UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 23, 2020
EQT CORPORATION
(Exact name of registrant as specified in its charter)
| Pennsylvania | 001-3551 | 25-0464690 |
|
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(IRS Employer
Identification Number) |
625 Liberty Avenue, Suite 1700, Pittsburgh, Pennsylvania 15222
(Address of principal executive offices, including zip code)
(412) 553-5700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, no par value | EQT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On April 23, 2020, EQT Corporation (EQT) issued a press release announcing its first quarter of 2020 earnings conference call schedule and certain preliminary and unaudited financial and operational highlights for such quarter. A copy of EQT’s press release is attached hereto and furnished as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including the accompanying Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act), or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 (the Securities Act) or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
On April 23, 2020, EQT issued a press release announcing its intent to offer, subject to market conditions and other factors, $350 million in aggregate principal amount of convertible senior notes due 2026 (the Notes) in a private placement (the Offering) to qualified institutional buyers pursuant to Rule 144A under the Securities Act. A copy of the press release is attached hereto and furnished as Exhibit 99.2 and is incorporated herein by reference.
This Current Report on Form 8-K (this Form 8-K) and such press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall either constitute an offer, solicitation or sale of securities in any state in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. The Notes have not been registered under the Securities Act or any state securities law and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act and applicable state securities laws.
The information in this Item 7.01, including the accompanying Exhibit 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
EQT is also filing this Form 8-K to supplement the risk factors described in Part 1, Item 1A of its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 with the following risk factor:
The outbreak of the novel coronavirus, or COVID-19, has affected and may materially adversely affect, and any future outbreak of any other highly infectious or contagious diseases may materially adversely affect, our operations, financial performance and condition, operating results and cash flows.
The recent outbreak of COVID-19 has affected, and may materially adversely affect, our business and financial and operating results. The severity, magnitude and duration of the current COVID-19 outbreak is uncertain, rapidly changing and hard to predict. Thus far in 2020, the outbreak has significantly impacted economic activity and markets around the world, and COVID-19 or another similar outbreak could negatively impact our business in numerous ways, including, but not limited to, the following:
| · | our revenue may be reduced if the outbreak results in an economic downturn or recession, as many experts predict, to the extent it leads to a prolonged decrease in the demand for natural gas and, to a lesser extent, NGLs and oil; |
| · | our operations may be disrupted or impaired, thus lowering our production level, if a significant portion of our employees or contractors are unable to work due to illness or if our field operations are suspended or temporarily shut-down or restricted due to control measures designed to contain the outbreak; |
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| · | the operations of our midstream service providers, on whom we rely for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs and oil, may be disrupted or suspended in response to containing the outbreak, and/or the difficult economic environment may lead to the bankruptcy or closing of the facilities and infrastructure of our midstream service providers, which may result in substantial discounts in the prices we receive for our produced natural gas, NGLs and oil or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties; and |
| · | the disruption and instability in the financial markets and the uncertainty in the general business environment may affect our ability to find attractive asset monetization opportunities and successfully execute our plan to deleverage our business (the Deleveraging Plan) on the timeframe previously anticipated or at all; for example, the market value of the assets to be monetized may be reduced and the financial condition or prospects of prospective purchasers and other counterparties, and such parties’ access to financing on acceptable terms, may be adversely affected. If we are not able to successfully execute our Deleveraging Plan or otherwise reduce absolute debt to a level we believe appropriate, our credit ratings may be lowered, we may reduce or delay our planned capital expenditures or investments, and we may revise or delay our strategic plans. |
Prior to the declaration of COVID-19 as a global pandemic by the World Health Organization on March 15, 2020, we established a COVID-19 Response Team (the Response Team) consisting of a multi-disciplinary group of senior leaders. The primary functions of the COVID-19 Response Team were to analyze areas of risk, scenario plan and assess business continuity matters. The Response Team generally meets twice weekly and has been in consistent communication with our Board of Directors. We expect that the principal areas of operational risk for us are availability of service providers and supply chain disruption. Active development operations, including drilling and fracking operations, represent the greatest risk for transmission given that the number of personnel and contractors on site. While we believe that we are following best practices under COVID-19 guidance, the potential for transmission still exists. In certain instances, it may be necessary or determined advisable for us to delay development operations. To date, we have only experienced one instance of positive COVID-19 testing resulting in the delay of development operations. The Response Team continues to monitor potential areas of risk for us.
