What does the pro forma information show about EQT's 2023 results?

Assuming the THQ acquisition and term loan draw had occurred on January 1, 2023, EQT's 2023 total operating revenues would have been about $7.53 billion versus $6.91 billion reported, and net income attributable to EQT would have been about $1.91 billion versus $1.74 billion reported. The table is unaudited and is not a projection of future results.

How was the acquisition paid for?

The purchase price consisted of 49,599,796 shares of EQT common stock and approximately $2.4 billion in cash, subject to customary post-closing adjustments. The cash portion was funded with $1.25 billion of term loan borrowings, $1.0 billion of cash on hand, and a $150 million escrow deposit placed earlier for the deal.

Why does pro forma interest expense increase, and what drives higher depreciation?

Pro forma interest expense increases by about $51.7 million to reflect a full-year draw on the $1.25 billion term loan as if it had occurred January 1, 2023. Depreciation and depletion rises by about $219 million in total, with the filing citing a recalculated depletion rate reflecting the higher fair value of acquired property, plant and equipment, along with changes to asset retirement obligation accretion and useful lives.

Do the pro forma EPS figures reflect the 49.6 million shares issued in the deal?

Based on the table, the pro forma weighted-average share counts (380.9 million basic and 413.2 million diluted) match EQT's historical counts, so the pro forma EPS figures do not appear to add the newly issued shares. Investors should be cautious about relying on the $5.02 basic and $4.65 diluted pro forma EPS figures without adjusting for the additional share count.

Why was this 8-K filed in May 2024 for an August 2023 transaction?

The filing is described as providing updated pro forma financial information giving effect to the acquisition, under Item 8.01 (Other Events) and Item 9.01 (Financial Statements and Exhibits). It supplements the earlier reporting of the transaction, and the pro forma statement is meant to be read alongside EQT's 2023 Form 10-K and the Upstream and Midstream Sellers' unaudited six-month 2023 financial statements previously filed in an 8-K/A.

EQT 8-K SEC Disclosure — May 16, 2024

01—Abstract

Summary

Summary of the 8-K filed May 16, 2024. Cited figures are marked; the original filing is the authoritative source.

EQT Corporation filed this Form 8-K on May 16, 2024 to provide updated unaudited pro forma condensed combined statement of operations for fiscal 2023, giving effect to its August 22, 2023 acquisition of THQ Appalachia I (upstream assets) and THQ-XcL Holdings I (gathering and processing assets).

The acquisition was paid for with 49,599,796 EQT shares and approximately $2.4 billion^a in cash, funded by $1.25 billion of term loan borrowings, $1.0 billion of cash on hand, and a $150 million escrow deposit. The filing is informational only and is not a forecast, but it shows what EQT's 2023 results would have looked like had the deal closed on January 1, 2023. On a pro forma basis, total operating revenues rise from $6.91 billion to $7.53 billion (about 9%), and operating income rises from $2.31 billion to $2.56 billion (about 11%).

Net income attributable to EQT increases from $1.735 billion to $1.912 billion^b (about 10%). Depreciation and depletion increases from $1.73 billion to $1.95 billion, and interest expense increases from $220 million to $271 million, reflecting the term loan draw. Reported pro forma diluted EPS is $4.65 versus $4.22 historically, and basic EPS is $5.02 versus $4.56.

Investors should note that the pro forma weighted-average share counts in the table are the same as EQT's historical counts (380.9 million basic and 413.2 million diluted), so the per-share uplift does not appear to reflect the 49.6 million shares issued in the deal. The per-share figures should therefore be read with that limitation in mind, while the dollar-based earnings and cash-flow profile of the acquired assets is the more meaningful takeaway.

02—Key points

Key Highlights

Acquisition closed August 22, 2023: EQT acquired THQ upstream and midstream assets for 49,599,796 EQT common shares plus about $2.4 billion in cash, subject to post-closing adjustments.
Cash consideration funded by $1.25 billion of Term Loan Facility borrowings, $1.0 billion of cash on hand (including October 2022 senior notes proceeds), and a $150 million escrow deposit.
Pro forma 2023 total operating revenues of $7.53 billion vs. $6.91 billion historical, an increase of about $625 million (about 9%).
Pro forma 2023 operating income of $2.56 billion vs. $2.31 billion historical; pro forma net income attributable to EQT of $1.91 billion vs. $1.74 billion historical (about 10% higher).
Pro forma diluted EPS of $4.65 vs. $4.22 reported; basic EPS of $5.02 vs. $4.56. Weighted-average share counts are held at historical levels in the pro forma table.
Pro forma depreciation and depletion rises to $1.95 billion (from $1.73 billion) and interest expense rises to $271 million (from $220 million), reflecting higher depletion on acquired assets and term loan borrowings.
The filing is unaudited and informational, and states that it is not necessarily indicative of future results; it was filed under Items 8.01 and 9.01 and is signed by CFO Jeremy T. Knop.

03—Questions

Frequently Asked Questions

What does the pro forma information show about EQT's 2023 results?
Assuming the THQ acquisition and term loan draw had occurred on January 1, 2023, EQT's 2023 total operating revenues would have been about $7.53 billion versus $6.91 billion reported, and net income attributable to EQT would have been about $1.91 billion versus $1.74 billion reported. The table is unaudited and is not a projection of future results.
How was the acquisition paid for?
The purchase price consisted of 49,599,796 shares of EQT common stock and approximately $2.4 billion in cash, subject to customary post-closing adjustments. The cash portion was funded with $1.25 billion of term loan borrowings, $1.0 billion of cash on hand, and a $150 million escrow deposit placed earlier for the deal.
Why does pro forma interest expense increase, and what drives higher depreciation?
Pro forma interest expense increases by about $51.7 million to reflect a full-year draw on the $1.25 billion term loan as if it had occurred January 1, 2023. Depreciation and depletion rises by about $219 million in total, with the filing citing a recalculated depletion rate reflecting the higher fair value of acquired property, plant and equipment, along with changes to asset retirement obligation accretion and useful lives.
Do the pro forma EPS figures reflect the 49.6 million shares issued in the deal?
Based on the table, the pro forma weighted-average share counts (380.9 million basic and 413.2 million diluted) match EQT's historical counts, so the pro forma EPS figures do not appear to add the newly issued shares. Investors should be cautious about relying on the $5.02 basic and $4.65 diluted pro forma EPS figures without adjusting for the additional share count.
Why was this 8-K filed in May 2024 for an August 2023 transaction?
The filing is described as providing updated pro forma financial information giving effect to the acquisition, under Item 8.01 (Other Events) and Item 9.01 (Financial Statements and Exhibits). It supplements the earlier reporting of the transaction, and the pro forma statement is meant to be read alongside EQT's 2023 Form 10-K and the Upstream and Midstream Sellers' unaudited six-month 2023 financial statements previously filed in an 8-K/A.

04—Continue

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