years ahead, the bolus inflection.
Toby Rice: Natural gas fundamentals supercharged, our excitement and when we look at the 2026 free cash flow and beyond investors still have the opportunity to own our premium story in assets at a discounted valuation compared to peers with that I'd now like to open the call to questions.
Toby Rice: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Toby Rice: If you would like to withdraw your question simply press Star one again.
Toby Rice: If you are called upon to ask a question and are listening via a loudspeaker on your device. Please pick up your handset and ensure that your phone is not on mute when asking your questions.
Toby Rice: Finally, we do request for today's session that you. Please limit yourself to one question and one follow up.
Speaker Change: Your first question comes from the line of Doug Leggate of Wolfe Research. Your line is open.
Speaker Change: Good morning. This is John Abbott on for Doug Leggate.
Speaker Change: Toby maybe I just wanted to start off with your like we appreciate the breakout on maintenance Capex for 2025.
Toby Rice: Maybe you could start off just sort of discussing how you've risked that and how you sort of see that evolving in the coming years.
Speaker Change: Yes, so when we think about the maintenance capex.
Speaker Change: You start with the asset quality I think we put numbers out there on well performance that gives us a good read on the type of volumes, we're looking to replace that.
Speaker Change: And then it just comes down to picking the operational efficiencies that drive that along with the cost. So we fully baked. These plans were backed by historical performance.
Speaker Change: We are taking are taken into account the operational efficiencies we proved in 'twenty four.
Speaker Change: And our role in that 4% and 25 I think a lot of the things that are giving us confidence the operational efficiencies are structural fixes to the business one of them being E train in the water.
Speaker Change: Infrastructure that has always been.
Speaker Change: A challenge for us, but now that we have those assets. The teams are locking in the efficiency gains there.
Speaker Change: Going forward, what this looks like I think we put that slide out there on the.
Speaker Change: Reserve development capital efficiency.
Speaker Change: And Youll see that that will continue to come down over time.
Speaker Change: There was a little bit of a dynamic at play in the near term with us adding compression.
Speaker Change: Still long term trends.
Speaker Change: Upstream maintenance intensity is going to be coming down.
Speaker Change: John I would also add to that.
Speaker Change: Actually when we talked about our 2025 capital plans. The assumption was peak spend for our compression investments probably wouldn't happen until 2026, we've been able to pull that forward and so the numbers you see for spend of about $130 million in 2025 as peak spend.
Speaker Change: Kind of ballpark, we expect that to decline in 2026, and then thereafter, so 2026 ballpark number today is like $85 million. So that's really been pulled forward and that pulled production forward at the same time. So I think in terms of a lot of those investments, it's really downhill from here.
Speaker Change: Which is great it's accelerating value into the exact market, we want to do that.
Speaker Change: And then in terms of how we model. It I know we talked about this in the past, but I think there is I think there is still a bit of conservatism baked into how we're modeling the net impact from these projects.
Speaker Change: It's still early so I don't think we want to get ahead of ourselves just yet.
Speaker Change: But if you boil it down the beat that we have seen the last couple of quarters, both the capex coming in low and also production being really robust or really really coming from that so I think we're hopeful that we see continued outperformance, but we're being patient at this time until we see to see a little bit more time go by and results come in.
Speaker Change: And that's a good segue into our second question, So where are you right now.
Speaker Change: As far as thinking about the benefit from compression you raised 2025 production guidance.
Speaker Change: What is your understanding of the benefits of compression of added compression at this point in time.
Speaker Change: Have you baked that into your plan.
Speaker Change: Okay.
Speaker Change: We have.
Speaker Change: Put that into our plans now the question really is going to be on the timing the teams or are there some more compression projects that they can they are identifying in the future sure but that will now be part of our base maintenance plans.
Speaker Change: To make sure that we're installing compression to keep gathering lines.
Speaker Change: The rate pressures.
As Jeremy mentioned I mean, I think the biggest focus for US was getting these compression projects onto the schedule as quickly as possible and commend the team for the work they've done.
Speaker Change: In less than six months from closing this deal to be able to get these projects put onboard so.
Speaker Change: We'll be watching going forward, we are assuming an uplift on these compression projects.
Speaker Change: Does that could that could could change a little bit higher or lower we've got about.
Speaker Change: I think it's about a compression projects that we've got history that we're using to guide or forecast.
Speaker Change: That's probably the biggest moving piece right now, but it should be very small in nature.
Speaker Change: Great. Thank you very much for taking our questions.
Speaker Change: You guys question.
Speaker Change: Your next question comes from the line of Arun Jairam of Jpmorgan. Your line is open.
Arun Jairam: Yes, good morning.
Tobey Rice: Tobey I wanted to see if we could.
