Q2 2025 EQT Corp Earnings Call
Thank you for standing by. I would like to welcome everyone to aqt QT 2025, quarterly results conference. Call all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to draw your question, press star 1 again, and please leave me to 1 question and 1 follow-up. Thank you.
Speaker Change: I would like to turn the call over to the camera and harvest managing director, investor relations and strategy. Please go ahead.
Speaker Change: Good morning, and thank you for joining our second quarter 2025 earnings results conference call with me. Today are Toby rice, president and chief executive officer and Jeremy Keno. Chief Financial Officer in a moment, Toby and Jeremy will present their prepared remarks with a question and answer session to follow.
An updated investor presentation has been posted to the investor relations portion of our website and we will reference certain slides during today's discussion, a replay of today's call will be available on our website beginning this evening.
Speaker Change: I'd like to remind you that today's call may contain 4 book statements.
Speaker Change: Actual results and future events could materially differ from these 4 looking statements because the factors described in yesterday's earnings release in our investor presentation.
The risk factor section of our most recent form, 10K, and form, 10 q. And then subsequent filings, we make with the SEC. 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
Toby Rice: With that, I'll turn the call over to Toby.
Toby Rice: Thanks again and good morning. Everyone. Second quarter results. Continue to Showcase strong momentum at eqt production was at the high end of guidance benefiting from robust well, productivity and outperformance from compression projects year to date. Our compression program is ahead of schedule below budget and driving production uplift. Well above expectations, showcasing continued, Synergy capture from the equitrans acquisition
Capital spending came in approximately 50 million dollars below the low end of guidance driven by Midstream spending optimization continued improvements in completion efficiency in lower. Well costs. Our teams set a new eqt record for completed footage per day during the quarter. And we believe there is still significant room for additional improvements.
Toby Rice: Q2 free cash flow attributable to eqt, despite 134 million of net. Expense incurred relating to a litigation settlement that resolves outstanding Securities class action, litigation
Toby Rice: We view this settlement as a positive step forward for eqt as it resolves remaining meaningful Legacy liabilities inherited by current management.
Toby Rice: Without this legal expense, second quarter, free cash, flow attributable, to eqt would have totaled approximately 375 million materially exceeding expectations.
To put into perspective, cumulative, free, cash flow generation totaled. Nearly 2 billion dollars over the past. 3 quarters despite natural gas prices, averaging just $3.30 per million btu. Over this period highlighting, the differentiated earnings power of eqt low-cost platform,
Toby Rice: Shifting gears, we close in our acquisition of Olympus energy on July 1st funding, the deal with 475 million of cash on hand. Plus the issuance of approximately 25.2 million shares after purchase price adjustments, recall, the assets comprise a vertically integrated contiguous 90,000 net acre position, offsetting eqt. Acres in Southwest, Appalachia with 500 million cubic feet per day of net production and over a decade of core marcelis, inventory along with significant upside optionality, from the deep Utica.
The teams are off to a fast start integrating the assets and we expect to have the bulk of operational, integration items complete within the next 30 days. We also see the opportunity to organically bolt on low-cost acreage around the Olympus assets which could materially expand inventory duration in this area.
Toby Rice: Turning to strategic growth opportunities as discussed over the past, several quarters.
Toby Rice: We have cultivated a significant pipeline of low-risk high return projects that should drive sustainable growth for our Midstream and Upstream businesses in the years ahead.
Toby Rice: Several of these projects recently crossed significant Milestones, thus the risking the path to Value creation.
First we are concluding the Open Season of our MVP boost project which is set to add 180,000 horsepower of compression to the MVP Mainline and increase capacity from 2 to 2.5 BCF per day. This project will provide additional takeaway from Appalachia into Virginia to serve the southeast markets. Unleashing, reliable low-cost low emissions natural gas into a region that is seeing significant demand growth
Toby Rice: As a result of strong project momentum, we have elected to jumpstart long lead, time orders this year. In order to de-risk the MVP boost construction timeline.
Toby Rice: We are also continuing to advance the MVP Southgate project and expect to receive the ferc environmental assessment in October of this year.
Toby Rice: MVP Southgate, will provide, 550 million, cubic feet per day of capacity, from MVP, Mainline into the Carolinas serving anchor, customers Duke Energy and the Public Service Company of North Carolina. This project will significantly enhance the reliability of natural gas delivery into this key growth Market, reducing energy costs for consumers and support the replacement of coal, MBP Southgate and MVP boost our projected to begin service in 2028 and in 2029 respectively, following the anticipated commencement of the Transco Southeast Supply expansion.
Toby Rice: Additionally, we are working to finalize our 20-year definitive agreement with the frontier group of companies to provide long-term natural gas supply. For the shipping Port, Industrial Park project, Northwest of Pittsburgh,
Toby Rice: the project will convert a retired Coal, Power Plant into a large-scale 3.6 gigawatt natural gas, power generation facility with Peak natural, gas consumption of approximately 800 million cubic feet per day.
Toby Rice: The project has secured a partner to build a co-located data center facility to support AI infrastructure and contemplate several phases of development, beginning in 2027 and ramping through 2028 providing significant Upstream growth. Optionality for eqt to meet increasing demand.
Toby Rice: We are also working to finalize our 20-year definitive agreement with Homer City. Redevelopment to build Midstream pipeline infrastructure and be the Project's exclusive supplier of natural gas.
Toby Rice: Once completed, Homer City will be the largest natural gas power plant ever build in North America with an existing grid interconnection for added reliability to support AI data center. Loads across its 3,200 acre campus
Toby Rice: Before reaching Peak capacity in late 2028.
Additionally, we signed an agreement to build Midstream infrastructure, serving a new 610 megawatt combined cycle, natural, gas power plant. In West Virginia with gas demand of approximately 100 million cubic feet per day. That will serve the pjm market. This project is poised to be the state's first large-scale. Gas-fired power plant and is being developed by a global investment grade. Power Company in partnership with a marquee private Equity sponsor.
Toby Rice: In service for the project is expected in 2028 in the commercial structure includes a 10-year term with recontracting optionality.
Toby Rice: We also secured a new Gathering contract with a large private producer to expand capacity on our Saturn pipeline system in West Virginia. This project is expected to be in service in 2027 with a 10-year initial term and is backed by attractive minimum volume commitments.
Toby Rice: This opportunity highlights success with our strategic initiative to grow, equitrans third-party business.
Toby Rice: Which further lowers eqs free cash, flow break even by driving stable, fee-based, Revenue growth.
Collectively. These projects represent a pipeline of nearly 1 billion dollars of organic investment opportunity with premium low-risk Supply agreements, which we estimate will generate an aggregate free cash flow yield of approximately 25% once fully online.
