Q1 2025 EQT Corp Earnings Call

Speaker Change: Hello and welcome to the AQTQ-1 2025 quarter-year results conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session.

Speaker Change: 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 one again. And please limit to one question and one follow up.

Speaker Change: Just a reminder, this goal is being recorded. Now, I would like to turn the call over to Cameron Horwitz, Managing Director of Investor Relations and Strategy, Cameron, please go ahead.

Speaker Change: Good morning, and thank you for joining our first quarter 2025 earnings results conference called. With me today, our Toby Rice, President and Chief Executive Officer, and Jeremy Knop to be financial officer.

Speaker Change: In a moment, Toby and Jeremy will present their prepared remarks with a question and answer session of 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. Thank you very much.

Speaker Change: A replay of today's call will be available on our website beginning this evening.

Speaker Change: I'd like to remind you that today's call may contain four-looking statements.

Speaker Change: Actual results in future events could materially differ from these forelooking statements.

because the factors described in yesterday's earnings release.

Speaker Change: and our investor presentation, the risk factor section of our most recent form 10K and form 10Q, and an subsequent following we make with the FEC. We do not undertake any duty to update any forward-looking statements.

Speaker Change: 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 reconciliation 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. 2025 is off to an exceptional start at EQT, with the first quarter generating the strongest financial results in recent company history. Production was at the high end of guidance due to robust well performance and minimal winter impact thanks to the proactive collaboration between our upstream and midstream teams.

Toby Rice: We tactically surged our production by 300 million cubic feet per day during the quarter by opening jokes into strong-winter demand and capitalized on robust appellation pricing, driving our corporate differential 16 cents tighter than expectations.

Toby Rice: Our differentiated strategy of curtailing volumes during periods of oversupply in surging production during higher price environments, underscores our capital-efficient approach for maximizing value amid price volatility and with a key driver behind this quarter's record-setting performance.

Toby Rice: Operating expenses and capital spending during the quarter were below the low end of guidance as efficiencies and synergies continue to outperform expectations.

Toby Rice: The stellar results drove more than $1 billion of free cash flow during the quarter with natural gas prices averaging just $3.65 per million BTU.

Toby Rice: This level of free cash flow generation is nearly two times consensus free cash flow estimates of the next closest natural gas producer in underscores the differentiated earnings power of our low-cost integrated platform.

Toby Rice: These results are a tangible demonstration of the impact of our strategic decisions over the past several years, creating a peerless natural gas business that generates durable free cash flow during down cycles while also having the greatest ability to capture upside pricing.

Toby Rice: Shifting Gears, we announced our agreement for the highly accretive bolt-on acquisition of Olympus Energy's upstream and midstream assets for $1.8 billion, comprised of 26 million shares and $500 million of cash.

Toby Rice: The purchase price equates to an attractive 3.4 times adjusted even a multiple, and a 15% unlimited free cash flow yield at strict pricing on average over the next 3 years.

Toby Rice: We forecast three-year cumulative free cash flow per share accretion of 4% to 8% from the acquisition at natural gas prices ranging from $2.50 to $5.00 per million BTU.

Toby Rice: The Olympus assets comprise a vertically integrated, contiguous 90,000 net acre position, offsetting EQT's acres in southwest Appalachia, with net production of approximately 500 million cubic feet per day.

Toby Rice: The assets are positioned adjacent to several proposed power generation projects in the region, providing potential strategic value upside through future gap supply deals.

Toby Rice: The Acred Physician has over 10 years of core Marcelo's inventory, assuming maintenance activity levels with an additional seven years of upside from the Utica. The Integrated Nature of Olympus' assets and high quality inventory drives an unlevered free cash flow break even price that is comparable to EQT's peer leading cost structure.

Toby Rice: Proformer for the Olympus Transaction, year end 2025 net debt at recent strip pricing is forecast to be approximately $7 billion.

Toby Rice: The deal is modestly de-leveraging from a credit metric perspective with pro-former 2025 net debt to with Jeff at EBITDA, dropping by 0.1 times at recent strip pricing.

Toby Rice: We expect the transaction to close in early Q3 and plan to issue performer guidance as part of our second quarter earnings.

Toby Rice: Turning to our 2025 forecast, we continue to capture synergies from the Equatrant Acquisition, with actions taken to date resulting in approximately $360 million of annual savings, an increase of $85 million relative to our last update driven by CapEx Savings and System and Receipt Point Optimization.

Toby Rice: We have now captured 85% of guided total synergies and see the potential for ongoing initiatives to drive upside beyond our original forecast.

Toby Rice: importantly, these synergy numbers do not include the upside optionality created through integration that has allowed us to be our differential guidance three quarters in a row, which represents additional value creation beyond our stated synergies.

Toby Rice: With robust energy capture, ongoing operational efficiencies, and strong well performance. We are raising our four-year production outlook by 25 BCFA, while simultaneously lowering the midpoint of 2025 capital spending guidance by $25 million, both of which are prior to the impact of Olympus.

Toby Rice: It's worth noting, our updated 2025 volume guidance is roughly in line with our maintenance production prior to the sale of our Northeast PA non-operated assets last year, which means efficiency gains, asset outperformance and the repressuring of wells from our procurement strategy have backfilled nearly half of BCF a day of production in 2025 all while reducing capital.

Fending and activity levels. [inaudible]

Toby Rice: This illustrates the tremendous momentum we've experienced at EQT over the past 12 months and we've seen no signs of slowing down as we look ahead.

Toby Rice: As we continue to de-risk our balance sheet, we expect to steadily grow our base dividend and position to opportunistically encounter cyclically repurchase shares.

Toby Rice: We've built a solid foundation underpinned by a peer leading cost structure which drives durable free cash flow generation.

Toby Rice: The next leg of our strategy is built on the dual pillars of reducing cash flow risk and creating pathways for sustainable cash flow growth.

Toby Rice: Achievement of these two goals should result in both greater through-cycle free cash flow generation and a higher trading multiple, driving differentiated shareholder value creation.

as it relates to organic growth.

Toby Rice: We have a rapidly expanding pipeline of in-basin demand opportunities which could provide us with the option to sustainably grow both our midstream and upstream businesses to serve these new facilities. Recent media reports of sizable gas-fired power generation and data center projects in Appalachia, substantiate our expectations for six to seven BCF per day of local demand growth by 2030.