In addition, the COVID-19 pandemic has increased volatility and caused negative pressure in the capital and credit markets. As a result, we may experience difficulty accessing the capital or financing needed to fund our exploration and production operations, which have substantial capital requirements, or refinance our upcoming maturities on satisfactory terms or at all. We typically fund our capital expenditures with existing cash and cash generated by operations (which is subject to a number of variables, including many beyond our control) and, to the extent our capital expenditures exceed our cash resources, from borrowings under our revolving credit facility and other external sources of capital. If our cash flows from operations or the borrowing capacity under our revolving credit facility are insufficient to fund our capital expenditures and we are unable to obtain the capital necessary for our planned capital budget or our operations, we could be required to curtail our operations and the development of our properties, which in turn could lead to a decline in our reserves and production, and could adversely affect our business, results of operations and financial position.
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As of December 31, 2019, our outstanding senior notes were rated “Baa3” with a “Negative” outlook by Moody’s Investors Services (Moody’s), “BBB–“ with a “Negative” outlook by Standard & Poor’s Ratings Service (S&P) and “BBB–“ with a “Negative” outlook by Fitch Ratings Service (Fitch). In January 2020, Moody’s downgraded our senior notes rating to “Ba1” with a “Negative” outlook. In February 2020, S&P downgraded our senior notes rating to “BB+” with a “Negative” outlook, and Fitch downgraded our senior notes rating to “BB” with a “Negative” outlook. In April 2020, S&P further downgraded our senior notes rating to “BB- ” with a “Negative” outlook, and Moody’s downgraded our senior notes to “Ba3” with a “Negative” outlook. As a result, the interest rate on our 6.125% senior notes due 2025 will increase to 7.875% and the interest rate on the 7.000% senior notes due 2030 increased to 8.750% beginning with the next interest payment period on such notes starting on August 1, 2020. See Note 10 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the Annual Report) for a further discussion of the effects of the downgrades on our financial statements subsequent to December 31, 2019. Although we are not aware of any current plans of Moody’s, S&P or Fitch to downgrade its rating of our senior notes, we cannot be assured that one or more will not downgrade or withdraw entirely their rating of our senior notes. Further impacts to our business as a result of the recent outbreak of COVID-19, including low prices for natural gas, NGLs and oil, or an increase in the level of our indebtedness or a failure to significantly execute the Deleveraging Plan, may result in Moody’s, S&P or Fitch downgrading its rating of our senior notes. If there are further downgrades to our credit rating, our access to the capital markets may be impacted, the cost of short-term debt through interest rates and fees under our lines of credit may increase, the interest rate on our Term Loan Facility and Adjustable Rate Notes (each defined in Note 10 to the Consolidated Financial Statements in our Annual Report) will further increase, the rates available on new long-term debt may increase, our pool of investors and funding sources may decrease, the borrowing costs and margin deposit requirements on our derivative instruments may increase and we may be required to provide additional credit assurances, including collateral, in support of our midstream service contracts, joint venture arrangements or construction contracts, which could adversely affect our business, results of operations and liquidity. As of April 22, 2020, such credit assurances could be up to approximately $1.4 billion, inclusive of letters of credit, margin deposits and other collateral posted of approximately $0.9 billion in the aggregate.
To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in Item 1A., “Risk Factors” in our Annual Report, such as those relating to our financial performance and debt obligations. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on our business, which will depend on numerous evolving factors and future developments that we are not able to predict, including the length of time that the pandemic continues, its effect on the demand for natural gas, NGLs and oil, the response of the overall economy and the financial markets as well as the effect of governmental actions taken in response to the pandemic.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release, dated April 23, 2020, issued by EQT Corporation (furnished solely for purposes of Item 2.02 of this Form 8-K) | |
| 99.2 | Press Release dated April 23, 2020, issued by EQT Corporation (furnished solely for purposes of Item 7.01 of this Form 8-K) | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EQT CORPORATION | |||
| Date: April 23, 2020 | By: | /s/ William E. Jordan | |
| Name: | William E. Jordan | ||
| Title: | Executive Vice President and General Counsel | ||
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Exhibit 99.1
NEWS RELEASE
EQT
Announces PRELIMINARY FIRST QUARTER 2020 HIGHLIGHTS, provides updates
on outlook and deleveraging plan, AND SCHEDULES EARNINGS
CONFERENCE CALL
PITTSBURGH – (April 23, 2020) – EQT Corporation (nyse: eqt) today announces certain preliminary first quarter 2020 operational and financial highlights, provides updates on outlook and its deleveraging plan, and schedules first quarter 2020 earnings conference call.