Toby Rice: This is particularly noteworthy, given the relatively low-risk annuity like cash flow streams from the infrastructure components of these projects which are underpinned by the deepest, highest quality natural gas resource in the United States.
Toby Rice: Further, this free cash flow yield is prior to any potential benefits from local basis Improvement in the Upstream growth optionality created by these projects.
The shipping port in Homer City facilities. The West Virginia power, plant the increase in MVP utilization plus the MVP boost expansion represent new Appalachian gas. Demand of nearly 3 DCF per day.
Toby Rice: this demand will be served in large part by eqt volumes flowing, predominantly through eqt infrastructure, underscoring the differentiated growth opportunity for eqt
Toby Rice: Through our integrated platform, we are demonstrating what? Responsible sustainable growth looks like for oil and gas companies. This means partnering with end users to enable new demand, then meeting that Demand with Supply backed by firm contracts, rather than simply chasing commodity price signals.
Toby Rice: This tremendous opportunity is unique to eqt enabled by the past. 5 years of strategic work, transforming our business and highlights. What is possible when you have the combination of a low-cost structure, scale integrated high-quality infrastructure. A multi-decade core inventory and investment grade credit ratings.
Toby Rice: as we highlighted last quarter, the next leg of our corporate strategy is built on the Dual pillars of reducing cash, flow risk and creating Pathways for sustainable cash flow growth and these projects represent a tangible step forward in executing that strategy
Speaker Change: I also want to give a special thank you to our leadership in the state of Pennsylvania, Senator McCormack and Governor Shapiro, as well as the administration in Washington for taking bold steps to unlock the vast economic, potential of the region in shining a spotlight on the massive opportunity for technology and AI to prosper. In the Pittsburgh area as we have, demonstrated eqt is ready to do its part and deliver affordable reliable and low carbon energy to power this growth and with that, I'll now turn the call over to Jeremy.
Thanks. Toby our strong second quarter results in free cash flow generation growth continued deleveraging of our balance sheet. We exited the quarter with 7.8 billion dollars of net debt down approximately 350 million compared to q1 and marking nearly 6 billion dollars of debt reduction over the past 3 quarters.
The recent closing of the Olympus transaction accelerates, our deleveraging plan, and enhances our debt to free cash flow metrics.
Speaker Change: Pro form of the transaction. We remain on track to achieve our year-end 2025 net debt Target of 7.5 billion.
Speaker Change: Over the medium to long-term. We plan to operate with a maximum of 5 billion dollars of net debt.
Speaker Change: Which is roughly 3 times. Free cash flow before strategic growth, capex at a 275 natural gas price.
Speaker Change: As a result, we will continue to focus on Debt, Pay down. Even after achieving this near-term 7 and a half billion dollar Target.
Speaker Change: Creating significant flexibility for counter-cyclical BuyBacks.
Speaker Change: And to build capacity for high confidence, reinvestment and growth even during the low parts of the commodity cycle.
Speaker Change: Turning to our recently announced pipeline of growth projects, we expect these projects to create a collective growth capex. Opportunity of approximately 1 billion dollars over the next several years.
Speaker Change: And we expect to begin spending capital on Associated infrastructure, in 2026 with investment spaced out over a multi-year period.
Speaker Change: We structured the 2 Data Center projects as index plus style deals on fixed volume commitments, similar to our existing contracts, with the Southeastern utilities these contracts, give us confidence in leaning into moderate, Midstream and Upstream growth. Due to the lower risk nature of these agreements.
Speaker Change: Similarly, the Midstream growth projects are all backed by fixed fee contracts, and minimum volume commitments. Providing low risk, High return earnings growth Pathways for eqt,
Speaker Change: While we cannot disclose specific contract terms or end customers before the impact of Upstream, volume growth, or basis tightening, we expect these projects to add approximately 250 million dollars of recurring free cash flow by 2029.
Speaker Change: Initially, we will reallocate volumes to fill this new demand followed by Steady mid single digit, multi-year growth.
Speaker Change: We have the capacity to grow production by at least 2 BCF per day to back, fill these volumes, which means we've set the stage to responsibly grow the business by at least 30% over the coming years.
Speaker Change: These sustainable growth opportunities, distinguish eqt among industry peers, while also providing unmatched risk, adjusted exposure to natural, gas prices.
Speaker Change: Furthermore, we are as confident as ever that Appalachian basis. Should structurally tighten through the end of the decade and we index the supply deals to local pricing points to benefit from this uplift relative to Henry Hub. In addition to the contractual premiums
Turning to Capital allocation, as we achieve our deleveraging goals in organically, grow the business. We will measure our free cash flow available to invest after the deduction of Maintenance, capex, only
Speaker Change: Of that remaining bucket of free cash flow. We plan to allocate first dollars toward High return low-risk sustainable growth projects like the ones discussed today.
Speaker Change: These large projects follow on the heels of the Strategic growth investments in water infrastructure, and compression that we have made over the past 2 years.
Speaker Change: And are now the key drivers of the operating efficiency, gains and outperformance, you have become accustomed to seeing in our quarterly results.
Speaker Change: We expect this High return, reinvestment to drive sustainable earnings growth, which should enable us to confidently, grow our base dividend and ensure it is bulletproof at all parts of the commodity cycle.
Beyond Organic growth and our base dividend. We plan to use excess, free cash, flow opportunistically to further, reduce debt patiently, build up, cash for opportunistically. Buy back a significant amount of shares during a market down cycle,
Turning to hedging, we tactically added, a modest amount of hedges for the upcoming winter, to take advantage of call skew in the options Market. We hedged 10% with Costless collars for December through February and an average price floor. Just above 4 dollars per mmbtu and an average sealing price around $7 per mmbtu.
Speaker Change: Note, our updated hedge table also includes Hedges. That were innovated with the Olympus acquisition covering approximately 5% of our production, through q1 2027,
Speaker Change: we will continue to patiently look for hedging opportunities like this and positioning QT to realize higher than average gas prices through the cycle.
Speaker Change: Turning to Natural Gas macro while there are near-term. Headwinds primarily due to production growth, we continue to hold a structurally bullish view for prices as we look out to 2026 and 2027.
First, on the supply side, there is growing evidence that Associated gas, growth is slowing.
Speaker Change: The oil directed rig, count has declined by approximately 50 rigs or roughly 11% since April.
Speaker Change: Well, Brent and WTI pricing has rebounded off their April and May loads. We Believe Global oil markets, still lean towards over Supply, particularly given OPEC strategy to rapidly, add back barrels and defend the market share.