Tobey Rice: Discuss your thoughts on kind of the longer term kind of capex trajectory at EQT.
The budget. This year is for $2 4 billion call. It just under about $2 2 billion for maintenance.
Tobey Rice: Just under 400 for strategic growth.
Speaker Change: Last quarter, you highlighted the potential for Eqt's all in Capex to be in the low twos and that was before capturing 175 million of potential E train synergies. So I was wondering how you think about kind of your maintenance capex evolving over time.
Tobey Rice: Including that strategic.
Tobey Rice: Kind of Capex budget includes some compression and some of the midstream.
Tobey Rice: Midstream type of projects.
Arun Jairam: Yes, Arun I think it's important why we're putting the spotlight on the actual maintenance spending that we have.
Arun Jairam: It would be around that $2 billion number this year looking forward what could that look like if you look at slide eight on our on our deck, we're showing the raise that capital intensity.
Arun Jairam: We will show the cost coming down for maintenance spending on <unk>, which is our oxygen business. The question is going to be.
Arun Jairam: Are we going to have more growth opportunities on the midstream front.
Arun Jairam: But we should see a natural trending down a bar.
Arun Jairam: Maintenance capex for the upstream side of the business over the coming years.
Arun Jairam: And the reason we broke out our maintenance capital separate from growth again, if you look at the midpoint of that number it's already trending below that prior guidance being put out. So I think things are already moving that direction.
Arun Jairam: I suspect that with.
Arun Jairam: With successful results on the compression.
Arun Jairam: I think that has had a chance to move even lower but thats why we put that out just so as you think about modeling two years out and beyond I think that's kind of the number you need to anchor to before thinking about any sort of other projects that would be more bespoke in nature.
Arun Jairam: Got it got it yeah. It sounds like you're already at over 800000 horsepower in terms of compression is expected to grow a little bit.
Jeremy Knop: Okay, maybe the second one for you Jeremy you highlighted the.
Arun Jairam: The potential for in basin demand to grow by 6% to seven which is obviously key to the Eqt's story.
Arun Jairam: I was wondering how youre seeing things on the power demand side of the equation kind of evolve kind of locally.
Arun Jairam: And also I know you have a strategic relationship with Blackstone.
Arun Jairam: They recently announced a deal to buy a large gas power plant in Virginia.
Speaker Change: Call that data center, Alex I was wondering if you could see how things are going on the power front in ways that this could be beneficial for EQT in terms of announcing gas for power deals or anything like that where you can you can.
Arun Jairam: Capture that.
Arun Jairam: <unk> of the earnings stream, which is really being highly valued in the marketplace today.
Speaker Change: Yes, that's a great question.
Speaker Change: So I just say something seems to have happened in the last two months or so.
Speaker Change: Momentum has picked up in those discussions rapidly.
Speaker Change: We're having discussions directly with several hyperscale or as other intermediaries.
Speaker Change: Other power producers and.
Speaker Change: I think while a quarter or two ago, we were hopeful I think youre now seeing tangible signs of that.
Speaker Change: There is active negotiations going on on different fronts explore specific opportunities and when you step back and think about why that is and Theres. A couple of sort of key gating items I think to even be relevant and ask the table in these discussions.
Speaker Change: First of all as you have be fully investment grade rated and when you look at the natural gas landscape that doesn't that's not really a pervasive theme.
Speaker Change: Theme with many of our peers or really any of them at this point, especially across all three agencies are net zero credentials I think are.
Speaker Change: Differentiate us, especially in that tech crowd.
Speaker Change: Really our peer group, where we're the only peer.
Speaker Change: Production scale the depth of inventory, we have is unmatched and so if youre going to build a data center or a power plant and you need 2030 years of gas supply reliably theres not really anyone else you can do to we saw the same dynamic with the big utilities in the southeast for those deals we did 18 months ago.
Speaker Change: Which were index plus style deals.
Speaker Change: And then I think the business we have.
Speaker Change: Really sculpted with this re integration with <unk> allows us to provide a holistic solution for these guys. So you've seen Williams energy transference of others talk about deals directly to power plants, but what they can't provide as gas supply and if you think about it from the perspective of a tech company or England farther downstream they don't want it.
Speaker Change: Have to go piece all this together with different dogs, and cats and tried to put a whole deal together the beauty of working with someone like EQT is we can take care of all of that upstream of the power plant and.
Speaker Change: And so we've seen that be a pretty powerful theme, especially within existing big FERC regulated business already.
Speaker Change: So look I think we're pretty optimistic from where we stand today the timing exact structure of how it comes together hopefully at some point. This year I think we're still working through that but there is a lot of different structures that we can provide.