President and CEO Toby Rice stated: “The benefits of our transformation strategy have come to fruition during the first quarter 2020. We exceeded our production expectations through continued operational efficiencies, made substantial progress towards our well cost targets and outperformed our operating cost projections, all while spending roughly 25% less capital than the prior quarter. These results reflect our commitment to being the best and lowest cost operator, and I’m excited about our team’s ability to continue building on this positive momentum in an improving natural gas environment.
Rice continued, “We believe these operational improvements, when combined with an expected improved natural gas pricing environment and anticipated cash inflows, are more than sufficient to allow us to repay all of our 2021 maturities by the end of 2020. As a result, we intend to more selectively explore non-core asset sales and opportunistically assess monetizing our remaining equity interest in Equitrans Midstream in a strategic manner in lieu of attempting to fully achieve our Deleveraging Plan by mid-2020. We believe these actions are aligned with our desire to position the company to generate sustainable long-term value for our stakeholders.”
Preliminary First Quarter 2020 Highlights(1):
| · | We have experienced limited operational impacts as a result of the COVID-19 pandemic |
| · | Sales volumes of 380 – 385 Bcfe, exceeding high-end of the guidance range of 360 – 370 Bcfe |
| · | Average differential of ($0.20) – ($0.15) per Mcf, in-line with midpoint of the guidance range of ($0.25) – ($0.05) per Mcf |
| · | Capital expenditures of $250 – $270 million, approximately 25% lower than fourth quarter 2019 | |
| · | Well costs of $740 – $750 per lateral foot in the Pennsylvania Marcellus, accelerating path towards target well costs |
| · | Total cash operating costs of $1.34 – $1.37 per Mcfe(2) |
| · | Increased 2021 hedge position to approximately 40% of expected production at an average realized floor price of $2.50 per Dth |
| · | 2020 cash tax refunds now expected to be approximately $390 million, accelerated in part by the CARES Act |
| · | In advanced discussions to divest certain non-strategic assets for approximately $125 million |
(1) First quarter 2020 highlights reflect our preliminary estimates with respect to such results based on currently available information, is not a comprehensive statement of our financial results and is subject to completion of our financial closing procedures. These results may change, and those changes may be material.
(2) Includes transportation and processing, production, exploration and selling, general and administrative expenses
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NEWS RELEASE
Updates on outlook
The energy industry is currently experiencing two significant external stimuli that are impacting both day-to-day operations and the macro environment. The novel coronavirus, or COVID-19, outbreak and ensuing “stay at home” mandates throughout the United States and other parts of the world have resulted in decreased demand for natural gas, NGLs and oil. Additionally, in March 2020, the group of oil producing nations known as OPEC+ failed to reach an agreement over proposed oil production cuts stemming from the decrease in global demand for oil in light of the COVID-19 pandemic (the “oil price war”). Although the members of OPEC+ eventually reached an agreement in April 2020 to reduce their oil production beginning in May 2020 and continuing through April 2022, the OPEC+ members’ production of oil in the interim period prior to the commencement of the production cuts and the significant drop in demand has led to significant increases in the supply, and decreases in the price, of oil.
To date, we have experienced limited operational impacts as a result of the work from home restrictions or COVID-19 directly. As a “life-sustaining” business under the guidelines issued by each of the states in which we operate, we have been allowed to continue operations, provided that non-essential personnel have been required to work from home. One of the primary actions taken by the new management team during the 100-Day Plan was the establishment of a digital work environment, which has allowed us to maintain the engagement and connectivity of our personnel, as well as minimize the number of employees required in the office and field.
