EQT Corrects the Toby Rice Group’s False and Misleading Statements

Highlights Significant Omissions and Errors in the Toby Rice Group’s

PITTSBURGH–(BUSINESS WIRE)–EQT Corporation (NYSE:EQT) today issued the following statement
correcting some of the false and misleading information published
yesterday by the Toby Rice Group in a letter to EQT shareholders:

The letter issued by the Toby Rice Group yesterday contains a number of
highly misleading or false statements about EQT’s financial and
operational performance. Based on these continued misleading and
reckless statements, we urge EQT shareholders to carefully review any
materials they receive from the Toby Rice Group and conduct their own
research to verify the accuracy of statements.

To highlight just a few examples, the Toby Rice Group:

  • Falsely tried to undermine EQT’s leading free cash flow generation by
    stating that $120 million or 40% of the $305 million of
    adjusted free cash flow1 generated by EQT in the last two
    quarters was from temporary midstream distributions. EQT’s earnings
    press releases and other filings clearly show that only $21 million,
    or less than 7%, of EQT’s adjusted free cash flow over the prior two
    quarters is from midstream distributions. In making this false
    claim, the Toby Rice Group either is trying to mislead investors or
    made an error in calculating EQT’s free cash flow, which demonstrates
    that the Toby Rice Group has no understanding of the significant level
    of free cash flow that EQT is actually generating.
    If the latter,
    this error calls into question the substance of the Toby Rice Group’s
    vague claims that it can deliver more free cash flow.

    the Toby Rice Group’s letter cites seasonal cash flow details provided
    by EQT but conveniently omits the Company’s expectations for the
    fourth quarter of 2019 (typically a seasonally strong quarter in the
    industry), when the Company anticipates significant positive free cash

  • Cherry-picked and misrepresented research information by
    referencing an out-of-context chart from a research report issued by
    an independent sell side analyst at Goldman Sachs dated May 17, 2019.
    The Toby Rice Group used the chart, which was based on 2018 data – to
    claim that EQT is the highest cost operator in the Appalachian Basin.

    reality is that this independent sell side analyst actually has a BUY
    rating on EQT and reiterated this rating in a more recent research
    report dated May 30,
    2019. The more
    recent report, which was readily available to the Toby Rice Group,
    contained the same chart, but included the following contextual
    statement: “EQT’s poor supply cost positioning based in part on 2018
    underperformance appears to be improving with
    new initiatives undertaken by management and operational momentum

    the more recent May 30, 2019 Goldman Sachs report included an
    accompanying forward-looking chart that highlighted EQT’s favorable
    outlook, stating “COG and EQT have an attractive combination of FCF
    yield, production growth and net debt/EBITDA relative to gassy peers.”2

    believe the Toby Rice Group’s decision to selectively cite only one
    chart taken out of context from an older report demonstrates either a
    lack of adequate due diligence or a willful intent to mislead

  • Manipulated data to tell a false story about EQT’s cost
    structure. For example, the Toby Rice Group cited another sell side
    research report that contained a number of inaccurate calculations and
    errors. The report, issued by a sell side analyst at Wolfe Research,
    included a well cost analysis that excluded EQT’s peer-leading LOE and
    G&A metrics, made adjustments to EQT’s cost structure that are
    incorrect and inconsistent across the peer set, and failed to adjust
    Rice Energy historical numbers for the current service cost
    environment and the realities of EQT’s water usage and delivery
    portfolio. EQT has previously refuted a number of these claims in

    EQT is among the Appalachian Basin’s low-cost
    leaders – with peer-leading LOE and SG&A costs. EQT also has top-tier
    drilling and completion costs per foot. Furthermore, since the new
    management team assumed their roles in November 2018, the Company has
    identified $150 million in annual cost reductions and has a line of
    sight to further cost reductions.

  • Used dated, pre-merger (Rice Energy and EQT) cash flow assumptions
    in an attempt to obscure EQT’s recent strong performance
    . The
    pre-merger cash flow projections reflect a different business climate,
    production growth rate trajectories, and legacy midstream agreements,
    which were not comparable between the two companies and were unrelated
    to upstream operations.