And really when you when you think about it there's not many peers, who can provide probably many of those and a lot of it comes down to counterparty credit risk. So if you're say for every gigawatt of power plant it probably cost us $30 billion in chips to invest in that ear.
Speaker Change: Year that Tech company building that youre not going to compromise the non investment grade counterparty periods like you just don't take that risk.
Speaker Change: So for EQT, if we did even a fixed price deal.
Some sort of premium to index that creates counterparty margin posting youre not going to do that with a non investment grade counterparty and so I think really in these discussions are realizing more and more it's kind of just EQT because we don't really have anybody who can provide really the rest of those attributes as probably negotiating one of these deals. So we're pretty optimistic where we sit today.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Your next question comes from the line of scaling <unk> of Bank of America Merrill Lynch. Your line is open.
Speaker Change: Hey, good morning, guys.
Speaker Change: My question is a follow up to the in basin pricing question related to feature demand just just a clarification here. When you say premium to index are you talking about Henry hub, rather than a local index.
Speaker Change: Yes.
Speaker Change: Awesome. My next question is a follow up on MVP Southgate. So a couple of weeks ago, we saw a filing suggesting that Ralph disorder.
Speaker Change: 31 miles rather than 75 miles maybe fewer water crossings.
Speaker Change: Can you give us an update on that project.
Speaker Change: Yes, that's a really cool example to have I think a synergy that we've been able to capture without I mean, it's not counted in the synergy numbers that we talk to so that was really a holistic upstream midstream solution that we were able to provide <unk>.
Speaker Change: To help.
Speaker Change: Really keep that project going shorten the cost of it while still delivering the same volume.
Speaker Change: And letting them.
Speaker Change: And ensure they have the gas reliably into that North Carolina market.
Speaker Change: So I would say things are on track right now and I think Thats just a tangible example of that progress we're making.
Speaker Change: Thanks, Jeremy.
Speaker Change: Your next question comes from the line of Neil Mehta of Goldman Sachs. Your line is open.
Neil Mehta: Yeah, great. Thanks team so.
Speaker Change: Starting questions on slide 12.
Speaker Change: I think you guys have made a really good progress.
Speaker Change: On getting the net debt down towards your targets.
Speaker Change: About how you plan on getting towards that $5 billion number it sounds like a lot of that is can be organic free cash flow at this point and then how does that ultimately ties into your hedging strategy and leave in 2026 more open.
Speaker Change: So your perspective on how the two tie together.
Yes, I mean from where we sit today, we've knocked out our objectives again above that $3 billion to $5 billion range on the asset sales. So go forward. It's just free cash flow, we're being pre patient right now I think as you get into mid year, I think the market expects rig count ramp up pretty rapidly we just don't.
Speaker Change: See that happening.
Speaker Change: When we think about what does it take to balance even 25, you probably need haynesville rigs to get to 50 ish by mid year I'd be surprised if we get out of the <unk> personally.
Speaker Change: So we're I think between now and mid summer I think we're going to sit tightened pretty patient.
Speaker Change: I think Cal 'twenty six.
Speaker Change: I wouldn't be surprised a bit if you see a five handle on Cal 'twenty six full year pricing.
Speaker Change: I wouldn't be surprised at this summer you see the same in 2025.
Speaker Change: So we're going to be pretty patient right now and I think where we are with the balance sheet, but the rating agencies.
Speaker Change: With just our trajectory of free cash flow I think we're in a perfect spot to continue being patient.
Speaker Change: And then Jeremy your perspective on long term gas was interesting just.
Speaker Change: The view that Qatar coming online and Permian associated supply could put a constraint on how high we go so how do you think about it sounds like Thats post 'twenty six dynamic in some ways. So how do you think about potentially locking in the 27 plus to the extent that comes.
Speaker Change: That firms up.
Speaker Change: With the 26 curve.
Speaker Change: Am I reading your view right there that while there is reasons to be bullish on the intermediate term there are some headwinds over the long term for global gas.
Speaker Change: Yes, I mean, I think your commodity teams specifically of everybody has done a phenomenal job I think outlining some of this in the more medium term.
Speaker Change: None of that impacts 2025, 26 that we can see I think you can.
Speaker Change: You've got pretty high over the next two years.
Speaker Change: Look I think what happens beyond that is really a factor of what happens to U S supply.
Speaker Change: <unk>.
Speaker Change: And.
Speaker Change: What happens with Russia, Ukraine, I think theres a lot of thought.
Speaker Change: Noise going around right now about if there is a peace deal. This year, what does that do to TGF pricing, we don't really see a tangible impact to that I think those fears are overblown personally.
Speaker Change: So I think there is still a pretty bullish case for European gas I don't.
Speaker Change: You might see that Ukraine transit deal reinstated and you already have gas going through to our extreme I don't see a real chance that.