Toby Rice: We are in discussions with roughly a dozen proposed power projects in the region for midstream and firm gas supply solutions.

Toby Rice: and the EQT exceptionally well positioned to capitalize on this setup given our production scale, inventory duration, world-class infrastructure, investment grade credit ratings, and low emissions credentials.

Toby Rice: As these discussions mature, we have significant supply flexibility thanks to our nearly two BCF per day of gross production sold locally in Appalachia.

Toby Rice: This provides vines that we can redirect into attractive firm supply arrangements while creating a longer-term growth option to partially or fully backfill this production.

Toby Rice: This opens up a differentiated avenue for EQT to drive sustainable production growth directly linked to end user demand.

Toby Rice: I'd like to remind everyone that even before any in-basin supply arrangements, EQT already has a significant realized pricing tailwind from the firm sales deals we signed with the major southeastern utilities at the end of 2023.

Toby Rice: These deals are the main driver behind the upcoming tightening of our corporate gas price differential, which is forecast to drop from around $0.60 this year, to around $0.30 in 2028.

Toby Rice: This means that EQT is projected to have a $600 million free tax annual free cash hotel and at a time when we believe many of our peers will see free cash will margin degradation due to core inventory exhaustion.

Jeremy Knop: and with that, I'll now turn the call over to Jeremy.

Thanks, Toby.

Jeremy Knop: Our stellar first quarter result in more than $1 billion dollars of pre-castle generated during the quarter grew a significant de-levering of our balance sheet.

Jeremy Knop: We ask you to the quarter with $8.1 billion of debt down from $9.1 billion at year end 2024 and $13.7 billion at the end of the third quarter.

Jeremy Knop: We tendered for approximately $750 million of notes during the quarter and completed a successful exchange offer for outstanding EQM midstream notes, which simplifies our balance sheet in a reporting requirements moving forward.

Toby Rice: It's Toby mentioned, the creative acquisition of Olympus Energy's upstream and midstream assets, accelerates our delivering plan, as pro-form and net debt increases by 6%, while free cash flow increases by 8%, thus enhancing our debt to free cash flow metrics.

Toby Rice: The Acquisition has an immaterial impact on our absolute debt balance, as we forecast exiting the year at $7 billion of net debt on a pro-corma basis.

Toby Rice: We continue to target $5 billion of net debt on a medium-term basis in a recent strip pricing forecast achieving this goal by the middle of 2026.

Toby Rice: Turning the hedging, Raffa D. Levering positioned us to add no incremental hedges during the quarter, and we remain un- hedged in 2026 and beyond. 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 limiting our need to financially hedge.

Toby Rice: Instead of sensibly hedging, we can now patiently look for opportunities to capture asymmetric skew in the options market, which positions EQT to realize higher than average gas crisis

Toby Rice: Turning to the macro, amid the risk off sentiment sweeping through the markets, I want to share some thoughts on the natural gas macro landscape, which is positioned as a safe haven with strengthening fundamentals.

Toby Rice: We have talked for some time about the natural gas market being structurally tighter than pricing indicated due to the successes bearish events of LNG facilities going down and warm winters.

Toby Rice: Despite consensus thinking that this past winter was particularly cold, it was measured by heating degree days when it was in fact in line with the tenure average.

Toby Rice: On the supply side, we believe US gas production needs to exit 2025 near 108 BCF per day and approach 114 BCF today by the end of 2026.

Toby Rice: Given current production levels in the 104-105 BCF per day range, we need to see a rapid increase in activity levels and production or pricing will reset significantly higher to suppress demand and balance inventories.

Toby Rice: Our assumption has been that half of this growth would come from associated gaps in the Perlian, and half from growth in the Angelville.

Toby Rice: However, OPEC has decided to once again descend market share and start bringing back near record level of spurt capacity.

Toby Rice: Sending oil prices toward the 50s at the same time the trade war broke out. At this price level, we expect to see a slowdown in

Toby Rice: Meanwhile in the Hainesville, we still have not seen activity picked up and believe any activity additions will be disproportionately impacted by tariff driven inflation.

Toby Rice: Thus, we are increasingly uncertain as to where this required production growth will come from in such a short time and are increasingly bullish gas crisis.

Toby Rice: On the demand side of the equation, we do not expect notable disruptions from recent macro events.

Toby Rice: As a reminder, natural gas demand is primarily driven by winter heating, power demand, industrial demand in LNG and pipeline exports.

and has a negligible correlation to macroeconomic advance cycles.

Toby Rice: Looking back at a worst-case scenario from 2020, industrial demand declined by less than one BCF per day, or less than one percent of total demand, and we don't believe a modest recession would have nearly the demand impact of COVID.

Toby Rice: Further, we do not expect any impact to LNG exports in the medium term due to low inventory levels in Europe , and thus expect exports to flow at full capacity.

Toby Rice: We are also observing a faster than expected ramp up from the new placements LNG facility which is operating above nameplate capacity.

Toby Rice: It's this outperformance continues and golden task comes online before year end and accordance with that sound guidance and its recent perk firings indicated as possible, substantially more production will be required to keep 2026 in balance.

Toby Rice: All told, we are more bullish medium-term gas prices today than we were last quarter.

Toby Rice: During risk off periods like we've seen recently, the market has troubled the sting-wishing signal from noise.

Toby Rice: However, we are convinced that when the dust settles and the fundamental picture becomes more clear, natural gas prices are positioned to move materially higher, particularly in 2026, the longer this macro uncertainty remains and the slower the activity responds, the more bullish we become.

Toby Rice: To wrap it up, as demonstrated through our record breaking results, we continue to deliver on our promises, tangibly proving the power of our integrated platform and the unique earnings power of our business in all market cycles.

Toby Rice: Our ability to quickly adapt to market conditions in a capital-efficient manner while concurrently driving operational efficiencies is fueling outside pre-cash flow generation.

Toby Rice: Looking ahead, we see a clear path for sustainability and continuing to create differentiated value for shareholders.

Toby Rice: With that, I now like to open up call to questions.

