002.Dave Porges

8/8/2019 002.Dave Porges

1/27

The Shale Revolution:Lessons Learned

DUG East ConferenceNovember 3, 2010

Pittsburgh


2/27

www.eqt.com 2

Birth of an Industry

18 miles

Pittsburgh

Murrysville

Haymaker Well - nations first natural gas well

Drilled in 1878 in Murrysville, PA


3/27

www.eqt.com 3

New Life for an Old Industry

35,000,000

70,000,000

105,000,000

140,000,000

175,000,000

210,000,000

1993 1996 2000 2005 2010

Year

Mcf

Pennsylvania Gas Production, 1993 - 2010


4/27

www.eqt.com 4

Natural Gas is Our Future

Available NOW - 250-500 TCF recoverable

Marcellus resources

2006-2008 36% increase inAmerican recoverablereserves

2010 in Pennsylvania

903 wells drilled

2065 wells permitted


5/27

www.eqt.com 5

How the Shales Changed EQT

ProductionM

Mcf/d

Began horizontal drilling

0

250

500

2006 2007 2008 2009 2010

Marcellus

Huron / Berea horizontal

CBM

Vertical

E


6/27

www.eqt.com 6

Leading Appalachian E&P Company

275,000 customers

4.1 Tcfe proved res. 11,000 pipeline miles

3.4 MM acres

2009 operating income$356.7 million


7/27www.eqt.com 7

Reserves By Play

28 Tcfe Total Resource Potential

Huron/Berea

6.7

Marcellus

4.0

CBM/Other1.8

Huron/Berea

2.0

Marcellus

1.1

CBM/Other

1.0

*As of 12/31/09

4.1 Tcfe proved reserves* 12.5 Tcfe 3P reserves*


8/27www.eqt.com 8

34 wells

59 wells

3 wells

EQT Acreage

PA

MD

WV

OH

Marcellus Outstanding Potential

~500,000 EQT acres

13.5 Tcfe resource potential

$3.8 $4.2 MM / well

5 6 Bcfe EUR / well

100 wells in 2010


9/27www.eqt.com 9

The Shale Revolution: Lessons Learned

Lesson #1 Improved Techniques Increase

Production and Reduce Costs


10/27www.eqt.com 10

Lesson #1 Improved TechniquesIncrease Production and Reduce Costs

Pad Drilling & Skid Packages for Rigs Construction costs spread over pad wells

Reduces rig mobilization costs

(from approximately $200,000 to $20,000)

"Fishhook" design reaches more pay

Extended laterals

Recover up to two times more gas

Costs only about 40% more F&D cost is about $0.75 per Mcf

Conventional

Marcellus

1,150 ft missed pay

Marcellus

Fishhook Design


11/27www.eqt.com 11

Lesson #1 - Improved TechniquesIncrease Production and Reduce CostsTarget the formation:

Best reservoir characteristics Most brittle rock

Best porosity & permeability

Maximum gas filled porosity

Maximum natural fracturing

Best hydraulic fractures

EQT productivity more than doubledsince 2008

Greene Co. Cooper well - average30-day production rate of 22 MMcfeper day

Armstrong Co. Rosborough well -24-hour IP of 15 MMcfe


12/27www.eqt.com 12




Lesson #2 Preserving the Environment is

Good Business


13/27www.eqt.com 13

Lesson #2 Preserving theEnvironment is Good Business

Meet or exceed all federal, state and local regulations

Pre-drill testing of all domestic water sources

Triple casing to protect drinking water supplies

Recycle frack water and pumping water

Self-contained system

Zero disposal in waterways


14/27www.eqt.com 14

Lesson #2 Preserving theEnvironment is Good Business

Use industry-leading spill prevention plans

Site-specific information pictures, maps, topography

All electronic accessible 24/7 online

Electronic SPCC inspections monthly, at a minimum

Disclose frack fluid additives www.EQT.com

Embrace appropriate punishment for bad actors
http://www.eqt.com/http://www.eqt.com/


15/27


16/27www.eqt.com 16

Lesson #3 Natural Gas is the NewNeighbor

Our neighbors are concerned about water Natural gas companies are going to pollute the water

2004/2009 EPA studies No evidence of impact

2009 Ground Water Protection Council report(commissioned by DOE) no documented cases/stateregulation sufficient

EDFs Scott Anderson .if wells are constructed

right and operated righthydraulic fracturing will notcause a problem.