Speaker Change: <unk> pipeline through Poland comes back into service in three of the four north shrink pipes are out of service. There is also some litigation, where Gazprom OS 2000 $30 billion. So a bunch of these European utilities that would all have to be settled two that's something that U S. Negotiators can't settle on behalf of Europe. So we just don't see that risk.
Speaker Change: Near term so even if there is a deal in terms of like balances and we're pricing those over the next two years I think you might see some sentiment driven moves, but fundamentally I think pricing has a ways to run.
Speaker Change: Alright, Thanks, Jeremy Thanks, Tony.
Speaker Change: Your next question comes from the line of Josh Silverstein of UBS. Your line is open.
Josh Silverstein: Hey, Thanks, Good morning, guys, maybe just sticking on the.
Speaker Change: The price discussion there, but in a different way.
Speaker Change: Talked about how you view your stock as disconnected to the commodity outlook I wanted to take advantage of that now and introduce the buybacks this year versus taking all of the $2 six of the balance sheet. Given that you are 55% hedged and you kind of know what your cash flow is going to be this year. Thanks.
Speaker Change: Yes.
Speaker Change: Yes, I mean look what enables counter cyclical buybacks is having a really strong balance sheet liquidity.
Speaker Change: We're coming off 45 days away from having closed almost $3 billion or $5 billion of transaction. So we still want to get the balance sheet down where we have closer to $5 billion of debt. I mean, if you think about even over the last three years, our stock is ping pong between.
Speaker Change: $30 $50, I mean, theres times over and over again to buy the stock back cheap.
Speaker Change: Look I think the stock has a ways to go in the next two years. It wouldn't surprise me that I mean, you always have something come up with whether you see big Pullbacks I think we're going to continue to be patient what we saw with that deep seek scare a couple weeks ago is a perfect example of that you can buy it back on some of those days. So look we're going to be opportunistic I think we're eyes wide open about the situation the relative.
Speaker Change: Value right now, but I don't think youre going to see us rush out and buy our stock aggressively when we're setting new 10 year highs every day.
Speaker Change: I think our my comments in the <unk>.
Speaker Change: <unk>.
Speaker Change: Earlier remarks were more geared at when you look at the embedded gas price in gas equities relative to where the strip needs to be in 2025 and 26.
Speaker Change: I mean, I think our internal views as you probably need to see $5 gas at least in those two years.
Speaker Change: Does it need to be at $5 forever. After that TBD I think it depends on a lot of this AI stuff, but look I think we're going to always be patient opportunistic buyers of our stock rather than chasing new 10 year high to buy it.
Speaker Change: Got it well, maybe flipping that around a little bit.
Speaker Change: Given the success of the compression program in vehicles and well performance could you use your equity to an advantage in acquisitions and other.
Pockets out there also to you guys that maybe youre seeing well performance like your old well performance that you can then put compression for insights into the kind of uplift in as well.
Speaker Change: Okay.
Speaker Change: Yeah, Josh I would say.
Speaker Change: Our approach towards M&A will still be disciplined in how we look at things but.
Speaker Change: One of the things that were showcasing now is sort of the power of the platform with upstream and midstream and creating a real real operational edge.
Speaker Change: Those those hedges will be used to look at offset operators and look for opportunities.
Speaker Change: But I would say our framework is still in place and a disciplined approach still there.
Doug Leggate: Thanks, Doug.
Speaker Change: Your next question comes from the line of Roger read of Wells Fargo. Your line is open.
Roger Read: Yes, thanks, good morning.
Toby Rice: Toby maybe to come at some of the other macro ideas for gas, we havent thought of in a while which should be going north.
Toby Rice: Some signs that New York is recognizing the shortcomings in their gas market, we have obviously the president's pushing to.
Toby Rice: Essentially move more gas in the northeast how would you look at that and any thoughts on <unk>.
Toby Rice: Timing and magnitude like that.
Toby Rice: Yes, I think youre seeing the impact of the new administration.
Toby Rice: If you could characterize the administration in the past as being a little bit about energy subtraction. This administration has made it clear they are going to be about energy addition, and.
Toby Rice: Seeing pipeline projects breathing new life into those with Constitution.
Toby Rice: Or even lifting the LNG pause. These are all signs that we're going to let market forces work in this country.
Toby Rice: And that's going to be key and letting the most affordable reliable clean this form of energy natural gas meet those needs.
Toby Rice: Also we're seeing some other other dynamics take place in our backyard PJM.
Toby Rice: As just allowed.
Toby Rice: Put an order out to allow us to reshuffle more natural gas power plants come to the top of the queue.
Toby Rice: Thats significant and.
Toby Rice: What hasnt changed is the fragility of these grids I mean, there is a.
