PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced second quarter 2016 net loss attributable to EQT of $258.6 million, or $1.55 loss per diluted share (EPS), compared to second quarter 2015 net income attributable to EQT of $5.5 million, or $0.04 per diluted share. Net cash provided by operating activities was $208.5 million, $5.6 million higher than the second quarter 2015.

Adjusted net loss was $57.6 million excluding hedge losses totaling $234.7 million in the second quarter 2016, resulting from a significant improvement in forward natural gas prices, $48.4 million lower than the second quarter 2015; and adjusted loss per share was $0.35, down from adjusted loss per share of $0.06 for the second quarter 2015. Adjusted operating cash flow attributable to EQT was $113.8 million; $32.7 million lower than the second quarter 2015. The Non-GAAP Disclosures section of this news release provides reconciliations of adjusted net loss attributable to EQT and adjusted loss per share to net loss attributable to EQT and earnings per diluted share, the most comparable financial measures calculated in accordance with GAAP, as well as important disclosures regarding non-GAAP financial measures.

Highlights:

• Production sales volume was 26% higher
• Midstream gathering revenue was 11% higher
• Midstream transmission revenue was 14% higher
• Realized price was 23% lower
• Acquired 62,500 Marcellus and 53,000 Utica acres from Statoil

RESULTS BY BUSINESS

EQT PRODUCTION

EQT Production achieved sales volume of 184.5 Bcfe in the second quarter 2016, representing a 26% increase over the second quarter last year.

EQT Production’s operating loss totaled $444.0 million for the quarter, compared to operating loss of $66.9 million in 2015. Operating revenue totaled $72.0 million for the second quarter 2016, which was $316.8 million lower than the second quarter 2015, primarily due to a lower average realized sales price, which more than offset the increase in production sales volume.

EQT Production’s adjusted operating loss totaled $112.5 million for the quarter, excluding hedge losses totaling $234.7 million, resulting from a significant improvement in forward natural gas prices, compared to adjusted operating loss of $31.8 million in 2015. Adjusted operating revenue for the quarter was $390.1 million, which was $14.7 million lower than the same period last year, primarily due to a lower average realized sales price, which more than offset the increase in production sales volume. Average realized price for the second quarter 2016 was $2.11 per Mcfe, 23% lower than the $2.75 per Mcfe realized in the same period last year.

The “net marketing services” revenue includes marketing revenue generated by either reselling third-party transportation capacity not used to transport EQT’s produced gas, or utilizing such capacity to transport purchased gas to higher priced markets, net of the transportation charges for such capacity. Net marketing services revenue totaled $2.1 million in the second quarter 2016, $7.7 million lower than the same quarter last year, primarily due to incremental capacity costs.

EQT Production’s operating expenses for the quarter were $516.0 million, $60.3 million higher than the same period last year. Consistent with the growth in sales volume – depreciation, depletion, and amortization (DD&A) expenses were $24.5 million higher; gathering expenses were $19.6 million higher; transmission expenses were $11.3 million higher; selling, general and administrative (SG&A) expenses were $7.2 million higher, including a $7.1 million legal reserve; processing expenses were $3.9 million higher; and production taxes were $1.5 million higher. Exploration expenses were $7.8 million lower; and lease operating expenses (LOE), excluding production taxes, were essentially unchanged.

The Company drilled (spud) 28 gross wells during the second quarter 2016, including 27 Marcellus wells, with an average length-of-pay of 6,400 feet; and 1 Utica well with a length-of-pay of 5,200 feet.

The Company plans to accelerate its drilling program for the second half of 2016 by spudding an additional 63 wells - 33 Pennsylvania Marcellus wells and 30 Upper Devonian wells – for a total of 105 Marcellus and 30 Upper Devonian wells in 2016. The 2016 capital expenditure forecast of $1.0 billion is unchanged, as lower costs per well offset the costs of increased activity.

EQT MIDSTREAM

EQT Midstream’s second quarter 2016 operating income was $124.5 million, an increase of $16.3 million over the second quarter 2015, primarily as a result of increased gathering and transmission revenue, partially offset by increased operating expenses. Operating revenue was $214.3 million, which was $21.9 million higher due to higher Marcellus volume. Gathering revenue was 11% higher at $136.4 million and transmission revenue increased by 14% to $69.7 million.

Total operating expenses for the quarter were $89.8 million, $5.5 million higher than last year. SG&A increased $7.7 million due to the termination of the Company’s pension plan; and DD&A increased $3.2 million. These increases were partially offset by lower operation and maintenance (O&M) expense of $5.4 million due to the timing of maintenance activities. Per unit gathering and compression expense for the quarter was 23% lower year-over-year.

OTHER BUSINESS

EQT Midstream Partners, LP (NYSE: EQM) / EQT GP Holdings, LP (NYSE: EQGP)

On July 26, 2016, EQM announced a cash distribution to its unitholders of $0.78 per unit for the second quarter 2016. EQGP also announced a cash distribution to its unitholders of $0.15 per unit for the second quarter 2016.

The second quarter 2016 financial results for EQM and EQGP were released today and provide operational results, as well as updates on significant midstream projects under development by EQM. This news release is available atwww.eqtmidstreampartners.com.

Statoil Acquisition

On July 8, 2016, EQT closed a transaction with Statoil USA Onshore Properties, Inc. -- acquiring 62,500 net acres located in EQT’s core Marcellus development area of West Virginia. Much of the acreage is contiguous with EQT’s current acreage; therefore, allowing the lateral lengths of 106 existing EQT locations to be extended from an average of 3,000 feet to an average of 6,500 feet, which will reduce overall costs and deliver stronger well economics. The acquisition also included approximately 500 undeveloped locations that are expected to have an average lateral length of 5,600 feet, along with the drilling rights on an estimated 53,000 net acres in the deep Utica.

On May 6, 2016, the Company completed a $796 million common stock offering. A portion of the proceeds was used to fund the acquisition.

Operating Cash Flow and Adjusted Operating Cash Flow Attributable to EQT

Operating cash flow and adjusted operating cash flow attributable to EQT are non-GAAP supplemental financial measures that are presented as indicators of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt. EQT includes this information because management believes that changes in operating assets and liabilities relate to the timing of cash receipts and disbursements and therefore may not relate to the period in which the operating activities occurred. Adjusted operating cash flow attributable to EQT is EQT’s operating cash flow (a non-GAAP supplemental financial measure reconciled below), adjusted to exclude adjusted EQT Midstream Partners EBITDA (a non-GAAP supplemental financial measure reconciled below), and includes the EQT GP Holdings, LP (EQGP) cash distribution payable to EQT. Management believes that removing the impact on operating cash flows of the public unitholders of EQGP and EQT Midstream Partners, LP (EQM) that is otherwise required to be consolidated in EQT’s results provides useful information to an EQT investor. Adjusted operating cash flow attributable to EQT also excludes current taxes on transactions, cash exploration expense, a legal reserve charge, and cash rig release expenses in order to adjust for the cash impact of these activities on operating activities of the period. Management believes this will enhance the comparability of results. Operating cash flow and adjusted operating cash flow attributable to EQT should not be considered as alternatives to net cash provided by operating activities presented in accordance with GAAP.

2016 Current Guidance

Based on current NYMEX natural gas prices adjusted operating cash flow attributable to EQT is projected to be approximately $750 million for 2016, which includes approximately $150 million from EQT’s interest in EQGP. See the Non-GAAP Disclosures section for important information regarding the non-GAAP financial measures included in this news release, including the projections for adjusted operating cash flow attributable to EQT and EBITDA.