Capital Allocation Priorities
Q: How does macro view affect debt paydown vs. buybacks?
A: EQT focuses on debt reduction over share buybacks due to their bullish outlook on natural gas prices in 2025 and beyond. They prefer to use cash to derisk the balance sheet now, which allows investors greater exposure to potential price increases. Allocating capital to buybacks would necessitate more hedging, which might limit upside if prices rise as expected.

Response to Low Gas Prices
Q: Will you cut activity if gas prices stay low?
A: The company monitors market conditions and is prepared to reduce activity to avoid losses and deliver gas into higher-priced markets in the future. However, given their low-cost structure and financial position, they prefer to maintain consistent operations rather than reactively cutting activity, as reducing CapEx now could adversely affect next year's production.

Hedging Strategy for 2025
Q: Why not hedge more for 2025 now?
A: EQT is being patient with hedging for 2025, believing current prices are below where they should be due to bearish market narratives. They prefer to wait for better pricing opportunities, aiming to capture upside from expected higher gas prices rather than locking in current lower rates through hedging.

Maintenance CapEx Reductions
Q: What's driving lower maintenance CapEx beyond 2025?
A: The reduction in maintenance CapEx is due to multiple factors, including synergies from the Tug Hill assets, lower base declines, cost savings, and less infrastructure spend. Teams are examining all aspects of the business to reduce expenses.

Potential Asset Sales
Q: Are you considering asset sales to reduce debt?
A: EQT remains open to selling assets at the right price to accelerate deleveraging. They've received interest in their non-operated Northeast PA assets, especially from international players less sensitive to price. Any sales would be opportunistic moves aimed at creating shareholder value.

Free Cash Flow Outlook
Q: Has anything besides pricing changed in cash flow outlook?
A: The decrease in the 5-year cumulative free cash flow outlook to $9 billion is solely due to lower commodity prices. There have been no material changes in cost assumptions or other factors affecting this projection.

Cost Structure Improvements
Q: How will you drive costs lower in coming years?
A: EQT expects their breakeven cost structure to decrease to $2.30 by 2028, down about $0.30 from current levels, primarily due to contractual reductions in gathering rates as the Mountain Valley Pipeline comes online and improved realizations from supply deals. Paying down debt also reduces interest expenses, contributing to a lower cost structure.

Production Curtailments
Q: Under what conditions will you reduce production?
A: EQT is ready to respond to low price signals by reducing activity and production if necessary. Their production guidance already includes flexibility for reductions. However, they believe the market is closer to balance than it appears, and significant cuts may not be required.

In-Basin Demand and Differentials
Q: How will in-basin demand affect differentials?
A: In-basin demand growth, potentially adding up to 2 Bcf/day, along with pipeline expansions like the Mountain Valley Pipeline, is expected to improve differentials by $0.10 by 2028. EQT anticipates a realized differential of about $0.50, down from $0.60 currently, as demand increases from data center growth and power generation in the Southeast.

Operational Flexibility
Q: How do you manage production in volatile prices?
A: EQT maintains a low-cost structure and operational flexibility to adapt to price volatility. They can adjust production through choke management, delaying turn-in-lines, or building drilled but uncompleted wells (DUCs), allowing them to respond to higher prices without being heavily impacted by downturns.

LOE Savings from Water Handling
Q: Can you reduce LOE further via water handling?
A: Having achieved significant savings by reaching over 95% water recycling rates, EQT aims to maintain these levels. Additional benefits will come from more efficient logistics servicing completions, contributing to operational efficiencies and potentially lowering lease operating expenses further.

Liquids Production Fluctuations
Q: What's causing changes in liquids volumes?
A: Variations in liquids production are due to the lumpy nature of their development program, alternating between liquids-rich pads acquired from Tug Hill and drier Marcellus and Utica wells. These fluctuations are normal and not indicative of any long-term trend.

Political Risks Impacting Gas Demand
Q: What political challenges affect gas demand?
A: EQT faces misconceptions about natural gas's role in providing cleaner energy. The company works to highlight natural gas as a critical component in reducing emissions and meeting energy needs. They emphasize that political forces can only override market forces temporarily and believe in the long-term necessity of natural gas.

Ethane Production and Pricing
Q: Why was ethane production below guidance?
A: Lower ethane production resulted from delays in the Shell cracker plant becoming fully operational. EQT's forecast assumes the plant won't be fully online for another year, impacting ethane volumes and guidance.

Activity Levels and Market Conditions
Q: Will you adjust activity levels based on prices?
A: EQT's operational cadence is expected to remain steady throughout the year despite price volatility. They believe cuts in Haynesville activity will balance the market more quickly, and their large-scale operations are not easily adjusted in the short term.