Toby Rice: As a reason why this administration put in Nash.
Toby Rice: So I would call the national emergency largely about the state of the grid.
Toby Rice: We will see those opportunities across the country and but we will also see those largely in our backyard as well, especially given the proximity to the datacenter demand that take thats taking place.
Toby Rice: I appreciate that and then just a follow up question on the.
Toby Rice: The opening comments about.
Toby Rice: Whether we're giving you the opportunity to open the chokes up and understand guidance for the full year and everything it doesn't sound like there is an issue, but just wanted to understand maybe to the extent you can provide a little more insight.
Toby Rice: Opening the chokes, what does that do in terms of pressure management reservoir management and your expectations going forward as we think about.
Toby Rice: Call, it plus or minus $2 billion of Capex on an annual basis.
Toby Rice: Yes.
Toby Rice: <unk>.
Toby Rice: I think one of the.
Toby Rice: One of the great characteristics of our business is the ability to respond to the current environment you'd see what see our ability to curtail volumes. When prices are low now you are seeing the ability to respond when prices are high but the dynamic at play here that gives us the flexibility to.
Toby Rice: To open chokes as the fact that we instill a managed choke program when we turn our wells back in line.
Toby Rice: So we have the capacity to grab a few hundred million a day of production that sizable.
Toby Rice: So we look at that and our commercial team can call for that when they see market signals.
Toby Rice: And we will respond to those volumes as far as a cost perspective.
Toby Rice: It doesn't cost us hardly anything.
Toby Rice: To increase those lines were it's as simple as just opening up the chokes for some of the newly drilled wells that are on that managed choke program.
Toby Rice: So it's really just pure upside from from higher pricing and really the higher volumes that we're putting into the market and.
Toby Rice: Provide a little more clarity on that too as it relates to the just the total year. We have today about 300 million a day of extra gas in the market as a result of that open choke program.
Toby Rice: Into Etfs pricing this week in Appalachia, I mean today, it's about $6 30.
Toby Rice: So when we open those chokes are flowing directly into that market is selling at a significant premium that's why we do that so.
Toby Rice: So it is adding like real material value now that said when you think about the course of the year and the trajectory of production.
Toby Rice: Like right now, it's probably the high point of production for the year, we pull that we pull that volume back in and then go back on managed decline.
Toby Rice: I think when you look at where December production is versus this moment in time, we're down at that point just because they are so much of that volume open backup right now due to how high pricing is so we're taking advantage of it I mean again, we're in a price times volume game. So we're maximizing productivity when we see the opportunities, but we're not we're not exactly like ramping towards the end of.
Toby Rice: The year I think we're just taking advantage of high pricing when we see it.
Speaker Change: Thank you for the clarity on that turn it back.
John Ennis: Your next question comes from the line of John Ennis, Texas Capital. Your line is open.
John Ennis: Hey, good morning, guys and congrats on the strong update.
John Ennis: My first question I wanted to touch on commentary provided on last quarter's call regarding the opportunity to complete 50% more footage per day and 25.
John Ennis: The historical average how should we think about what level of improvement above that 35% improvement from historical levels that was achieved in the second half of 'twenty four is embedded in guidance versus what is potential upside.
John Ennis: Yeah.
John Ennis: Yes.
John Ennis: Yeah.
John Ennis: The.
John Ennis: Theme here for operationally really is going to be us continuing to push the pace on these operational efficiencies, we're going to be conservative on that.
John Ennis: The other impact I think that's probably more focused on driving our costs down is just the impact of compression, allowing us to reduce the amount of of cortisone afford us that needed to maintain productions.
John Ennis: Yes, I would say that the other thing too is a lot of that improvement is driven by logistics.
John Ennis: And so things like expanding our water network and integrating fully with <unk> and some of the legacy tug Hill and Chevron systems. So the more we complete there and the more throughput we add on the water side. The faster we can track that those sort of connections don't happen overnight. So we're still working through that in terms of where we can get to probably peak throughput here.
John Ennis: Or maybe even a year off from that still so I think there's still improvements to make.
John Ennis: And I'm, hoping we continue to carry on the momentum we've seen in terms of just quarter over quarter improvements. So we have some of it baked in based on how we're performing today, but I think we're always continuing to try to push the envelope and build on that.
John Ennis: Okay.
John Ennis: Perfect and for my follow up just building on the macro commentary in your prepared remarks, there seems to be a price signal and the forward strip that highlights the need for natural gas growth towards the end of this year not sooner yet the sector's largest in maintenance mode.
John Ennis: It's just more than just price that you consider could you just help frame how you as a management team contemplate the decision to potentially shift back to that sustainable growth mentioned in the presentation.
John Ennis: Yes, it's very simple.