That backdrop suggests us, oil activity. Will remain subdued into next year is operators, stay disciplined and focused on shareholder returns.
Speaker Change: Critically this curbs. A major source of incremental gas supply.
Speaker Change: At the same time, the demand picture continues to strengthen, as we expect a meaningful Step Up in LNG, exports by Q4 with platinum's LNG reaching full rate in Golden pass LNG. Beginning operations,
Speaker Change: Increases on top of the 2 and a half BCF per day of LNG, demand growth. We've seen since the beginning of 2025 and should quickly. Tighten balances, especially as us dry gas supply, struggles to keep pace.
Speaker Change: Based on recent and upcoming fids US name plate. LNG capacity should grow to north of 30 BCF per day by 2030, which we believe will drive structurally, higher us pricing next decade.
Speaker Change: At the same time, Qatar recently delayed the in-service of their new LNG capacity from early to mid 2026.
Speaker Change: Further increasing our bullish near-term Outlook.
Speaker Change: Due to surging gas production. The current market is loose with storage levels, 6% above normal, but this environment is self-correcting
Lower pricing in the near-term, should disincentivize dry gas producers, who are chasing prices by increasing activity.
Speaker Change: especially in the marginal hanesville play where well productivity is beginning to degrade a clear sign of inventory, exhaustion,
Speaker Change: Shifting the guidance. We have issued an updated Outlook ProForm of the Olympus transaction. Our updated 2025 production guidance range is 2,300 to 2400 bcfe which includes approximately 100 bcfe of production contribution from Olympus in the second half of the year.
Speaker Change: We are lowering our operating expense guidance range by approximately 6 cents per ncfe, driven by accretion from the Olympus transaction and continued based business, outperformance while keeping a price differential guidance, unchanged.
Speaker Change: As you recall, last quarter, we reduced our full year Capital guidance as tangible evidence of efficiency gains.
Despite the acquisition of Olympus on July 1st and the associated hundred million dollars of incremental. Second half spending, we are maintaining our full year. Capital guidance range of 2.3 to 2.45 billion.
Speaker Change: This is, once again a tangible representation of continued efficiency gains within our base business.
Speaker Change: Which without Olympus would have driven our Capital spending well, below the low end of guidance.
Speaker Change: All told production is up, operating costs are down and capital efficiency continues to improve.
Speaker Change: And finally we have modestly increased Capital contributions to equity method Investments reflecting our decision to pre-order the compression. Horsepower for MVP boost due to the growing backlog for this equipment.
Speaker Change: No, this is not an increase in capex, but simply a decision to pull forward an existing expenditure from 2026 into 2025.
Toby Rice: And with that, I will turn the call back over to Toby for some concluding remarks.
Speaker Change: Thanks Jeremy to conclude. We've posted another Stellar quarter of both operational and financial results with the Outlook continuing to improve our pipeline of differentiated strategic growth projects that we discussed today. Places eqt in a Peerless position within the industry and underscores, the differentiated investment opportunities emerging from our integrated platform, we have unlocked sustainable growth while also increasing free cash flow durability. The combination of which we expect to drive cash flow growth, and further valuation multiple expansion for shareholders.
Speaker Change: The momentum at eqt has never been stronger in the sense of purpose and excitement inside the company has never been greater with that. I'd now like to open the call to questions.
Speaker Change: We will now begin the question and answer session again, if you would like to ask a question simply press star, followed by the number 1 on your telephone keypad. And if you would like to return your question, press star 1 again, and again, please leave me to 1 question and 1 follow-up. Thank you.
Speaker Change: And your first question comes from the line of talk. Legate with both research dog. Please go ahead.
Speaker Change: Uh, thank you. Good morning, guys. Um I uh I got to say, I love Jeremy, we will continue to build cache, I think, uh, you know, our views on that. So uh, happy to hear that message, uh, continually delivered. But my my question is whether you can do that while spending on the the tremendous growth, um, setup that you've laid out and obviously accelerated in the last couple of months with the, the announcements. So I wonder if you could address the key question props for everybody this morning, which is what's the capex Cadence to get to that 250 million of free cash flow goes by 2029. Um, maybe during you could also address you or not to build multiple lists, whether you're hinting at monetization at some point.
Speaker Change: That's going to be back, weighted closer towards 28. So, we'll see a little bit that show up in 26. Um, but then it'll, it'll start showing up closer 2728. Um, and I think the, the, the other point that's really important on the Upstream side of things, you know. Keep in mind, we've got 2 BCF a day, that that's already producing local. Um, we have the opportunity to reallocate those volumes to feed these facilities. That is going to give us a tremendous amount of flexibility to be very thoughtful with our Upstream production growth. And I think both of these both of these uh opportunities are going to allow us to continue to make sure that we're allocating Capital where, where we think is best continue to pay down deleveraging, but also being able to capture these these exciting sustainable growth opportunities, Doug when you think about the Cadence of of, when the spending shows up that Toby just outlined relative to when we have a lot of cash coming in the door, I think if you look at where we are at by the end of next year, since a lot of the spending is really picking up in 2728.
Doug: Um, I I think our debt's going to get so low at that point that it, it really lines up really nicely where there's not a lot more debt to repay at all. Uh, certainly on a net basis and and it's a natural point where we can start shifting dollars towards these really high return opportunities. Um and and I'd also note too that at that point in time, you know, when we look at our forecast, it it kind of where strip is in the, in the high threes. I mean, we're generating north of 3 billion dollars a year and so you get to a level where
Doug: Net debt can be approaching zero and there's still a lot of dollars left over.
So I think we have opportunity both ways in in a ton of flexibility, no matter how the macro plays out.
Speaker Change: That's very clear guys. My follow-up is a quick 1 is really not to always question. Uh, what would it take for you to add production as opposed to reallocate production? I guess it's a micro question into that to BCF as a layout because obviously the potential uplift and Associated free, cash flow, call it a couple of dollar margin could be enormous but what would it take for you? Actually go production, I'll leave it there. Thanks.
Speaker Change: Yeah. So we're not going to be blind to what the market, uh, is, is, is showing there. So, we will be thoughtful on on, on the pricing that we're seeing there. Um,
Speaker Change: And and that'll that'll factor into our decisions on how I'd say, how fast we move from reallocating towards growing the the production. Uh, but Doug you mentioned, you know this opportunity for us just to highlight this growth opportunity and what this means in in an end State scenario. Let's just use, you know, a BCF a day of of growth that will translate to call 360 BCF of increased production, you know, an end State. Uh, looking at our cost structure about 2 dollars,
Take a 4 dollar Henry Hub, price, you're talking about 720 million, a free cash flow, you know, throwing 8% yield on top of that free cash flow yield, that's 9 billion dollars of value. It's about $15 a share. So uh just a BCF a day is a basically a 25% upside uh to to share price now, so it's attractive. But, you know, we're going to continue to be disciplined and thoughtful about this. And like I said, we we've got the volume so that we have the flexibility to make the right decisions.