Similarly, we expect to have limited direct operational impacts from the oil price war. The oversupply of oil and NGLs resulting from the demand destruction attributable to COVID-19 is anticipated by some market participants to result in a lack of storage capacity and ultimately the shutting in of certain oil and NGLs production. We have limited direct oil and NGLs exposure, with approximately 95% of our production being natural gas.
The prices for natural gas, NGLs and oil have historically been volatile; however, the volatility in the prices for these commodities has substantially increased as a result of recent world developments in 2020. Oil prices in particular have plummeted in recent days. Strip pricing for natural gas has increased meaningfully as a result of the oil price war, with the principal contributing factor believed to be the market expectation that supply decreases in associated natural gas – natural gas produced as a byproduct of principally oil production activities – as a result of reduced or curtailed operations in oil basins will more than offset reduced demand for natural gas as a result of COVID-19. The impact of these recent developments on natural gas prices and our business are unpredictable, and there is no assurance that natural gas prices will remain at recently elevated prices or that any positive impact from the oil price war will outweigh the negative impact from reduced demand for natural gas as a result of COVID-19 or other factors.
Update on Deleveraging Plan
In October 2019, we announced a plan to reduce debt by approximately 30%, or approximately $1.5 billion (the “Deleveraging Plan”), by mid-2020 through asset monetizations and increased free cash flow. The Deleveraging Plan contemplated generating targeted proceeds from monetizations of select, non-core exploration and production assets, core mineral assets and/or our retained equity interest in Equitrans Midstream.
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NEWS RELEASE
We continue to actively pursue monetization opportunities for certain of our non-core assets, and we are in advanced stages of negotiations for the sale of certain of our non-core assets principally located in central Pennsylvania for an anticipated sale price of approximately $125 million. Given current market conditions and our expectation that natural gas prices may improve further starting in the latter half of 2020, we intend to more selectively explore non-core asset sales and opportunistically assess monetizing our remaining equity interest in Equitrans Midstream Corporation in a strategic manner in lieu of attempting to fully achieve our Deleveraging Plan by mid-2020. We believe that the combination of the anticipated proceeds from these asset sales, an anticipated approximately $390 million of income tax refunds (in part accelerated by the Coronavirus Aid, Relief and Economic Security Act (the CARES Act)) and improved realized free cash flow amounts as a result of accelerated well cost reductions will be sufficient to allow us to repay or refinance our debt maturing in 2021 by the end of 2020. Until our leverage target is achieved, we still expect to use all free cash flow and divestiture proceeds to reduce debt.
The successful execution of the Deleveraging Plan is based on our current expectations, including with respect to matters beyond our control, and is subject to change. There can be no assurance that we will be able to find attractive asset monetization opportunities or that such transactions will be completed on our anticipated timeframe, if at all. Furthermore, our estimated value for the assets to be monetized under the Deleveraging Plan involves multiple assumptions and judgments about future events that are inherently uncertain; accordingly, there can be no assurance that the resulting net cash proceeds from asset monetization transactions will be as anticipated, even if such transactions are consummated. Some of the factors that could affect our ability to successfully execute the Deleveraging Plan include changes in the financial condition or prospects of prospective purchasers and the availability of financing to potential purchasers on reasonable terms, if at all, the number of prospective purchasers, the number of competing assets on the market, unfavorable economic conditions, industry trends and changes in laws and regulations. If we are not able to successfully execute the Deleveraging Plan or otherwise reduce debt to a level we believe appropriate, our credit ratings may be lowered, we may reduce or delay our planned capital expenditures or investments, and we may revise or delay our strategic plans.
First Quarter 2020 Earnings Conference Call:
EQT will host a conference call with security analysts on May 7, 2020, beginning at 10:30 a.m. ET. Topics of the teleconference will include financial and operational results, and other matters, with respect to the first quarter 2020. A brief Q&A session for security analysts will immediately follow the discussion. EQT plans to issue its financial and operating results prior to the market opening on the same day.
To access the live audio webcast of the conference call, visit EQT’s investor relations website at ir.eqt.com. A replay will also be available via EQT’s investor relations website for seven days following the live call.
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.