John Ennis: To reiterate what we've said in the past as EQ.
John Ennis: EQT will respond with growth, but it's got to be sustainable and that means we need to see demand on the other side of that production growth I think the days of us just.
John Ennis: Yes.
John Ennis: Growing volumes into the commodity market, because we see a good strip.
John Ennis: We want to see a little bit more than that and we want to see demand on the other side and then we will grow to make sure that demand.
John Ennis: As materialize the dynamic that we have right now is going to present, Jeremy and the commercial team opportunities to connect to that demand and I think that will create the opportunity for EQT and that's.
John Ennis: It's something that we're looking to make sure we create and connect those opportunities and I think our integrated platform is going to give EQT and advantage.
John Ennis: Capturing those type of opportunities I think we're also seeing I mean, let's look at <unk> com.
John Ennis: Conversations with with other producers privates operators in the Haynesville I don't think anyone cares anymore about a single well.
John Ennis: Return it just doesn't mean anything.
John Ennis: I have yet to hear from even talking to so many privates that they really care about that anymore, either so I think the focus across the board is more generally what is my corporate returned to my investors.
John Ennis: Measured in actual free cash flow not EBITDA, not a single well return, but what am I actually able to deliver boxes through a dividend through buyback and so I think a lot of producer, especially if youre in the Haynesville youre looking at this and saying well gosh I need maybe at $5. It starts getting interesting and I can start thinking about making growth plans, but.
John Ennis: It's a lot easier it's a lot more efficient I can drop drive well cost down if I get into a.
John Ennis: Our cadence where I have larger scale operations like what EQT does.
John Ennis: Although development driving efficiencies.
John Ennis: And look at the end of the day.
John Ennis: We keep saying, it's a price times volume game.
John Ennis: If we if we had not done the <unk> deal. If we had not gotten those transactions done as quickly as we had towards the end of last year, we probably would have added another call it 20% of hedges in the back half of 'twenty five.
John Ennis: We'd probably be about 30% hedged in 2026 today.
John Ennis: Hedge position, if we would've put that on over the course of Q4, we'd be about $700 million underwater on that right. Now. So there is there is so much more value to gain by just being flexible having low leverage being able to be have production available when pricing is there relative to chasing a price signal when in reality you put a rig.
John Ennis: Today, you don't see production until next year.
John Ennis: Everybody got snake bit in 2021 'twenty two when they tried to do that and then you had a warm winter and the LNG facility go down pricing fell apart. So I think everybody is kind of learned their lesson I think everybody seems to have just stepped back and for US. We're just trying to run a good consistent low cost business.
John Ennis: <unk>.
John Ennis: If you can put a rig out there in 30 days and capture a little bit a little bit of it could make sense, but that's not really the game that we're playing so look I think you do see some rigs come back but the best we can tell why I commented before I think it's hard to even see the haynesville getting out of the <unk> in terms of rig count I don't really know who is motivated to Adam at this point.
John Ennis: Okay.
John Ennis: Yes.
Speaker Change: I appreciate all the color and thanks for taking my questions.
Speaker Change: Your next question comes from the line of Scott Hanold of RBC. Your line is open.
Scott Hanold: Yeah, Thanks, Hey, good quarter guys.
Speaker Change: Got it.
Speaker Change: I'll kind of basket my two questions into one so I'll just ask it in one.
Speaker Change: And it's around.
Speaker Change: Well performance, obviously, you talked about like compression helping.
Speaker Change: You are just seeing better well productivity, but could.
Speaker Change: Can you give us a sense as you look at your core inventory duration like where does your confidence level on how far that goes out.
Speaker Change: <unk> lead to others with all the.
Speaker Change: Upside you're seeing and then kind of question number two on well performances as you guys manage the chokes.
And part of it's the way of saying this but on and off have you seen any change in <unk> over time as that had a positive or a negative benefit.
Speaker Change: Yes, Great question, and Scott I would point you to slide seven.
Speaker Change: As I think.
Speaker Change: Very illustrative picture of the dynamic that's taking place.
Speaker Change: Both with what's happening outside of our walls with our peers and what's giving us confidence in the quality inventory that allows us to say with confidence we've got decades and decades of inventory. When you look at the chart on the left.
Speaker Change: You can see EQT sort of middle of the pack.
Speaker Change: <unk> for.
Speaker Change: Well put on line in 2021.
Speaker Change: But if you look at the picture fast forward a few years later you see peers.
Speaker Change: Inventory inventory degradation pretty significant and I think this should be a concern for investors when evaluating companies is looking at the quality of inventory because as you see here with peers those numbers are coming down, but one thing thats, saying, that's still shining is our EQT well performance actually is increasing.