Speaker Change: Great. Thanks guys. Appreciate the answers.
David McDermott: And your next question comes from the line of David McDermott with Morgan Stanley Devin. Please go ahead.
David McDermott: Hey, good morning. Thanks for taking my questions.
Speaker Change: So I wanted to come back to to the capital side, but talk a bit more just about the base of business. If you look at this year's results so far, it's the second quarter in a row of capex reductions and volumes at the high end of the guys even with some curtailment in the quarter. So I was wondering if you could talk a little bit more about the evolution of capital on that side over the next few years. So you have the roll off of compression spending. You have the reduction in DNC spending that comes along uh, with the the Synergy targets. So how much room does that give you relative to the current capital budget? And then later in some of this strategic growth later in the decade, if that, if that question makes that just kind of putting all the pieces together on the total capital budget.
David McDermott: Yeah, it's a good question. Devin. I I think, as we move into 2026 and 2027, you're going to see the maintenance piece of our spin come down, but you will see the growth.
Be able to see very clearly separate from the value creating growth wedge that's added on top of that.
Speaker Change: Yep. Okay.
David McDermott: It's a lot of sense.
Speaker Change: And then maybe just kind of step back. You you had talked about earlier in the year. Maybe announcing 1 power deal in in 2025 and here we have multiple strategic growth projects already executed by the middle of the year across both upstream and Midstream, I wonder if you could just talk a little bit about the opportunity set as it sits today. Have you executed on your targets at this point? Is there still more room to run? How are you thinking about the longer term evolution of strategic growth, and the opportunities that for Invasion demand?
Toby Rice: Yeah, Devon. When you, when you look back at some of the, I guess, guidance, we we we we we provided in Prior earnings calls. You know. We said probably seeing you know, of the 6 to 7 BC after day of invasion, demand 2 BCF a day that was was Data Center driven. Um, and when you step back, you think eqt, maybe will capture a BCF a day of that 6 to 7 of uh in Bas and demand. And here we are sitting, you know, with over 1 and a half BCF a day of power demand opportunities that have been captured and brought in here for, for, for eqt, you know. So, so really, you know, 2 things here. Either, we've significantly underestimated the size of this opportunity or we are
Toby Rice: Uh over over executing on our ability, to capture these opportunities. Um 1 things for sure. You know. There's this is a a good first step. We we still see uh other opportunities in the pipeline uh and 1 of the other things that I think is important to note is you know the cluster effect of these uh AI data centers. And these ecosystems I think will only continue to build on themselves. So as momentum grows in our operational footprint, we think the opportunity could get larger
Toby Rice: Understand, welcome to the good progress so far. Thanks, guys.
Speaker Change: Anyway, next question comes from the line of Arun chiyyaram with JP Morgan Aaron. Please go ahead.
Arun Chiyyaram: Yeah, good morning, gentlemen. Um my first question is appreciate the detail on the shipping port and Homer City, uh, deals that you're pursuing. Um, you talked about a multi-phase uh, development in 2027 and 28. I was wondering if you you had a thoughts on the timeline to reach the, the full 800, uh, M's, uh, on the shipping Port, uh uh, facility and and 665 on Homer City. What, what do you expect as the timeline to reach those? Those volume commitments.
Arun Chiyyaram: Yeah, good question. I think for both of them we think about it is is year end 2028. Um, you know, there there will be a ramp phase home or city has, uh, those turbines being delivered beginning next year. So I think you could see that 1 pick up a lot sooner and we can throw our Olympus assets, start to bring some, some volumes to that facility, a lot sooner than we, otherwise would be. So flexing, the, uh, the operational capabilities after after that acquisition, um, but I think to really be able to reach full rate it, I I the way we model it is is really year in 2028 which you know, just as a reminder of when you step back and think about what that means, that's also the same year that the trans go expansion, comes online MVP. Boost Southgate. It's all happening right now in that same period of time. So that's the period too going back to, I think Doug's questions on the timing of growth that we're really looking at where if we're going to bring growth into the market, that's when the market is really going to need it. Um, we have flexibility because of the reality allocation but but you're going to see a very quickly tightening Market
Arun Chiyyaram: In 2028 and 2029 uh on the back of all this demand coming on online in a very short period. Kind of like you are with LNG right now.
Speaker Change: Created my follow-up. Uh, you know how do you see yesterday's PGM auction? Clear at the price cap, um you know, how do you see this impacting gas, powergen development and gas demand overall
Speaker Change: You know, given indications of continued power Market tightening.
Speaker Change: Look, I I think it's a great demonstration of the market working to solve the problem. Um, I mean there's certain inefficiencies in pjm that need to get worked out. Uh, we're certainly not Advocates of of prices being pushed so high. That it it's, it's not good for, for society and the economy overall. And that's what we're really able to solve through our integrated platform is providing that the best solution for customers at the cheapest cost. Um, but look, there's there's power that's needed and the power is going to get built and you're seeing, uh, generation willing to, uh, be built but at a higher price and and that's what's what's happening through those auctions.
Speaker Change: Great. Thanks a lot.
Neil: Neil, please go ahead.
Neil: Yeah, thanks so much. Um, congrats again on on these data center related transactions and just would love your perspective on on how how your pricing. It it sounds like you you're tying it to M2 plus. And so you know, implicit in that is a view that the differentials should be tightening up over time. So can you just talk about, you know, how much flexibility was there to to the price of the Hub versus pricing? It locally. Well, if if if there was that flexibility, why did you choose local pricing and just, uh, your perspective on on, uh, uh, the pricing and then I have a follow-up on near-term macro.
Neil: Yeah, great question. So we're trying to obviously get the most value out of this we can uh but also provide a a anchor licking liquid pricing point for customers so they can financially hedge. If they want to take some of the volatility out, um, you know, basic like I said in the prior comments, we are very bullish.
Neil: Appalation pricing actually relative to Henry Hub. I know it's not the consensus view right now.
Neil: But when you see all this demand show up in the face of probably half of of the players in Appalachia running real thin on inventory, come into the decade. It does set up for a really interesting sort of Paradigm Shift where I think that basis tightens a lot. So we intentionally are are structuring them linked to that. You know, for multiple reasons. I think it's best for the customer. I I actually think it's best for you to do at the same time. Um, you know, look in in time in theory, you could link it to Henry hub.