Speaker Change: We will now begin the question and answer session. If you would like to ask a question at this time, see the press power followed by the number one on your telephone keypad. And again, please limit to one question and one follow up.

Speaker Change: And your first question comes from the line of Dog Leggit with Wolf Research. Dog, please go ahead.

Doug Leggett: Hey, I'm on it, guys. Nice to embarrass everyone on the free cash flow number, so thanks for that, but I can draw some strong quarter. I have two underlaid questions if I may.

Speaker Change: Toby first, I'm addressing it to you, it might be Jeremy wants to answer this, but on Olympus

Speaker Change: Big equity component, 1% of it then yields, so cheap way of doing the deal from a cash outflow standpoint. But I'm curious what it does.

Speaker Change: to your levered break even. To the extent you can offer any color on post-deal sustaining capital and what that, how you see the levered break even today, and obviously we're all watching your progress was dirt reduction. So that's my first one I've got to follow up please.

Speaker Change: Doug, I think it's a great question because you can see deals get printed and show strong financial accretion.

Speaker Change: But I think what's really exciting about the Olympus deal is we're seeing that accretion and doing it with a high quality asset that has a cost structure that's equivalent to EQTs.

Speaker Change: We think that's really special about this and what makes a good deal on the accretion numbers a great deal for our shareholders in the long term. So we're really excited about that setup and being able to get that print.

Speaker Change: Doug, in terms of specifics, you know, I would say it doesn't really have an impact on the unlevered number. It's modestly delivering, as you noted, due to the equity component. So it marginally improves that, but on a levered basis, we see that break even at about $2.35 for 2025.

Jeremy Knop: Can I just a quick follow up, Toby, if I may, when you're comparing it to E.K.P. Would that also apply to the inventory depth? You guys have got 20 years. You've talked about what does Olympus look like?

Jeremy Knop: Basically, just the Marcellus. So, you know, the Utica out there is all upside.

Jeremy Knop: And so we think that that's going to be more of the longer term play that would get an inventory depth sort of on on par with what we're carrying here, but

Jeremy Knop: We didn't describe any value to it in underwriting this deal and it's something that will work on over time, but this is directly adjacent to some of the UTAC activity, not just that the Olympus team has done a handful of wells, but some of the other activity.

Jeremy Knop: by other operators right there. So I mean, there's some things to get excited about with the deeper Utica in this area, and we think that will pull inventory levels up for the longer term.

Speaker Change: Thanks. Thanks for that. My follow up, Jeremy, is definitely for you, is Praising Strategy.

Speaker Change: The reason for the question is, we obviously saw T5 and other regional hubs blow out in the quarter and you guys obviously have got a lot of, you've got some constraints over how you allocate Bidley versus spots. I'm just curious.

Speaker Change: As the balance sheet gets improved as you own the midstream now, you can allocate things little differently. What are you thinking? Is there any reason to consider whether you would change that bid week versus spot mix in your gas and I'll leave it there? Thanks.

Speaker Change: Yeah, it's an interesting question. So a lot of times we elect a first-of-month because our financial hedges are sexually settled against that first-of-month price.

Speaker Change: So, for example, if you're 50% heads, you probably want to have at least 50% of your production settled first a month to pair that up.

Speaker Change: As we move to a position where we are hedged left through the fact that we do have the midstream cash flows and as our leverage drops lower and lower, we'll have a lot more flexibility.

to sell more into the dailies. [inaudible]

and we change that seasonally. So when you think about…

Speaker Change: This past quarter and some of the winter storm that came through the amount of value you can capture selling in the daily price market is.

is pretty material. That's what you saw a surge production into.

Speaker Change: in the first quarter. So I think we'll have a lot more flexibility to do that, but that's really enabled by, you know, it's a core having the midstream foundational assets and the stability of cash flow, which then allows us to hedge less, which then gives us that flexibility. So I think the opportunity is increasing. Thank you very much.

Great stuff. Thanks so much, guys.

Speaker Change: And your next question comes from the line of David McDermott, with Morgan Stanley , David, please go ahead.

Kevin, your line is now open.

You hear me? Sorry about that.

Speaker Change: So I wanted to ask first just building a bit on the M&A strategy and Toby, you want us to kind of think back at your tenure as CEO , you've built EQT into a premier gas company as you framed it in your opening remarks, pure list.

Jeremy Knop: Wright. It's been through a mix of organic improvement in strategic M&A. I think one of the impacts of the strong portfolio you have right now is it raises the bar on any incremental acquisitions. So beyond just Olympus, I guess the question is probably both for Utopia and Jeremy. Is what strategic and financial boxes need to be checked?

Speaker Change: for further M&A, and how are you viewing EQT's role in additional consolidation from here?

Speaker Change: Yeah, Devin, I think for us, I mean, our track record, I think we've been very consistent. I think we'll continue to be consistent. And you're right, the bar is gotten higher and

Speaker Change: You know, I think for us, we're looking at value. And I say on the other hand, we're looking at just the power of the platform and we are. [inaudible]

Demonstrating an Edge here.

Speaker Change: But we could be patient and we've got a great business that we're focused on.

Speaker Change: and it's one of the reasons why we want to highlight. Our success has not been purely from the strategic cabinet that we've done. We've transformed the operating model of this business.

You're seeing us flex.

Speaker Change: The asset base, and continue to see operational efficiency gains. That momentum is going to continue, and it's going to continue to give us the ability to have opportunities in the future. Just working this current asset base we have that we're pretty excited about. Thank you very much.

Speaker Change: Devin, a lot of it just comes down to that North Star. We always talk about which is cost structure.

Speaker Change: and that's one of the unique things about Olympus, just that integrated model and actually really high quality.

Wells out there.

Speaker Change: That allows us to maintain the integrity of what we've always focused on and do in a really value of creative manner.

Speaker Change: and do it in a way that preserves their balance sheet strength and in this case actually improved our leverage metrics on the margin.

Speaker Change: So, you know, I wish there were more opportunities like that. There's just fewer and fewer, so I think it's going to be pretty hard for us to find much, much going full.

Speaker Change: Much going forward. But look, we're always active, we're looking, we continue to be focused on Appalachia. And if there's a way to create outfly shareholder value by taking a strategic action, I think we're always interested in that. It's just becoming difficult because of opportunities.