17/27www.eqt.com 17


Our neighbors are concerned about water Natural gas companies are going to use all the water

Recycle/reuse the water for the next well

The same amount of water used to complete a well isused by one U.S. golf course every 8 days (Pittsburghhas 65 golf courses)

Natural gas industry uses less than 2% of all water

used by all industries in Pennsylvania


18/27www.eqt.com 18


Our neighbors are concerned about air Natural gas companies are going to pollute the air

Nov. 1, 2010 PA DEP news release -Sec. Hanger: the data shows no emission levels

that would constitute a concern to the health ofresidents living near [natural gas] operations.

Majority of potential emission sources at drilling sitesare primarily trucks - already covered by federal

emissions standards


19/27

www.eqt.com 19


Our neighbors are concerned about jobs Natural gas companies arent hiring locally

Drilling and completing one Marcellus well requires410 people from 150 occupations!

Nationally

2008 3 million jobs, $385 billion

Locally

2010 - 100,000 jobs, $8.2 billion 2011 110,000 jobs, $11.0 billion

2020 174,000 jobs, $13.5 billion

Support programs to train Pennsylvanians


20/27

www.eqt.com 20




Lesson #2 Preserving the Environment is

Good BusinessLesson #3 Natural Gas is the New Neighbor

Lesson #4 To Thrive, We MUST Create Demand


21/27

www.eqt.com 21

Lesson #4 To Thrive, We MUST CreateDemand

Cheaper Cleaner

Abundant

Natural Gas


22/27

www.eqt.com 22


Survey says the government should do more toencourage natural gas use -

73% supporters of business

69% supporters of environment

Consumption expected to increase nearly 50% by 2030


23/27

www.eqt.com 23



24/27

www.eqt.com 24


2009 U.S. Imports, billion bbls

Canada & Mexico 1.3

OPEC 1.8

Other 1.2

Total 4.3

69% of usage

Petroleum Use

Source: EIA 2009 Annual Energy Review

2009 U.S. Petroleum Use by Sector(billion barrels)

Aviation,

Marine,

Military

0.9

Electric

Power

0.1

Residential &

Commercial

0.3

Industrial

1.5

Vehicles

3.6


25/27

www.eqt.com 25


100% conversion means:

1) 68% reduction in imports

2) U.S.A. saves $265B / year

225 million gasoline-burning vehicles in U.S.

10 million NGVs in the world

Only 120,000 NGVs in the U.S.


26/27

www.eqt.com 26


Feedstock, or raw material, for making chemicals,fertilizers and plastics

Used to generate:

Ethane-Based Ethylene Hydrogen

Ammonia

Methanol


27/27

27

Cautionary Statement

The Securities and Exchange Commission (the "SEC") permits oil and gas companies, in their filings with the SEC, to disclose only

proved, probable and possible reserves that a company anticipates at a given date to be economically and legally producible and

deliverable by application of development projects to known accumulations. We use certain terms in this presentation, such as totalresource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. We caution you that the SEC views

such total resource potential estimates as inherently unreliable and these estimates may be misleading to investors unless the

investor is an expert in the natural gas industry. We also note that the SEC strictly prohibits us from aggregating proved, probable and

possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.

Disclosures in this presentation contain certain forward-looking statements. 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

presentation 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 the companys drilling and infrastructure programs

(including the Equitrans expansion project) and technology, the timing of the signing and the terms of the natural gas processing and

natural gas liquids infrastructure joint venture, the timing of construction and expected economics of public-access natural gas

refueling stations, the expected decline curve, the expected feet of pay, total resource potential, production and sales volumes,

reserves, estimated ultimate recoveries, internal rate of return (IRR), expected after-tax returns per well, F&D costs, unit costs, direct

well costs, midstream costs, reserve replacement ratio, capital commitments and capital expenditures, capital budget, financing

plans, dividend rate, projected operating cash flows and revenue, hedging strategy, growth rate and tax position (including tax

refunds). These 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. 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, most of which are difficult to predict and many of which are beyond the

companys control. The risks and uncertainties that may affect the operations, performance and results of the companys business

and forward-looking statements include, but are not limited to, those set forth under Item 1A, Risk Factors of the companys Form

10-K for the year ended December 31, 2009, as updated by any subsequent Form 10-Qs. 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.

Documents

002.Dave Porges