Neil: But it, it just makes it a little more complicated when it comes to actually procuring Supply. Giving eqt, the flexibility to find the the best molecule is a solution. Um, you know, as an example, if we're marketing gas and we want to buy gas out of 1 of the more liquid pools uh because that's a cheaper solution. It's a lot easier to do that. When pricing is already indexed to that point, you don't run any issues of of having effectively like a dirty hedge. Um, so it allows us to again give the best solution for the customers. Still have all the flexibility and have the most upside I think from a production standpoint
Speaker Change: That that's helpful. Dear me. And then the follow up is just on the near term macro, it's just us. But we've been surprised by some of the scrapes that have come in with production at 107. It's probably around the north of the bee higher than what we would have anticipated in the near term. Have you guys been surprised by that? Has that affected the way you think about how we exit October and set up for the winter and just in general as you think about uh near-term producer discipline. Are we seeing some breakdown?
Speaker Change: I think the short answer is. Yes. Um, I think we we I think our view of Appalachia specifically is from this point towards the end of the year you're flat to down. Um it looks like from what the data we see the puran is also relatively in check, you're not seeing any sort of like race to add production growth. It's really the hanesville and its other basins. And again it's it's more of what we've seen in the past. It's it's producers chasing
Speaker Change: Price signals and look this morning. You're seeing gas approaching 3 dollars, right? I I I just
Speaker Change: I think if we add Haynesville assets, we would be really hard for us as to why there's justification to add activity right now. Um you know, I think there was a view for the past 2 years that 2025 was going to be this year that that a lot of these producers could could exit and sell their businesses and you know lo and behold, they do the same thing again. They push pricing down to a level where if you're in the hanesville, you're not getting your money back. Um we're well, productivity is today, it currently will cost.
Speaker Change: and so again it's just another example of the value destruction that comes out of unsustainably chasing prices,
And again, as as we talk about, what does it take for et to grow? Its, it's lining up our supply with known demand through our infrastructure through contracts. It's a very it's a very different, much more disciplined way that we look at it.
Speaker Change: But again, it's, you know, if, if if, if if we see this continued, you know, um, you know, surge of production. There's certainly downside to pricing in the years ahead, uh, we we certainly hope that that happens. It's not something we control, but, you know, the good thing about being the lowest cost producer in the position. Eqt is in today is we we make a bunch of money, either way. Even at 3 dollar gas, we can make a bunch of money um and if gas goes up, we'll make a bunch of money too because we can be unhedged. So it it it fits perfectly into how we sculpt sculpted the business. Um, but you know, again short answer is we. We do think production is too high. We've been surprised to the upside and certainly hope it doesn't continue search.
Speaker Change: Ing.
Speaker Change: Yeah, thanks Jeremy. We'll be watching.
Speaker Change: And your next question comes from the line of Cali. Aamin with Bank of America Cali. Please go ahead.
Cali Aamin: That allow you to to divert a lot of its new customers as you get your growth ramp underway. And I appreciate that it's early. But are there any guard rails that you can kind of offer around capex, how you plan to shape that maybe over how many years um that could be spread over?
Speaker Change: Yeah, as far as guard rails are concerned, uh I think it's Jeremy mentioned in the opening remarks. I mean, we could talk about thinking low single digit growth towards to to meet these volumes.
Speaker Change: And you know, I think just the other thing I just mentioned on these these opportunities that we've been able to capture and 1 of the things that's
Speaker Change: Special special about at that, that's worth highlighting because this is what's ultimately going to position us to continue this momentum, and continue to capture these, uh, really attractive opportunities for our shareholders is just our scale, our investment grade, uh, balance sheet.
Speaker Change: Are peer leading, inventory, durable, cost structure. Uh and this the scale part knowing that we have these volumes um flowing above ground, giving us the flexibility to to enter these contracts. I mean I think all these things really positioning you can see well and allow us to sculpt our capex profile. Um so that we can still show robust free cash flow. Uh, while also meeting a pretty exciting, uh, sustainable growth profile
Speaker Change: Got gotta think so. Yeah I want to come back to the capital efficiency Trend. It's been very clear over the last several quarters. Can you kind of offer a view on where Leading Edge DNC Capital per per lateral foot metrics are compared to maybe 24 and then offer view on how much runway is remaining.
Speaker Change: Yeah. So, I mean, on slide, uh, on the record setting completion, efficiency slot. I mean, we throw out the well cost from 24 to sort of where we've seen in the first half of 25. Um, you know, I think we we'd like to continue to see you know single digit improvements in in well cost. Um so it it's it's really good to see these optimizations that take place, you know, we're halfway through our compression
Speaker Change: Program, so we'll continue to see benefits and uplift from that. Those, those are we're seeing, you know, twice the the uplift that we were budgeting for. So there's a lot of opportunities that these team continued to find, uh, we're stepping into the Olympus integration now. So we're hoping to continue to find ways to optimize their and then you're, you're looking at what we're doing now, leveraging these assets to also create, uh, commercial opportunities with these Supply agreements. So, I mean, there there's a lot of opportunities for us to continue to, to evolve the business not just focused on the The Well cost improvements. Yeah, I would also add to that, it's just important as we talked about increasing some of our strategic, spend a lot of what we've been able to achieve on the well, cost side specifically in completions is also named
abled, by
Speaker Change: Investments we've made in infrastructure spending money to make money over the past 2 years. That's why we want to keep doing that. That's really the the the undercurrent of why we keep beating. Um quarter quarterly results is just seeing that that come to fruition. That's why we're so excited about that. Um, the rate of return on those Investments is just so high.
Speaker Change: so that that I think that momentum continues uh, as Illustrated on that slide Toby referenced
Speaker Change: Got it. I appreciate you guys. Good stuff.
Speaker Change: And your next question comes from the line of charge. So first thing with UPS Josh, please go ahead.
Speaker Change: You think good morning guys. Um, just had a question on the the 2 BCF day potential growth here. Um, how do you set yourself up to deliver mid single digit growth? Um, is there enough infrastructure in place already to to support this or the new projects been capable of of delivering that? And then do you build up any sort of backlog over the next few years to then have that as the storage to be able to deliver that when the demand is there? Thanks.