You know, they've mostly been picked up.

Yeah, it makes a lot of sense.

Doug Leggett: and then I wanted to shift and ask about the in-basin demand opportunity, Toby, I think you mentioned your currently discussions with one dozen different in-basin demand sources and gas sales opportunities. I was wondering if you characterize these in a bit more detail, like size, timeline, how you're thinking about central contract structure, and also whether or not you're still expecting that first announcement in 2025.

Yeah, I mean, Doug, I think it's him. [inaudible]

Speaker Change: Kevin MacCurdy, Kevin MacCurdy, David Deckelbaum, I think it's important to step back and just look at the dynamics that have taken place in this country. I mean...

Doug Leggett: and this is what's driving a lot of in-base and demand. You know, we've had over five BCF a day of pipeline projects that have been blocked, canceled or opposed. That would have taken, you know, low cost, reliable, clean, Appalachia gas and delivered to other parts in the country.

Doug Leggett: The market opportunity for more natural gas and without these pipelines, that invasive demand is going to grow and that's what we're seeing and you know specifically on the power generation front. Thank you very much.

Doug Leggett: You know, one of those pipelines was Atlantic Coast pipeline got blocked. That would have taken gas into data center alley for the I build out well without that pipeline. People that want that power are going to move back closer to basis. That's certain.

Doug Leggett: into our basin, so I mean that's the high level thing that's taking place.

Doug Leggett: You know, what that's translating for us, obviously I think EQT is well positioned, just with the sprawl of our acreage position, we've got a lot of shots on goal.

Doug Leggett: So we've got a lot of conversations that are taking place right now. This Olympus transaction positions that's even closer to some of those opportunities, so we're excited about.

Doug Leggett: Seeing how that could potentially translate to optimizing gas delivery to some of these opportunities, these are...

Doug Leggett: Deals that take a lot of people putting it together. We're still confident that we're going to have something by this year. We've got a lot of conversations happening, but it's going to take some time to put these through. [inaudible]

Great. Thanks so much.

Speaker Change: And your next question comes from the line of Arun Jayaram with JP Morgan. Arun, please go ahead.

Good morning, gentlemen.

Speaker Change: Morning, morning. Yeah, quick question here. Toby, you know, there's a lot you control as an ENP company.

Speaker Change: But ultimately you're a price taker. And so I wanted to see if you could maybe address some of the benefits to EQT from having conversations with called data center.

kind of counter parties. [inaudible]

Speaker Change: You know, from their sample and I could see they get the benefit of a guarantee of supply.

Speaker Change: Supply SciRity, sort of to make it help us think about some of the benefits to EQT from doing Quinico to data center deal. Obviously, it could probably help local basis, but what are the opportunity sets from a marketing standpoint to benefit your margins?

Speaker Change: Yeah, so I think it's important for everybody to understand, you know, in a world where it's energy short and you're planning on building billions and billions of dollars in the data centers, you know, having security of supply is critical and that's what's having people come and look to. [inaudible]

Speaker Change: Go full path on their energy solutions, not just by natural gas on the spot market. So that's what's creating the opportunity for us to come in and talk.

Speaker Change: But I'd say what are we looking to deliver? I mean these are competitive situations [inaudible]

Speaker Change: There's going to be lots of options for EQT to be successful. We have to provide the best combination of costs, reliability, and carbon footprint of the emissions associated with that energy. We're certainly very well positioned. Our location is.

Speaker Change: in proximity to some of these opportunities, I think, is tough to replicate. And what will that ultimately will translate to? I think will be opportunities like we've already shown.

Speaker Change: The ability to capture, you know, the deal we did back in 23, which will really start hitting in 27-28, with MVP off the tailpipe. I mean, as an example, I mean, it will be...

Speaker Change: I would look at it simply as just an uplift to just selling our gas locally.

Speaker Change: and we've got to call it around a couple BCF a day of that gas. That's it.

Speaker Change: Already flowing above ground, being sold in Basin. That is an amount of gas that's ready today that our commercial team is using to connect to some of these opportunities and then we will have a decision strategically whether we want to. [inaudible]

Speaker Change: Backfill those volumes that we supply, and that will create the opportunity for us to get, you know, sustainable growth. So it's really an exciting opportunity, not just for the margin enhancements we can get, but also triggering the sustainable growth opportunities for our massive inventory base.

Jeremy Knop: Great, that's super helpful. Maybe my follow-up is maybe Jeremy Slide 11.

Speaker Change: You highlighted the ability for your basis differentials to narrow by 30 cents into 600 million uplift.

Speaker Change: Can you give us a sense of maybe break that out between what portion of that is just from M2 tightening versus the benefits are uplift from the long-term sales agreements?

Yeah, it's a great question.

Speaker Change: So, if you think about the $600 million that Toby mentioned in some of the prepared remarks, that half of that is coming from those sales deals, and the other half is coming from these in-dates and dynamics of what you're seeing on the forward curve right now. So, I'd call half of that more or less contractually locked in, and the other half just due to these fundamentals that we keep talking about. [inaudible]

Great. Thanks a lot, gentlemen.

All right, thanks everyone.

Speaker Change: And your next question comes from the line of Neil Mehta with Goldman Sachs. Neil, please go ahead.

Neil Mehta: Yeah, thanks so much Toby Jeremy for the comments and we agree with your view that the front month of the gas curve looks a little oversold here. One of the questions

Speaker Change: And we've been getting this. How do you think about what that marginal molecule...

Speaker Change: cost curve is and if we ultimately need to price the Haynesville, how do you think about the price break even of it? I'm curious if you guys have done some work around that and is there a scenario where you need to actually price through non-core Haynesville and go higher? Just your framework as you think about the upside of the volatility band.

Neil Mehta: Yeah, we spent a lot of time on that, and I saw your team put out a note last night on that

Neil Mehta: Look, I think our view is that with the dwindling inventory in the Haynesville and some of the more recent wells having...

Neil Mehta: Much less productive results than what we saw a couple years ago. That's at least in the mid-4s, and with the volatility you're seeing in the market right now, and even really the last month and a half.

Neil Mehta: Seeing how much pricing swings around, I think I think the bar to make that capital allocation decision towards growth where you don't see the return on those dollars for a year and a half to years.