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NEWS RELEASE
Cautionary Statements
This communication contains 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 preliminary first quarter 2020 financial and operating results and expectations of plans, strategies, divestitures, objectives and growth and anticipated financial and operational performance of the Company and its subsidiaries.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from projected or estimated 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, considering 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 and which include, but are not limited to, volatility of commodity prices; the costs and results of drilling and operations; access to and cost of capital; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; the Company's ability to appropriately allocate capital and resources among its strategic opportunities; inherent hazards and risks normally incidental to drilling for, producing, transporting and storing natural gas, natural gas liquids and oil; cyber security risks; availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and water required to execute the Company's exploration and development plans; the ability to obtain environmental and other permits and the timing thereof; government regulation or action; environmental and weather risks, including the possible impacts of climate change; and disruptions to the Company’s business due to acquisitions and other significant transactions. The risks and uncertainties that may affect the forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 27, 2020, and as updated by the Company’s Current Report on Form 8-K that will be filed with the SEC on April 23, 2020, the Company’s subsequent Quarterly Reports on Form 10-Q, and 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 undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Investor contact:
Andrew Breese – Director,
Investor Relations
412.395.2555
ABreese@eqt.com
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Exhibit 99.2
NEWS RELEASE
EQT ANNOUNCES PRIVATE OFFERING OF CONVERTIBLE SENIOR NOTES
PITTSBURGH – (APRIL 23, 2020) – EQT Corporation (the Company or EQT) (NYSE: EQT) today announced that it intends to offer, subject to market conditions and other factors, $350 million aggregate principal amount of convertible senior notes due 2026 (the “notes”) in a private offering (the “offering”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). EQT also intends to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $52.5 million aggregate principal amount of notes.
The notes will be senior unsecured obligations of EQT and will accrue interest payable semiannually in arrears. The notes will be convertible into cash, shares of EQT’s common stock or a combination thereof, at EQT’s election. The interest rate, initial conversion rate and other terms of the notes will be determined at the time of pricing of the offering.
EQT intends to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions described below. EQT intends to use the remainder of the net proceeds to repay or redeem certain of its outstanding indebtedness, including those with near-term maturities, and for general corporate purposes. If the initial purchasers exercise their option to purchase additional notes, EQT expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions as described below and the remainder to repay or redeem certain of its outstanding indebtedness, including those with near-term maturities, and for general corporate purposes.
In connection with the pricing of the notes, EQT expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce the potential dilution to EQT’s common stock upon any conversion of notes at maturity and/or offset any cash payments EQT is required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap. The strike price of the capped call transactions and the premium paid will be determined at the time of pricing of the offering.
In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to EQT’s common stock and/or purchase shares of EQT’s common stock concurrently with or shortly after the pricing of the notes, and may unwind these various derivative transactions and purchase shares of EQT’s common stock in open market transactions shortly following the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of EQT’s common stock or the notes concurrently with or shortly after the pricing of the notes.
In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to EQT’s common stock and/or purchasing or selling EQT’s common stock or other securities of EQT in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and may do so following any conversion of notes, any repurchase of notes on any fundamental change repurchase date, any notes redemption date, or any other date on which any notes are retired by EQT, in each case if EQT exercises the relevant election under the capped call transactions). This activity could also cause or avoid an increase or a decrease in the value of the notes or the market price of EQT’s common stock, which could affect a noteholder’s ability to convert its notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that a noteholder will receive upon conversion of its notes.
Neither the notes, nor any shares of EQT’s common stock issuable upon conversion of the notes, have been, or will be, registered under the Securities Act or any state securities laws, and unless so registered, such securities may not be offered or sold in the United States absent an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a solicitation of an offer to buy these or any other securities and shall not constitute an offer, solicitation or sale of these or any other securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
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.
Cautionary Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 statements regarding the proposed terms of the notes, the size of the proposed offering, the capped call transactions, expectations regarding actions of the option counterparties and their respective affiliates and the expected use of proceeds from the sale of the notes. 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 forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2020, and as updated by the Company’s Current Report on Form 8-K that will be filed with the SEC on April 23, 2020, the Company’s subsequent Quarterly Reports on Form 10-Q, and other documents the Company files from time to time with the SEC.
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Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Investor contact:
Andrew Breese – Director, Investor Relations
412.395.2555
ABreese@eqt.com
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