Speaker Change: Yeah, Josh. So when we're looking at supplying, these these uh, specific demand opportunities, um, we will be building out new Midstream infrastructure, connect them to, uh, existing gas networks. A lot of those will be connected. That eqt has our volumes connected there. So our commercial footprint is going to allow us to move, gas around. We'll be
Speaker Change: Going through optimization exercise. And what exactly is the best way for us to fill these Supply to get to these these new interconnects. Um, but you know, this is this is 1 of the reasons why people are selecting
Speaker Change: this region to build their data centers is because they're building on top of a lot of gas infrastructure. And eqt will will close that last mile and then be in a position to optimize
I look less attractive to to you because of what you've been signing in the power market. So any update there would be great.
Yeah. Um thanks for the question. I I think so. Our long-term goal in the LNG markets is actually to do very similarly what we are doing on the power and data center side right now, which is linked up Supply directly to an end user, um, of that gas, that's why we're trying to contract the way we are, um,
Speaker Change: Long term, we still want to have 5 to 10%, at least of volume, I think is our credit ratings continue to Rise. Um, I think our appetite for leaning into more that will also rise. I think that's more of a 2030 and Beyond opportunity where that LNG Market's going to really be tight. And we can make a lot of money there. Um, we're we're actually in, in, in discussions with the number of facilities right now. Those discussions have actually improved and picked up recently. Um, so we're actually really excited about that opportunity. And and I think what we're proving we can do domestically with our platform, um, is in essence, exactly what we plan to do. Internationally, we've been having conversations with with some International customers that have really underscored
I think how great that opportunity is um, but again we just want to do it the right way. Those are long-term contracts. Uh can be very costly if not structured the right way. Um, but I think, you know, beyond what we do domestically that that is a huge opportunity for us and for any company who has a a platform like we do, uh, that's built.
Speaker Change: To do deals like this directly within customers.
Petty Jan: Question comes from the line of petty Jan with parkleigh Petty, please go ahead.
Petty Jan: Thank you. Um, good morning. Um, I would love to dive into the M2 Dynamics a bit more since you guys are really doubling down on the bullish view there. Um basically how big is the M2 and Logo Market in that region.
Speaker Change: If um, based on what you guys are saying, it's 1.5 BCF per day.
Speaker Change: Of demand that we could see from the power deals um MVPs. And then the trans go expansion that could add another 1 BC per day. Um, like how material is that the members of the market size? How easily is it for other producers to deliver volume to the market. So really just trying to get a better sense on the bulk case scenario on where that M2 price could go
Speaker Change: Yeah, it's a great question. I it obviously depends seasonally, but I, I'd say if you look at the 2 and then the Dominion Market, it called egts now. Um, we typically look at those as being 5 to 7 BCF a day. Each uh again depending on the season. Um I think each of these opportunities is they emerge. Um are going to create very large demand sinks and very specific uh point.
Speaker Change: And so how we go through the process of marketing, gas volumes and supplying those, whether it's eqt, volume, buying, other third-party volume, or reallocating, depending on where we are in that growth ramp it. It's going to evolve, we're working through the most efficient plan to do that right now. Um, so I think there's some element of basis tightening, but that is really taking volume for example, that we might sell from Olympus into egts.
Toby Rice: Take it 20 miles down egts and pull it into Homer City as an example. So it really is. It really is Supply matching. Um if you look at other projects like Mountain Valley that that that plant or sorry that pipeline is served on the tailgate of the Mobly plant and we deliver a lot of gas there through Hammerhead and OBC and other pipelines. That is predominantly all eqt gas. So I think for anyone who is buying gas and MVP, you're still buying eqt, gas and interfacing with eqt at mobbly. So I think there's a there's a tremendous amount of Upstream opportunity but to, but to the point Toby made in his opening remarks, this is predominantly eqt infrastructure whether its existing or new build. And in a core eqt, operating area, meaning it's eqt volume. So I I think there's a broader view that it's it. Yes. It's, it's an opportunity for everybody in Appalachia. I think the way we see the volumes actually flowing is it's really more of an eqt opportunity, which is why we're talking about filling it with growth and reallocating,
Toby Rice: We have a little over 2 BCF a day today that we can reallocate. So, in theory, we don't have to grow it. All, if we don't want to, but I, I think in the long term, the most value and creative thing for shareholders is us to tailor in moderate responsible growth to backfill as we reallocate that. Um, so I think there's Tailwind on both sides but it's not going to be evenly distributed across across across. Producers from the way, we see volumes flowing,
Do you think about your pricing signal? Are you looking at M2 specifically that you need to see, maybe M2 getting to narrow, its discount to, I don't know, 50 cents, or, uh, something better than where it is now for you to see that production like back, filling that volume response.
Toby Rice: I think it's a combination of both Hub and, uh, M2 and egts. Um, you know, look if you had a, a weak period in in Henry Hub, but also tighter basis, we might still say that cheaper things to do is just reallocate volumes as opposed to grow into it. Uh, we, you know, we could build Ducks if we wanted to just to uh, prepare for a period where uh, pricing been rebounded. But you know, again the beauty of our scale and infrastructure platform is, we can be flexible. So, um, answer is it kind of depends, it's hard for us to concretely, commit to anything this early out because this is something that's really 3 to 5 years from now. Um, but, but the point is, that we can continue making is we have, we have a ton of flexibility.
Speaker Change: Okay, thanks for that caller.
Speaker Change: And your next question comes from the line of Philip. Jung worked with BMO Capital markets, Philip, please go ahead.
Philip: On the West Virginia power project where you'll we are providing Midstream infrastructure. Uh is there any reason to think you wouldn't also be supplying volumes and and if this, if and if this is still to come, how, how much is Midstream give you a competitive Advantage here?
Philip: Um I'd say that is our expectation, it's not uh fully committed yet, you know that project should reach FID in the back half of this year. Um,
Philip: You know, operating near near full utilization that's around 100 million a day of gas supply. So it's not this sort of Mega level of the other 2 projects, but I I think logically it is, it is a project we will also Supply gas to. Um, but you know, I think, I think more to come on that project. Yeah, as far as a Competitive Edge with Midstream, Midstream is a Competitive Edge. I mean, being integrated allows us not only to give them access to supply, but connected dots for them. So I think it's it's it's been incredibly helpful. Um, as we've
Philip: Sourced these opportunities. Yeah, I would say too the 1 Thing That Toby and I found to be really interesting is, you know, when we in our in our teams, look at these opportunities. We start first with what is the best solution for the customer. Um, and how do we connect those dots to provide the most efficient solution? If you don't have all the tools and the toolbox between Midstream and and gas trading and um, the quantity of supply and investment grade ratings. You just, you simply
Philip: Can't offer that you, you, you have, you have 1 product to offer. Um, so I, I think for a project like, like like this, uh, like this power plant, we can truly come to them and say, we have the best solution or we can create the best solution for you, if, if it's not a market solution. And I think that's 1 reason why we've been able to be really successful, um, and, and really so far the partner choice for these big projects is, is, is they've is they've, uh, been developed.