Neil Mehta: I think you need to see the back end of the curve rise more to really incentivize that. And you're just not there yet. I mean, Cal26 right now is just over $4.

Neil Mehta: and you're seeing Kale 27 below that. From our perspective, I don't think that's nearly enough to get the level of activity back. It's required to meet some of these demand growth estimates, and what's effectively locked in with these LNG exports.

Neil Mehta: So, look, that's why we're being patient in terms of how we think about hedging, if we hedge at all, you know, near term it's really about balancing the March 26th inventory balance in different winter scenarios.

Neil Mehta: But then beyond that, as you get into mid-2026, unless you see that activity response and take production volumes materially higher, I think the market just gets upside down pretty quick. And it takes a little while as you will know between activity coming back and that production's showing up.

Neil Mehta: So I think if we go a couple more months and we don't see a material increase, it's almost going to become too late and you almost crystallize that bullish inflection in 2026 where you have to hope winners warm to keep the market balanced.

Speaker Change: All right, that's really helpful. And you think about the production that we've seen out of Appalachia.

Speaker Change: And I'd be curious as you think about the production path for the US from here, particularly in the basin that you operate in and with that just a pull forward in response to strong pricing and we stabilize production from here so that it catches up and then we draw in the torque.

Speaker Change: Yeah, I would characterize it the same way you just did. I think it's a bit of a pull forward, but I think for the next...

Speaker Change: Two-quarters at least. We don't see that growing much beyond where it's at, certainly in the northeast. I think it's easy to extrapolate where you're at. I think what we're seeing every single year, it's funny, I feel like we have this conversation year after year.

Speaker Change: You see Northeast production surge in the winter, and then it comes back off at some point in Q2. I think due to some of the deferred tails and ducks you probably have more of a flat scenario, but I don't see that rising beyond where it is today.

Speaker Change: So again, it just kind of underpins part of the part of the reason we're so constructive. In addition to...

Speaker Change: You know, what's happening on the liquid side of the space right now, I think, you know, we said it's in the prepared remarks but half the volume we assume was coming from the Ainsville in terms of growth and half from the Permian.

Speaker Change: and it is harder and harder for us to see that showing up in the time frame you needed to show up. 25 and 26 really is a unique time period because you do have that step change increase in demand so quickly.

Speaker Change: and you normally never have events like that, and it's very hard for a production to keep up at that rapid of a pace.

Speaker Change: So in the same way in 2023 and 24, you didn't have enough demand and you had enough supply. That's going to flip on you and put the market under supplied scenario pretty quickly.

Speaker Change: So again, we think that macro backdrop is really attractive and if we're sitting here having the same conversation three months from now on our Q2 earnings call it's going to feel like I think in our review how we model it like it's a little too late and you're really crystallizing that bullish setup in 2026.

Great, thanks Jeremy.

Speaker Change: and your next question comes from the line of Kaleia Camine with Bank of America. Kale, please go ahead.

Kalei Akamine: Hey, good morning, guys. I've got two thoughts on Olympus here. I guess first, it's a good deal. We think it's the creative of multiple measures and the industrial logic is there. Maybe first, can you talk a little bit about Olympus midstream? [inaudible]

Kalei Akamine: We understand that business is integrated in the upstream and the downstream wondering if there are any opportunities to link that system into equity trends. So differently, are there any synergies from linking into equity trends and do you see any compression opportunities, which have been a big driver of gains and your legacy assets. Let's go ahead and take a look at some of the things that are going to happen in the future.

Kalei Akamine: Yes, so great question. And the answer is yes, we will be looking to tie this midstream system into our equatrans.

Kalei Akamine: Based set of fights we got out there. I mean, I think the picture on slide 10 just shows the proximity that we've got there so that will definitely create opportunities for us to optimize delivery points. I think the thing that's that's most interesting though is going to be. [inaudible]

Kalei Akamine: Seeing how we can leverage this asset base to serve us from new in-base and demand opportunities that we're working with. So that certainly would be, you know, a nice synergy upside however you want to categorize it. But we'll be looking, our midstream team will be looking to maximize value from this asset base we have here.

Speaker Change: The second one is, we looked at the legacy of Olympus as well, and their well-designed looks a little bit different than yours. In fact, very different. Can you talk about whether you're baking any upside in from your own best practices onto the Olympus assets?

Speaker Change: Yeah, no, we've been pretty conservative in underwriting the tight curves here. So there will be opportunities for us to tweak the well-designed, but...

Speaker Change: That is not factored into our math right now. Things like well spacing and some of the completion intensity, you know, maybe some tweaks, but that would be considered upside.

Got it. Thank you, Toby.

You got it.

Speaker Change: Then your next question comes from the line of Roger Read with Wells Fargo. Roger, please go ahead.

Yeah, good morning.

Oh.

Speaker Change: A lot of the big stuff has been hit here, but I think one of the questions we get kind of consistently is, what are the-

Speaker Change: Out of base and opportunities that we're not necessarily thinking of front page, but we should consider I know in a long time we've talked about LNG and the Northeast that seems unlikely but what are some of the other opportunities we should be paying attention to there.

Speaker Change: Well, I think it's just important to note like we've got I think the hottest trend happening in our backyard with the power gen I mean a lot of the focus on LNG was really driven by the fact that that was a big source of demand for natural gas.

Speaker Change: But now, you know, we've got a more bullish opportunity happening in our backyard with this AI data center thing. So, I mean, I would say I'd be focusing on that. That's certainly where we're spending most of our time.

Speaker Change: I appreciate that. The other question I have, you've done a lot of acquisitions, you know, there've been some dispositions along the way.

Speaker Change: Maybe a little premature with Olympus here, but are there things we should think about that will be, you know, paired at different times to bring, you know, a little more focus to the operations. Obviously you get the opportunity to really review everything, determine what is.

Speaker Change: You know, truly low cost and advantage within your portfolio. But is that part of the process we should presume or you know, is there still just a lot more to grow within the Marcello's that we should you know the other words it's too early to be taken any steps back. [inaudible]

Speaker Change: Roger is a good question. We're always looking at that. I think our investors of our not off interest last year and those two transactions are a tangible example of that. And there's a number of things that we're always evaluating as a way to just continue to refocus on our poor asset base and reallocate capital to which generates the highest returns. [inaudible]

Speaker Change: So we're not going to talk about specifics at this time, but there's always things that we are looking at like the non-op last year, and I think that will be a...

