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8/8/2019 002.Dave Porges
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The Shale Revolution:Lessons Learned
DUG East ConferenceNovember 3, 2010
Pittsburgh
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Birth of an Industry
18 miles
Pittsburgh
Murrysville
Haymaker Well - nations first natural gas well
Drilled in 1878 in Murrysville, PA
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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
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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
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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
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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
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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*
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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
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The Shale Revolution: Lessons Learned
Lesson #1 Improved Techniques Increase
Production and Reduce Costs
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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
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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
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The Shale Revolution: Lessons Learned
Lesson #1 Improved Techniques Increase
Production and Reduce Costs
Lesson #2 Preserving the Environment is
Good Business
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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
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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
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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.
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Lesson #3 Natural Gas is the NewNeighbor
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
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Lesson #3 Natural Gas is the NewNeighbor
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
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Lesson #3 Natural Gas is the NewNeighbor
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
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The Shale Revolution: Lessons Learned
Lesson #1 Improved Techniques Increase
Production and Reduce Costs
Lesson #2 Preserving the Environment is
Good BusinessLesson #3 Natural Gas is the New Neighbor
Lesson #4 To Thrive, We MUST Create Demand
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Lesson #4 To Thrive, We MUST CreateDemand
Cheaper Cleaner
Abundant
Natural Gas
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Lesson #4 To Thrive, We MUST CreateDemand
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
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Lesson #4 To Thrive, We MUST CreateDemand
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Lesson #4 To Thrive, We MUST CreateDemand
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
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Lesson #4 To Thrive, We MUST CreateDemand
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.
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Lesson #4 To Thrive, We MUST CreateDemand
Feedstock, or raw material, for making chemicals,fertilizers and plastics
Used to generate:
Ethane-Based Ethylene Hydrogen
Ammonia
Methanol
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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.
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