Okay great and then on MVP, uh Booth the the Open Season here. Um, not sure how much want you want to get into it. But are there any initial expectations as far as interest from demand pole type customers versus producers and uh more broadly just similar questions as it relates to some of these third-party proposed pipelines out of Appalachia uh, terrorists look like, they could be quite high for producers. So, so how do you, How likely do you do some of these projects ultimately reaching F ID?
Philip: I I see we got to be careful in what we say because that open season is still active right now. I think our expectation is that in certain markets where there's a lot of scarcity for gas right now.
Philip: The need for volumes or that or that egress, it's more with the end users as opposed to the producers. Um, you know, consistent with with I think some of our comments in the past, I think these pipes, if and when they get built will predominantly be underwritten by uh demand pull shippers as opposed to Supply push.
Philip: Uh, producer shippers like you saw over the past decade. But look, we we'll see when the Open Season concludes and and we can provide more color next quarter.
Philip: Thanks guys.
Speaker Change: And your next question comes from the lineup, Scott hanel with RBC Capital markets, Scott, please go ahead.
Scott Hanel: Yeah. Thanks um just curious as as your balance sheet uh continues to improve. It sounds like you want to be a lot more opportunistic with BuyBacks uh versus
Speaker Change: Does does that play into it? Would you guys be willing to kind of Step Up and and help manage that if, if that were to occur?
I mean like it all depends on the price. It's hard to speculate on things like that. But um look I I think 1 of the big opportunities that Toby and I have been talking about for the past 24 hours is for a lot of this growth that we feel really confident in looking at that in-state and what that means for valuation, that some of the Matthew walked through in the beginning, if we're not getting credit for that early on, if it just opens up this huge opportunity for us to lean into BuyBacks with a lot of confidence.
Speaker Change: Where we have a lot more. We're investing behind, as opposed to just what gas price do. You have to believe over the coming years? Which is, which is generally. Well, you know, if you're in maintenance mode, the essence of the decision you're making and I think what we're setting up for at is you can you can win on more things than just gas price because we're we're taking more control of our own future and and and the value creation, as part of that. So I think the opportunity to buy the stock back becomes more attractive,
Speaker Change: Got it. Okay. And then my other question becomes or goes to the, uh, the debut opportunity. Obviously, you talked, you know about that underlying the, you know, some of the Olympus assets and, and probably Elsewhere on your asset base, you know, when when does that become, um, you know, a Target that you look a little bit harder at? Do you do you see that as more of a longer term option or is that something you're willing to test um a little bit more near-term to help, you know, support. Um, you know, the the growth opportunity you need on on your um,
Production base.
Speaker Change: Yeah. It's a it's it's a longer term opportunity for us. Um, you know that said you we we could uh do some science work and give the team some opportunities to prove themselves on on the cost side. You know udica, I think we feel pretty good about the resource. It. It really is going to be more about the operational execution. Um, so I mean we could call it science because we don't technically have that labeled as non-core. Um, but it could be, it could be a tool for us to uh, to feather in. I mean, all of this, I think for would really, uh, want to have a better appreciation for the upside inventory. If we continue to see momentum on the commercial front supplying, these these power plants, um, just having more more confidence on inventory, I think could be helpful it. It may be a reason why we go out there and do a couple but uh, it's more of a longer term in nature.
Speaker Change: Yeah, it's kind of interesting good point on this, and I know the the Deep utak has gotten more air time.
You know, in Southwest Appalachia, when most producers talk about inventory depth. We all just refer to, to the, uh, lower Marcellus, which is really the main Marcellus member. If you look at the, the Northeast part of part of the play inventory, numbers reference, now include a heavy, disproportionate amount of upper Marcels, which is, you know, call it 1.5 BCF per thousand.
And you look at the Haynesville. Most of those numbers reference, now, include a disproportionate amount of middle Boer. Um, and, and when you think about the productivity of those second degree, um, or or sort of like second tier, uh, members of the formation to, to develop,
Speaker Change: Compare that to the Deep Utica where around the Olympus area, the way we underwrote that is call it like 2526 BCF per thousand. Uh and and with well costs that are, you know, probably around what Haynesville well costs are. But that's before anybody's really spent time trying to drive the cost down. So for us, it's a free option and I think takes our 30-ish years of inventory out much farther and so when we think about what could we grow into, there's a ton more resource out there that we have rights to in Appalachia that keep that opportunity wide open for us to continue growing just a question of what price and how efficient can we get on the operation side? Uh drilling the wells.
Speaker Change: Got it. Thanks for that.
Speaker Change: And your next question comes from the line of Roger read with Wells. Fargo, Roger, please go ahead.
Yeah, good morning.
Good morning.
Um, maybe just come up with a couple of things here 1, um, sort of been talked about it, I guess, as we've gone through the call here. But, uh, the idea with, you know, the very high pjam prices that are that are out there. Uh, obviously local need. You've got the infrastructure, what are you seeing or is there any way for you to kind of give us?
Speaker Change: It's an idea of what's happening in the you know call it the behind the meter, the off grid. In terms of demand beyond the very high profile, you know, Homer City and shipping Port type projects.
Speaker Change: Needed. Um, but you know, it's I think people now realizing the only way to get this infrastructure built is to get these ppas in place and it's going to and with inflation that's taking place, it's going to require a little bit higher pricing than what people have been accustomed to. Um, but you know, it's encouraging to see that these projects are are going to be going forward.
Speaker Change: Yeah, I think there's also the opportunity to add add some, some peaking Supply capacity. Um, and and when you add that allows you to increase your, Your Capacity Factor across existing base load from the levels that you see today. I mean, still and still have that reliability but that additional peaking Supply at current inflated rates due to the the scarcity of equipment simply requires a much higher price than it did even before. Um,
Speaker Change: and and I think that's 1 of the misconceptions that we've we've observed is you're seeing much higher electricity prices, but you've also seen the cost of building these gas plants. Roughly double from what they might have been 3, 4 years ago. So, logically just to keep economics flat. You need your spark spreads to probably double 2. Um, so I I, again, I think when, when you read through the economics of what it actually takes to build 1 of these plants, you can, you know, the need for electricity prices to rise, uh, and, and, and allow the market to evolve to meet the needs, uh, today and over the coming years, just simply requires higher prices, unless the price of building these projects and the cost of capital falls back lower again.