    Moreover, while Rice Energy was
    moving from a higher growth rate to a lower growth rate, EQT’s
    projections reflected a higher growth rate trajectory. EQT has since
    adjusted the Company’s strategy from growth mode to significant and
    sustainable free cash flow generation to maximize shareholder value.
    In addition, each company had a very different arrangement with its
    midstream affiliate, with EQT’s legacy contracts carrying a heavier
    burden to its upstream cash flow projections.

The facts are clear: EQT is a low cost producer generating strong
free cash flow.

The EQT Board recommends that shareholders support EQT by voting on the GOLD
universal proxy card “FOR” all 12 of EQT’s highly qualified
director nominees. Shareholders should simply discard and NOT vote using
any white proxy cards they may receive from the Toby Rice Group.

1 Non-GAAP financial measure, see disclosure below for
definition and reconciliation.
2 Permission to use
quotations neither sought nor obtained.

If you have any questions, or need assistance in voting
shares on the GOLD universal proxy card,

please call EQT’s
proxy solicitor:

at 1-877-687-1866 (from the U.S. or Canada)

Or at (412)
232-3651 (From Other Locations)

Please discard and do NOT
vote using any white proxy cards you may receive from the Toby Rice Group

About EQT Corporation:

EQT Corporation is a natural gas production company with emphasis in the
Appalachian Basin and operations throughout Pennsylvania, West Virginia
and Ohio. With 130 years of experience and a long-standing history of
good corporate citizenship, EQT is the largest producer of natural gas
in the United States. As a leader in the use of advanced horizontal
drilling technology, EQT is committed to minimizing the impact of
drilling-related activities and reducing its overall environmental
footprint. Through safe and responsible operations, EQT is helping to
meet our nation’s demand for clean-burning energy, while continuing to
provide a rewarding workplace and support for activities that enrich the
communities where its employees live and work. Visit EQT Corporation at www.EQT.com;
and to learn more about EQT’s sustainability efforts, please visit https://csr.eqt.com.

EQT Management speaks to investors from time to time and the analyst
presentation for these discussions, which is updated periodically, is
available via the Company’s investor relationship website at ir.eqt.com.

Cautionary Statements

This communication contains certain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended.
Statements that do not relate strictly to historical or current facts
are forward-looking. Without limiting the generality of the foregoing,
forward-looking statements contained in this communication specifically
include the expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of the Company and its
subsidiaries, including guidance regarding projected adjusted free cash
flow. These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from projected
results. Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. The
Company has based these forward-looking statements on current
expectations and assumptions about future events, taking into account
all information currently available to the Company. While the Company
considers these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory and other risks and uncertainties, many of which are
difficult to predict and beyond the Company’s control. The risks and
uncertainties that may affect the operations, performance and results of
the Company’s business and forward-looking statements include, but are
not limited to, those set forth under Item 1A, “Risk Factors,” of the
Company’s Form 10-K for the year ended December 31, 2018, as filed with
the SEC and as updated by subsequent Form 10-Qs filed by the Company,
and those set forth in the other documents the Company files from time
to time with the SEC.

Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company does not intend to correct or update
any forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law.


Adjusted Free Cash Flow

Adjusted free cash flow is defined as the Company’s net cash provided by
operating activities less changes in other assets and liabilities, less
EBITDA attributable to discontinued operations (a non-GAAP supplemental
financial measure defined below), plus interest expense attributable to
discontinued operations and cash distributions from discontinued
operations, less accrual-based capital expenditures attributable to
continuing operations. Adjusted free cash flow is a non-GAAP
supplemental financial measure that the Company’s management and
external users of its consolidated financial statements, such as
industry analysts, lenders and ratings agencies use to assess the
Company’s liquidity. The Company believes that adjusted free cash flow
provides useful information to management and investors in assessing the
impact of the Company’s ability to generate cash flow in excess of
capital requirements and return cash to shareholders. Adjusted free cash
flow should not be considered as an alternative to net cash provided by
operating activities or any other measure of liquidity presented in
accordance with GAAP.