Speaker Change: a continuous thing that we explore as we grow the business. It's not all about growth in acquisitions, it's just simply about reallocating capital to maximize shareholder value.

Appreciate that answer. Thank you.

together.

Speaker Change: And your next question comes from the line of Jake Roberts with TPH. Jake, please go ahead.

Good morning.

Speaker Change: Morning, Jake. The start-up was on the increase of the third party revenue guidance relative to the last quarter. If you could speak a little bit about what's driving that as well as if you see the update is kind of the upper bound on the potential.

Speaker Change: That Revenue Line Item, just a little bit more consistent apples to apples. And if you look back to how equitrains accounted for that as well, it's more consistent there too. So that's effectively what's going on, but I wouldn't say it's a fundamental change in the business.

Speaker Change: Okay, great. And then the second question may be a follow up to Devon's earlier question. Jeremy, you mentioned the limited opportunity set there for M&A. I was wondering if that applies to other vertically integrated businesses, or if there's a case to be made for looking at the pure plain midstream market and what could be applied to those businesses that you've done to e-train in the future.

Speaker Change: Yeah, I mean, across anything we do strategically, it really starts with where do we have an edge.

Speaker Change: We're not looking to just buy things for the purpose of buying and growing and getting bigger.

Speaker Change: Equatrans was special in that sense because there's so many synergies between the two businesses and we're seeing that on full display. I think if you look back, it's really each of the quarters that we've reported since closing that deal. We beat each quarter pretty handily.

Speaker Change: and it's kind of funny when we're forecasting and giving guidance out, it's hard to account...

Speaker Change: for the 30, 40 very small things individually that we're doing better, but I think what you're seeing in these beats is the collective result of all of those small things coming through and positioning up to outperform what we said we would do. I think that will continue. Thank you.

Speaker Change: But it's hard to look at other mystery assets and say we can have the quite the same result. So look, we're open-minded about it.

Speaker Change: If there was an opportunity like Aquatrans with the same benefits and synergies, I think we'd love to explore it for the right value, but it's hard for me, it is juncture to think about what that really would be.

Great, appreciate the time.

Speaker Change: Your next question comes from the line-up Scott Gruber with CD Group. Scott, please go ahead.

Speaker Change: Yes, good morning. A couple of questions up front. You know, the last call you guys talked about behind the meter deals, likely seeing contracts. We'll see you guys next time.

You've signed it, it premiums to...

Speaker Change: Either a regional marker or a Henry Tubb, and we could reach some interest in potentially signing a fixed price.

Speaker Change: Sales Agreements, since it will help walk in the Spark Spread for the Power Producer, which in turn can help.

Speaker Change: Ben Secure, Financing for the Plant, and then given, you know, hyperscalers desired for line of sight to power, it could be positive economics, you know, all the way down the value chain.

Speaker Change: Are you are you hearing about an interest in six price deals? Is that picking up and? [inaudible]

Speaker Change: Obviously, it's all price-dependent, but if these types of deals are possible, there's any color on the price point that tips you to be more interested in fixed price over a premium to a regional market or for updates next.

Speaker Change: Yeah, I think so what's unique about each one of these power deals is that they all have different considerations.

Speaker Change: Some need help with citing, some need midstream, some need gas, some need all of it. There's different counterparty credit qualities of these different, whether it's a developer, hyperscaler, whoever we might be talking to, so I wouldn't say there's a one-size-fits-all approach.

Speaker Change: Every one of these is going to be different and we have the flexibility to structure around that. I think in the long run what I would love to see is some sort of portfolio approach to this over the long term as they come together where you have some of all of it. [inaudible]

Speaker Change: I think where you have to be somewhat careful on a fixed price deal though is if it is priced at a level to factor in the upside asymmetry of gas prices, and if you fast forward ten years from now just so you do a 20 year deal, where gas prices probably need to be.

Speaker Change: You know, to incentivize the marginal molecule, as the Hainesville is fully depleted, the

Speaker Change: and a lot of these legacy oil basins don't have a lot of inventory left and decline. I think that gas price needs to look different. So what might look good today for a fixed price fuel, half with your contract, you might not like very much. [inaudible]

Speaker Change: So I think one of the things we like about the index plus style deals that we've done with these southeast utilities is it insulates you from that? We're also providing you a bit of an extra margin.

for that reliability of long-term supply.

Speaker Change: So, I think we're open to all of it, but that's kind of where we gravitate to, just as we think about it over the long term.

Speaker Change: But look, we'll see, we're having a lot of really fascinating discussions of different parties up and down the chain. And like Toby said, I think we're pretty optimistic we get something done this year and I think Olympus advances our ability to do that.

Speaker Change: Great, that was it for me. Thanks for all the color, Jeremy.

Speaker Change: Your next question comes from the line of Kevin MacCurdy with Peakery Energy. Kevin, please go ahead.

Kevin McCurdy: Good morning, guys. I wanted to ask another one on the Olympus acquisition. It looks like the deal came with a nice ebit of contribution and what looks like high implied margins. Can you talk about the midstream assets that you acquired and the effect on the op-ax and any information on the sales points for the acquired guests?

Kevin McCurdy: Yeah, so if you think about the total EBITDA of the business, about 15% of that, if you were to break it out, is attributable to midstreams about $80 million roughly.

Kevin McCurdy: You know, I think one of the big benefits in terms of why the margins are so high is again that integrated nature of it. It's being sold effectively all it into right now but we do see opportunities to probably improve that and certainly for the link into some of the adjacent data center power projects that are right there in that area that could obviously be a huge improvement beyond that.

Kevin McCurdy: It kind of sits right at the junction between the M2 and M3 markets, so we're probably going to explore whether there's a way to move some volumes into that, into that more premium market along Catcoe.

Kevin McCurdy: But that's something that I'd say is a synergy that could develop in the coming years, but it's not a tomorrow type of event.