Speaker Change: Okay, and then, uh, just an unrelated follow-up, how are you thinking about, uh, hedging strategy at this point? I know, you know, at different times there's been, you know, a goal for debt and then stepping away from hedging other times. Um, you know, tied to what's going on, maybe with the Midstream business. You've laid out,
Speaker Change: You know, potential, not potential, but likely future uh capex increases on the Midstream side, you know, so not really price sensitive on the back side, but maybe price sensitive up front on the capex commitment. So, does that affect any way you're thinking about hedging over the next year or 2?
Speaker Change: Let let me put it this way. So when we think about the appropriate debt level for our business, I mean I I made this comment in our opening remarks at 275. Gas, it like Henry Hub pricing unhedged we generate in a given year between 1 to 2 billion dollars of unlevered free. Cash flow or said another way. Like your Eid out. Less maintenance capex.
So at 5 billion dollars, you're looking at a little over 3 years of just steady state, unhedged repay all your debt, right? That compares to a lot of our peers that are free cash flow negative at that point in time. So yes, we are trying to get our ratings higher, the agencies still want to see our debt at a low level, but fundamentally
Speaker Change: I already feel like we're, we're very underlever. And in our balance, sheets in a very safe spot. We're mostly focused on on our maturities right now specifically looking out to 2027 and resculpting. That um,
Speaker Change: so look hedging is something that I think we are less and less focused on and I think if if we're in a structurally bull market,
Speaker Change: Over the next 5 to ten years programmatically hedging or really hedging any other way. Aside from being opportunistic, will net result in value, destruction over that period of time relative to just being a taker of ore, prices subtle um and at the same time, it gives us more flexibility in how we uh nominate our volumes whether its first a month or in the spot market. So I I think as we move to a position where no really no matter what prices are, we're going to be rapidly repaying debt, able to fund projects confidently, um and wanting to provide investors that exposure to gas prices. They want by investing in eqt, structurally. In addition to the growth we've talked about today
Speaker Change: I think our bias continues to be be lowly hedged if not hedged at all. And if we are going to hedge, do the types of things that we've been doing recently hedging, you know, 4 by 7 Costless, right? I think we'd be happy hedging a lot at that sort of price. Um, and if we lose both 7 dollars, that that's a probably a fine outcome for our business. Yeah. And, and only other Dynamic. I just add here is, is these Investments that we're, we're making in our sustainable growth. Projects are
Speaker Change: Going to bring durability to our cash flows and you know this this 250 million of of Midstream free cash flow from these growth projects. I mean, those are going to bring a pretty decent amount of of durability. So we also are thinking about ways that our growth is going to continue to solidify the cash flow story at eqt which is just worth noting.
Speaker Change: It's like adding a it's like it's it's like adding a hedge.
Toby Rice: Yeah. I mean 250 million to Toby's point is another 10 cents, reduction in our break even cost. By the time, all this comes online towards the end of the decade.
Toby Rice: huge savings, uh and and takes this, I think in our view as you as you model that out, below 2 dollars,
I appreciate that. Thank you.
Speaker Change: And your next question comes from the line of Jacob Roberts with dph. Jacob. Please go ahead.
Jacob Roberts: Good morning. Hopefully a quick 1 in a pure reality reallocation scenario. Uh, and I know it'll be pricing dependent but do you see a meaningful shift to the percentages? You guys lay out on slide 24.
Speaker Change: Uh, I think that it's just simply going to be our election. Uh, and again, I think that goes back to Betty's. Question earlier about where pricing is on a relative basis. Um, if we see basis price, tighten up, uh,
Speaker Change: You know, in Basin from the call at 90 cents you see today closer to like 5060 cents.
Speaker Change: You know, I I think we're pretty open minded about adding more exposure back in Basin. It also, just depends on
Speaker Change: You know, when that is, uh, what the remaining Supply picture looks like, you know, we have a view that you get towards the end of this decade. The udica is also pretty thin on inventory. Um, kind of like the hanesville. And so, again, I think you just see a paradigm shift at that point in time, where you have, a 30 BS of LNG becomes fully absorbed in the global market, you have all these power plants data centers, starting to really pull real demand. At the same time, you see inventory roll over that will also structurally reset the market higher. Um, and its really a point in time where we're we're kind of laying the groundwork to
Speaker Change: Position for where if we do grow, all of a sudden, you're you're going to see a paradigm shift in pricing. And, and that growth we add is going to be worth a tremendous amount.
Speaker Change: Okay, so there's nothing precluding you from from moving gas wherever you want it. I I guess it's the other way to ask that question.
Correct.
Speaker Change: All right, thank you. Appreciate the time.
Speaker Change: And your next question comes from the lineup. Jen anise. With Texas Capitol Chan, please go ahead.
Jen anise: my question is,
Jen anise: for my first 1, the 2 Supply agreements announced are for projects located in, Southwest Appalachia. How would you characterize the opportunity set for eqt to secure similar agreements in northeast PA or is the Southwest just more attractive with your Midstream assets there?
Jen anise: I think you're going to see uh the opportunities, anywhere. You have uh eqt footprint and that footprint can come from our Midstream infrastructure. Uh, the footprint can also come from our commercial opportunities. Um, you know, it seems like there's a, a big gravitation of the Tech Community in in Southwest Appalachia. Um, and so we're seeing a lot of opportunities there. But I mean, our foot, our footprint,
Jen anise: Uh, it is pretty massive. So we we are seeing opportunities uh, across the Horizon. Yeah, there's also nothing that precludes us from building a, for example, 20 me lateral off, someone else's pipeline to tie into a new power plant or data center um, as long as our Traders can
Jen anise: Can secure the capacity on the pipelines and make sure we get volume there uh 12 months out of the year at a price that makes sense. So again I think between our trading arm and our Midstream side of the business, in addition to our own Equity volume, as we have a ton of flexibility,
Speaker Change: I appreciate it. And then just a quick housekeeping item on the tax front with the tax rule changes. And recently, passed legislation, how does that change your outlook for cash taxes over the next couple of years?
Speaker Change: Yeah, that's a great question. Thank, uh, actually T's up some important color, uh, that we did not cover and prepared remarks. So, just the, the, the tax bill alone saves Us. In the next couple of years, about 500 million dollars in taxes by deferring that out, uh, present value, that's about 450 million. So logically that's very front and weighted in that in that 5 year window.
Speaker Change: But that is also before the impact of a lot of the spending like this billion dollar opportunity for ferc regulated projects, which is approximately like the MVP related projects are about half of that billion dollars for perspective.
Speaker Change: Participating.
Speaker Change: Great update. Thanks guys.
Speaker Change: Thank you. Everyone. That concludes our question and answer session and also concludes today's call. You may now disconnect