Speaker Change: And so from a reservoir quality perspective.
Speaker Change: We have a deep inventory and then from an economic perspective, when you layer in the fact that we just pulled in all of these midstream costs from macro trends.
Speaker Change: The ultimate what we're looking for is not just high quality reservoir, it's high quality economics, and our inventory is deep.
Speaker Change: On the <unk>.
Speaker Change: Question I think one thing that we're looking at pretty closely on the impacts of compression.
Speaker Change: It is going to be are we seeing just acceleration of reserve recovery or are we actually increasing yours.
Speaker Change: I would say initially right now we're seeing signs of this is just an acceleration, but we'll keep an eye on that and we do not anticipate any degradation on the on the enhanced.
Speaker Change: We're moving the chokes on our on our wells flow back.
Speaker Change: On the inventory life, specifically, we had done a deep internal analysis pre echo trends on this so we can.
Speaker Change: Do you see in various and others put out estimates our view internally was we had about 25 years of locations that we considered.
Speaker Change: High quality.
Speaker Change: We had more than a 50% working interest in it I think a lot of the numbers you see publicly our numbers where someone might have a 25% working interest they counted as one of their locations and it's really not because someone else owns the other 75%.
Speaker Change: So that was our threshold ecuadoreans totally transformed that though because what then was tier three inventory, but can become tier one on an integrated cost basis, and then when you think about leasing because in Appalachia, there's still plenty of land lease if someone else wants to lease that land they still have to flow through our pipelines or we can go lease the land ourselves that's why we still see.
Speaker Change: Call it $100 million a year in our budget on infill leasing because were adding to that inventory and really replacing a lot of what we do every single year. So look I think at this point, we haven't updated the analysis candidly since then but I would estimate that added at least 10 years to it so it's a level where.
Speaker Change: That's before infill leasing so every year, we probably replaced 70% of the inventory we develop with our with that program. So I think we are.
Speaker Change: Have a level of inventory at least at EQT, we don't really have to think about it.
Toby Rice: Well productivity is not only maintained but it's tobi pointed out continue to actually improve due to the operational improvements.
Toby Rice: The only point I would add is just the land replenishment dynamic thats, taking place over the last few years, our land budget cumulatively.
Toby Rice: Paas was majority spent on maintenance.
Toby Rice: And a small portion of an infill now that's flipped and the majority of our dollars are spent on infill leasing which is adding new working interest increasing adding to our inventory and you can sort of see that on our on our budget slide.
Toby Rice: Dollar spent on infill versus land. So we're getting I would say more more value creation out of the land that we're spending right now.
Speaker Change: Note that dynamic with Jeremy just discussed.
Toby Rice: Got it thanks.
Speaker Change: Your next question comes from the line of Jacob Roberts of <unk>. Your line is open.
Jacob Roberts: Good morning.
Jacob Roberts: Maybe a clarifying question on 2025 capital it sounds like the maintenance budget is somewhat of a function of some of the strategic growth budget, specifically with their compression. So I was wondering if you could help risk about number relative to those compression projects coming on stronger than expected or perhaps the other direction given some concern.
Jacob Roberts: Turns around lead time delivery installation and things like that.
Jacob Roberts: Yes, I would say that.
Jacob Roberts: What we have in place for the compression plans.
Jacob Roberts: As follows our normal project management operation schedule type risking for when those get turned on line. So.
Jacob Roberts: Teams have looked at that and that is baked into our plans.
Jacob Roberts: There is not going to be we don't anticipate a lot of flex in.
Jacob Roberts: Upside downside on the impact of compression like I said, we've already done a handful of pilots here and have a pretty good.
Level of comfort on what those will do and.
Jacob Roberts: We broke one of the reasons why I think we broke out pressure reduction.
As a portion of our Capex. So you can sort of see that on our budget as well.
Jacob Roberts: Okay perfect. Thank you.
Jacob Roberts: My second question it looks like some midstream spend maybe fell out of Q4 I was wondering if you could frame is that showing up in 2025 or some portion was permanently eliminated based on what you've seen from the assets.
Jacob Roberts: I'd say, a little bit about the short answer.
Jacob Roberts: Perfect I appreciate the time guys.
Jacob Roberts: Okay.
Jacob Roberts: Thanks.
Speaker Change: Next question comes from the line of Michael Sheila of Stephens. Your line is open.
Speaker Change: Thank you good morning, guys.
Speaker Change: And to ask about your 2025 plans.
Speaker Change: Specifically the net sales you plan in southwest PAA, it looks like 32% to 40.
Speaker Change: We're all of those intended to be in the Marcellus or any of those in the Utica.
Speaker Change: Just wanted to get your thoughts on the deep Utica returns, how they compete with Marcellus at this point.