Speaker Change: Great. I appreciate all that detail. And for my next question, I wanted to ask on the change on MVP, capital contribution guidance. Is that just timing of spending or is there something on the cost of that project that is increasing?

Yeah, I'm glad you asked that. That's an important clarification.

Speaker Change: So it's actually an accounting change. There's actually no difference. If you look at the change to distributions and the change to contributions, they actually offset each other. It's just a difference between how we assumed we would just recycle capital within the MVPJV before, so there wouldn't be an actual contribution. Thank you very much.

Speaker Change: That's unchanged, except from an accounting perspective, we still have to book it as a distribution out and a contribution in, effectively. But net net, I don't think at the bottom line there's any real difference in how we forecast the contributions or what MVP will generate for us or our partners. First.

I appreciate that. Thanks Jeremy.

John Annis: During next question comes from the line up Chen Anis with Dexas Capital, John , please go ahead.

John Annis: Hey, good morning guys, and thanks for taking my questions. For my first one, just on this energy front, can you elaborate on the specifics that drove that $85 million in saving since the last update and the ongoing initiatives that could drive additional upside that you've highlighted in the presentation. Thank you very much.

John Annis: Sure. Great question. Happy to provide some more color. So since last quarter, we've...

John Annis: We've obviously revised our synergy capture up. Some of that is we're going to be on water disposal costs, capex synergies from us to seeing if we can optimize some of the spend that's happening on capex projects.

John Annis: but really the larger trunk really just comes on the receipt point system optimization efforts that we're doing. So this is just us moving volumes.

John Annis: to optimize the receipt points and capture some spreads there. So those are going to be some of the opportunities that we're going to be looking for also to recreate on the Olympus asset.

John Annis: You know, going forward, you know, what we really are looking at on the upside there is going to be really more in the discrete projects.

John Annis: Bucket, so, you know, are there going to be some projects that we can identify that would allow us to continue this momentum is what would be making up the remainder of the upside there. [inaudible]

John Annis: Makes sense. For my follow up, one of the questions we get most often is what market conditions would cause you to accelerate production growth? How would you frame your thought process and deciding to grow volumes if the market is calling for it? [inaudible]

John Annis: Yeah, I think it's pretty simple. I think the market calling for it is not just, you know, price signal is gonna be a demand signal. So, you know, we're gonna have a firm supply deal.

John Annis: and we will make sure we grow bonds to meet that firm supply. I think it'll be pretty simple. So that's sort of how we're looking at it right now. And I think that's where we're going to be for a little bit until we get back to a place where we get...

John Annis: and Market that is more well connected with more pipeline infrastructure. I think we need to be more prudent in making sure that we see the demand before we bring volumes.

John Annis: John , I think I would distinguish the difference between growing to sell to the market versus sell to a customer.

John Annis: and we're trying to pivot our business to sell to a customer in a large scale way and that's very different than I think the way a lot of our peers look at it and I think the way operators have approached this in the past.

John Annis: and it's really only possible just through the platform. We've built the scale of EQT and investment grade balance sheet and all the other attributes we talk about. So...

John Annis: As opposed to one that just chase price and half to float up and down on the waves of volatility quite so much trying to transform the business in a sense. We think thats just a much more durable higher quality way to manage the company over the over the long term.

John Annis: Yes, and I think it's worth pointing out too I mean.

John Annis: Take advantage of price signals, we are going to be taken advantage of that with our existing asset base. I mean, if you look at I think it's slide seven.

John Annis: We're showing a two bcf over two bcf.

John Annis: Day volumes swing.

John Annis: So we are being responsive to price in group, giving more volumes when the market is calling for it but.

That trip into activity levels, it's going to be more of the dynamics of Jeremy just put color on.

John Annis: Makes sense thanks, guys.

John Annis: Yeah.

Speaker Change: Your next question comes from the line of David <unk> with TD color. David. Please go ahead.

John Annis: Yes.

David: Thanks for the time guys.

John Annis: Tobey I'm curious just as a data center opportunity develops here in basin.

John Annis: Can you square those opportunities or put it in context relative to your LNG strategy in those opportunities as it relates to contracting and the ability to improve commerciality of your products going forward.

John Annis: Well I think those are.

John Annis: Opportunities are going to be a much lower.

John Annis: Costs access to get there.

John Annis: So I mean I think that's the first consideration that these are going to be happening in our backyard.

John Annis: On the other half on the other side of the country ultimately with with <unk>.

John Annis: <unk> consumers across the world.

John Annis: So I think it's really easy for us to know the parties and create custom tailored solutions that gives them the best combination of affordable reliable and clean energy.

Speaker Change: And Theres just a lot of them over here. So I mean, we've gone from occurred where we're having to think we're going to be needing to stretch the.

Speaker Change: The commercial footprint of our business, which is fine we saw gas across the country.

Speaker Change: But having these opportunities in our backyard I think is going to be a little bit easier in.

Speaker Change: The costs associated with connect those opportunities is a much lower bar and.

Speaker Change: We're not going to be needing to sign up for.

Speaker Change: Big tolling fees to get access to these opportunities and margin uplift.

Speaker Change: Yes, I think David to remember we have one two bcf a day down in that go into the golf market and that LNG corridor. As it is that's probably more than we would ever look to sign up and those LNG contracts for the reasons Toby said it just creates too much financial risk for the company, which is why we've set that limit around 5% for the amount of LNG that we'd probably like to sign up for export.

Speaker Change: At least the size and scope of our business today, we think beyond that it just creates too much financial risk.

Speaker Change: So thats why beyond that we're looking back towards where that that demand is domestically and to effectively take a very high priced ft style commitment to export gas around the world to sell to a utility when we added utilities, calling us virtually every day to supply their power plan.

Speaker Change: <unk>.

Speaker Change: Adjacent to our operating footprint.

Speaker Change: I think for US we can grow.

Speaker Change: More quickly with less financial risk.

Speaker Change: Supply in that market domestically right now.

Speaker Change: They then than we necessarily.

Speaker Change: Would be able to on a much longer term basis, three LNG market. So it's going to be all the above we're obviously looking to serve any demand that shows up but if we can serve the same in the market in essence and do it a lot more efficiently and cheaper and faster I think we're going to look to do that before trying to chase an LNG project.

Speaker Change: Jack It takes years and years to even come online.