The table below reconciles adjusted free cash flow with net cash
provided by operating activities, the most comparable financial measure
calculated in accordance with GAAP, as derived from the Statements of
Condensed Consolidated Cash Flows included in the Company’s report on
Form 10-Q for the quarter ended March 31, 2019 and in the Company’s
report on Form 10-K for the year ended December 31, 2018.

  Three Months Ended
March 31, 2019
  Three Months Ended

December 31, 2018

Net cash provided by operating activities $ 871,287 $ 530,866 $ 1,402,153
(Deduct) / add back changes in other assets and liabilities (223,934 ) 261,216   37,282  
Operating cash flow $ 647,353 $ 792,082 $ 1,439,435
(Deduct) / add back:
EBITDA attributable to discontinued operations(a) (118,934 ) (118,934 )
Interest expense attributable to discontinued operations   19,452   19,452  
Adjusted operating cash flow $ 647,353 $ 692,600 $ 1,339,953
Capital expenditures attributable to continuing operations (476,022 ) (558,351 ) (1,034,373 )
Adjusted free cash flow $ 171,331   $ 134,249   $ 305,580  

(a) As a result of the separation of the Company’s midstream business
from its upstream business and subsequent spin-off of Equitrans
Midstream Corporation in November 2018, the results of operations of
Equitrans Midstream Corporation are presented as discontinued operations
in the Company’s Statements of Condensed Consolidated Operations. EBITDA
attributable to discontinued operations is a non-GAAP supplemental
financial measure reconciled in the section below.

EBITDA Attributable to Discontinued Operations

EBITDA attributable to discontinued operations is a non-GAAP
supplemental financial measure defined as income from discontinued
operations, net of tax plus interest expense, income tax expense,
depreciation and amortization of intangible assets attributable to
discontinued operations for the three months ended December 31, 2018.

The table below reconciles EBITDA attributable to discontinued
operations with income from discontinued operations, net of tax, the
most comparable financial measure calculated in accordance with GAAP, as
reported in the Statements of Condensed Consolidated Operations included
in the Company’s report on Form 10-K for the year ended December 31,

  Three Months Ended
December 31, 2018
Income (loss) from discontinued operations, net of tax $ (163,911 )
Add back / (deduct):
Interest expense 19,452
Income tax benefit (31,575 )
Depreciation 22,243
Amortization of intangible assets 4,847
Impairment of goodwill 267,878  
EBITDA attributable to discontinued operations $ 118,934  

Important Information

EQT Corporation (the “Company”) filed a definitive proxy statement and
associated GOLD universal proxy card with the Securities and Exchange
Commission (the “SEC”) on May 22, 2019 in connection with the
solicitation of proxies for the Company’s 2019 Annual Meeting of
Shareholders (the “2019 Annual Meeting”). Details concerning the
nominees for election to the Company’s Board of Directors at the 2019
Annual Meeting are included in the definitive proxy statement. BEFORE
CONTAIN IMPORTANT INFORMATION. Investors and shareholders can obtain a
copy of the relevant documents filed by the Company with the SEC,
including the definitive proxy statement, free of charge by visiting the
SEC’s website, www.sec.gov.
Investors and shareholders can also obtain, without charge, a copy of
the definitive proxy statement, when available, and other relevant filed
documents by directing a request to Blake McLean, Senior Vice
President, Investor Relations and Strategy of EQT Corporation, at [email protected],
by calling the Company’s proxy solicitor, Innisfree M&A Incorporated,
toll-free, at 877-687-1866, or from the Company’s website at https://ir.eqt.com/sec-filings.


Analyst inquiries:
Blake McLean – Senior Vice President,
Investor Relations and Strategy
[email protected]

Media inquiries:
Michael Laffin – Vice President,
[email protected]

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