Speaker Change: Yes.
Speaker Change: We have no deep Utica in West, Virginia, I think we are finishing up a handful less than five that is not going to be a core part of the program going forward. So some of that work was in West Virginia was finishing up some wells in progress that.
Speaker Change: That we have from the <unk> deal.
Speaker Change: We've had a good time to assess the competitiveness of those and.
Speaker Change: Feel at this time that the Marcellus is still the best investment opportunity for us and we loaded our programs with those type of projects going forward.
Speaker Change: Interesting point actually though going back to the.
Speaker Change: Prior questions on inventory depth, when we talk about inventory, we just talked about Marcellus.
Speaker Change: You do have a lot of deep inventory out there I mean, some of our peers are.
Speaker Change: We're testing that already I mean, some areas have really good results, that's all upside to what we talked about.
Speaker Change: We already have the infrastructure in place to so.
Toby Rice: We don't need to drill that today not as good as the Marcellus as Toby said, but it is certainly upside for us.
Speaker Change: Got it thanks.
Speaker Change: I wanted to ask about slide 11, with the MVP just curious I guess my impression was that.
Speaker Change: Can you talk about the.
Capacity constraints out of the Appalachia yet.
Speaker Change: <unk> wasn't running at full capacity less summer can you talk about the reason for that was that just a function of demand and what was the source of that incremental demand move.
Speaker Change: Moving forward and do you anticipate to flow at capacity go forward from here.
Speaker Change: Yes.
Speaker Change: What we've mentioned in the past about MVP up until the expansion that takes place on Transco should be slated for call. It 27, maybe early 'twenty eight.
Speaker Change: Until that point in time, MVP is going to be more of a seasonal pipe.
Speaker Change: And that's based off pricing in that area.
Speaker Change: And I think you can see that dynamic play out in the volumes there.
Speaker Change: I think it's pretty remarkable.
Speaker Change: Just to step back and look at this there were people with this pipeline that questioned the need of mountain Valley pipeline pipeline needed to get built and the fact that this thing is flowing over two Bcf a day. The fact that pricing in this area touched over almost $35.
Speaker Change: Per million Btu is a signal that this pipeline.
Speaker Change: As needed and there's dozens of other pipelines in this country that would produce a similar type story, if they were allowed to get built.
Okay.
Speaker Change: I appreciate that thanks, guys.
And your next question comes from the line of Breakdowns of Trust Securities. Your line is open.
Speaker Change: Hey, guys. All bundled my question is for Tom as well just wanted to hit on the data center demand again.
Speaker Change: Mentioned the value Youre right in your inventory.
Speaker Change: And as well as net zero status I'm, just curious if the hyperscale is or trying to get around maybe paying up for EQT premium assets and maybe thinking hey, we can do a deal with maybe a consortium of E&ps.
Speaker Change: Each company, taking a share of it and then maybe they those items matter less or is that not even in the mix and then the second question would just be are you leaning or the deals out there leaning more towards that premium to an index you referenced or is it more leaning towards the fixed price. Thank you guys.
Speaker Change: Yeah, I mean, I think that's a great question and no doubt EQT competes.
Speaker Change: With every operator every gas molecule that gets produced and we need to provide a differentiated option.
Speaker Change: I'll tell you this.
As Jeremy mentioned, there was a shift in sentiment over the last couple of months I mean the event. If you ask me. This was Stargate coming out I think a lot of tech companies looked at that announcement and got questions where are you at with your with your power demand and meeting that and I think a lot of people are frustrated and the progress and speed to market.
Speaker Change: Market is a critical component and so what's going to be faster dealing with <unk>.
Speaker Change: <unk> 10, five putting those together or dealing with one day.
Speaker Change: Dealing with multiple parts of the value chain or dealing with one.
Speaker Change: We think that that is going to be a great solution for our service providers for our data centers and.
Speaker Change: Those are the conversations that is how EQT will differentiate yourselves simple one stop shop best cleanest, most reliable most affordable gas on the market.
Speaker Change: Okay.
Speaker Change: Perfect and then the second part just is it leaning towards a premium to an index or maybe a fixed pricing.
Speaker Change: Okay.
Speaker Change: I think the beauty of the situation for EQT is we can offer both that we have offered both.
Speaker Change: You generally when you structure that stuff you have to price it at an indifference point, there's a lot of different flavors of that.
Speaker Change: We worked through with all of our end customers in the utilities, we've already done deals with so I.
Speaker Change: It's a little early to say, but I think both are on the table.
Speaker Change: Alright, thanks, guys.
Speaker Change: Thank you and with that that concludes our Q&A session. We've run out of time.
Speaker Change: We thank you for your participation. This concludes today's conference call you may now disconnect.
Speaker Change:
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