Speaker Change: It makes plenty of sense.

Speaker Change: And perhaps just for my follow up just on the clarification.

Speaker Change: How you view the Olympus assets strategically.

Speaker Change: Obviously, youre picking up half a bcf a day.

Speaker Change: In an area, where there is some emerging demands on the power side.

Speaker Change: I guess, how do you how do you square those opportunities on the eastern portion of your acreage versus sort of the Ohio side.

Speaker Change: This more responding to what you see is.

Speaker Change: A more compressed timeline and the Westmoreland area from maybe some brownfield projects or.

Speaker Change: Is this just more of a matter of balancing.

Speaker Change: The production footprint between those two areas.

Speaker Change: I think this is more of just increases our ability to get to get more and more opportunities closer in our operating footprint.

Speaker Change: We're going to be look we're looking at opportunities across our entire operational footprint.

Speaker Change: Olympus is pretty special and the fact that it's close to the industrial corridor in Pittsburgh.

Speaker Change: There are a lot of people are looking at opportunities.

Speaker Change: It puts us right next to some of these opportunities so we'll be exploring those.

Speaker Change: Yeah.

Thanks, guys.

Speaker Change: Your next question comes from the line of Noel Parks with Tuohy Brothers Novo. Please go ahead.

Speaker Change: Hi, Good morning, Yeah actually that last question with something I had been wondering about so is it fair to say then that.

Speaker Change: The timing of Olympus was just a.

Speaker Change: Because I assume that these are assets.

Speaker Change: Been aware for a long time.

Speaker Change: It was sort of uniquely because of the anticipation of in basin power.

Speaker Change: That's where the industrial corridor.

Speaker Change: I think this deal would have made sense without the upside opportunities that the datacenter potential data center opportunities would would present.

Speaker Change: So when we look at this as pure upside and.

Speaker Change: When we think about the volumes here with the Olympics asset base I mean, when we are if we can tie in our systems.

Speaker Change: It will be a way for us to connect our entire asset base in southwestern Pennsylvania up to this industrial corridor.

Speaker Change: So that 500 million a day of gas is flowing today will be connected will be supported with a huge amount of inventory.

Speaker Change: We could use to flex to the service volumes way more than the 500 million a day thats coming from the Olympus asset base today. So all to say like people that are thinking about putting data centers in the Pittsburgh region.

Speaker Change: We're going to make sure that you have all the energy you need to achieve the power demand goals that you have.

Speaker Change: Yes.

We look at we look at Olympias as it was a value buy right asset right time, there's a win win deal for both sides I think Blackstone sees a lot of upside in our stock at the same time.

Speaker Change: And look I think.

Speaker Change: The Optionality created both on the ground leasing in that area, which is pretty inexpensive can add some really attractive runway.

Speaker Change: Just like what we already do in our base business every year to really extend that inventory depth.

Speaker Change: Beyond the call. It 15 years of really high quality inventory that we already see right there.

Speaker Change: <unk> is really competitive and again like tobi alluded to I mean to have that probably higher probability.

Speaker Change: Our data center opportunities that were in discussions with are located effectively right. There one of which could be one of the largest largest projects in the country. So I think it positions us really really well as we continue that dialogue.

Speaker Change: And again, if we just think about the region in total and the way we're positioned whether it's in the Ohio market, whether it's the Pennsylvania market or even parts of West Virginia, where we are in discussions on projects.

Speaker Change: I think we should really be looked at as the go to supplier of choice for any gas needs for any of these any of these facilities. So it's really just improving our positioning in those conversations.

Speaker Change: Great. Thanks, and I was wondering if you wanted to take your temperature on.

Speaker Change: The macro commentary you've made in looking at the setup with LNG over the next few years.

Speaker Change: Our sensor our stance on whether we are heading into effectively a net greater volatility in.

Speaker Change: In gas and maybe ultimately reflected in the script or do you think that's sort of the.

Speaker Change: The reduced seasonality.

Speaker Change: Net net it's going to.

Speaker Change: To lead to more stability and just to follow on that I guess, just sort of wondering is if you have any appetite to your balance sheet improves for investing and puts.

Speaker Change: Our hedging strategy.

Speaker Change: Yeah, I think as we've been talking for a couple years now we think volatility is only going to increase and that's the.

Speaker Change: The reason, we're trying to position and sculpt the business. How we have I mean, if you look back in early November we had curtailed and we have a really interesting slide on this in our deck that you should look at because we get some pretty good granularity on this and what our curtailment program has allowed us to do but we curtailed at least one six Bcf a day in the first week in November.

Speaker Change: Two months later, we not only had all of that back, but we had actually surge production.

Speaker Change: Our baseline so you saw effectively a two bcf a day swing to make sure that we can actually capture the volatility not be harmed by it on the downside and actually be positioned to capture more of that upside value. When you see those price spikes, if you're in a position where you're having to get completion crews out there in <unk>.

Speaker Change: Rack wells chasing pricing I mean look if you would've done that two months ago, all of a sudden you're bringing wells online now a pricing thats $2 below actually more than that if you look at just Appalachian pricing.

Speaker Change: Below are those price levels are so we can be very prescriptive very tactical as we optimize around that volatility and again, having the foundational assets of echo trends.

Speaker Change: With the operational flexibility of EQT.

Speaker Change: To maximize profitability, it's sort of like this extrinsic value that doesn't get picked up easily in financial models, but as I.

I noted before it's important to just observe that every quarter. Since we acquired <unk>. We consistently beat part of that is operational and part of that is what we're able to do on the commercial side of things. So we hope that continues we expect that to continue and that is just more and more important as we go through these ups and downs of volatility that we expect to.

Speaker Change: Probably get more extreme in the coming years.

Speaker Change: Yeah, Jeremy I think that was very well said and if I had to say it very simply.

Speaker Change: <unk> as a business.

Speaker Change: That is designed to evolve.

And align our operations with the current environment and EQT as a business thats going to thrive and volatility and I think everything we've done Jeremy just couple of color on as an example of that.

Speaker Change: Great. Thanks, a lot.

Speaker Change: There are no further questions at this time that concludes today's conference call you may now disconnect.

Speaker Change: Okay.

Speaker Change: