EQT Corporation (EQT) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of EQT Corporation. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Toby Rice, President and Chief Executive Officer of EQT Corporation. Mr. Rice, the floor is yours.

Good morning, ladies and gentlemen, and welcome to the 2020 Annual Meeting of Shareholders of EQT Corporation. We are pleased that you could join us today. My name is Toby Rice, President and Chief Executive Officer of the company. The company's Board of Directors has designated me to preside over today's meeting. Due to the public health threat posed by the COVID-19 pandemic and to safeguard the health and well-being of meeting participants, we have moved to a virtual-only format this year for our meeting, which is being streamed as a live audio webcast. We hope that hosting this year's meeting virtually will maximize the ability of our shareholders to participate while keeping everyone's personal safety a priority. Thank you very much to those who are participating in our virtual meeting online today. Following the business portion of the meeting, I will offer some remarks about our company. Before we begin, there are a few housekeeping items to cover. A list of rules that will govern this meeting can be found in the agenda and procedures document which can be accessed in the Files section in the lower-left portion of the screen. I now call this meeting to order. The business of the meeting will be taken up in the order set forth in the agenda. Please note that there will be a question-and-answer session at the end of the meeting. I would now like to introduce the members of our Board of Directors, each of whom is a nominee for election as a director at this meeting and whom is present at today's meeting: our Independent Chair, John F. McCartney; Lydia I. Beebe; Dr. Philip G. Behrman; Lee M. Canaan; Janet L. Carrig; Dr. Kathryn J. Jackson; James T. McManus, II; Anita M. Powers; Daniel J. Rice, IV; Stephen A. Thorington; Hallie A. Vanderhider. Thank you. I would now like to introduce the executive officers of the company, each of whom is also present for today's meeting: David Khani, Chief Financial Officer; Will Jordan, Executive Vice President and General Counsel; Lesley Evancho, Chief Human Resources Officer; Todd James, Chief Accounting Officer; and Tony Duran, Chief Information Officer. Thank you. Finally, I would also like to introduce the representatives of our independent registered public accountants, Ernst & Young, that are present for today's meeting, Vaughn Cook and Leon Hoffman. As a formality for the record, we need to confirm that we have a meeting duly called and organized and that a quorum is present. The Corporate Secretary, Nicole King Yohe, has presented a copy of the notice of meeting and the affidavit showing that each shareholder of record of this company received by mail either the notice of the meeting, the proxy statement and a proxy card or a notice of Internet availability of proxy materials as required by law. Proxies on file show that shareholders present by proxy represent at least 222,752,674 million shares, which is about 87% of all shares entitled to be voted, and this constitutes a quorum. The Board of Directors has appointed Ashley Graziano, Allyson Graham and [ Monique Hughes ] as judges of election. Each is in attendance at the meeting today. The judges of election have executed an affidavit under oath with respect to their duties, and the affidavit has been filed with the record of this meeting. The minutes of the last annual meeting of shareholders held on Wednesday, July 10, 2019, are available for authenticated shareholders to view via the link in the lower left-hand side of your screen. Let's now proceed to the matters to be voted on today. Six matters were presented in the proxy statement for shareholder consideration. All 6 matters were proposed by the Board of Directors. The first item on the agenda, Item 1, is the election of 12 directors nominated by the Board. Each director elected at this meeting will serve a 1-year term expiring at the Annual Shareholders Meeting in the year 2021. The Board recommends a vote for the election of all nominees. The second item on the agenda, Item 2, is approval of nonbinding resolution regarding the compensation of the company's named executive officers for 2019. The Board recommends a vote for this proposal. The third item, Item 3, is the approval of certain amendments to the company's articles of incorporation to eliminate the supermajority voting standard required to, one, remove directors; and two, make future amendments to certain provisions of the company's articles and bylaws. The Board recommends a vote for this proposal. The fourth item on the agenda, Item 4, is the approval of amendments to the company's articles of incorporation to provide that shareholders holding at least 25% of the outstanding shares of common stock of the company may call a special meeting of the shareholders. The Board recommends a vote for this proposal. The fifth item on the agenda, Item 5, is approval of the company's 2020 Long-Term Incentive Plan. The Board recommends a vote for this proposal. The sixth item on the agenda, Item 6, is the ratification of appointment of Ernst & Young LLP as our independent registered public accounting firm for 2020. The Board recommends a vote for this proposal. We will now proceed with the voting. It is 8:06 a.m. The polls are now open. I would now like to call for a vote on the nominations and proposals. If there are any shareholders present who have not submitted their proxies and wish to vote at this time, please do so by clicking the link provided online. If you voted before the meeting via phone, Internet or mail, there is no need to cast your vote again today. As a reminder, only individuals that entered this meeting as an authenticated shareholder will have the ability to cast their vote at this time. We will now pause for a brief moment to allow shareholders designed to submit their votes to do so. I will pause 1 minute to allow votes to be submitted. [Voting]

It is now 8:08 a.m., and I declare the polls to be closed. I now would like to receive the preliminary report of the judges of election who have submitted their report to the corporate secretary.

Mr. Rice, the 12 persons nominated for election as directors have each received a majority of the votes cast. Item 2, approval of a nonbinding resolution regarding compensation of the company's named executive officers for 2019 received the majority of the votes cast. Item 3, approval of amendments to the company's articles of incorporation, eliminating the supermajority requirements to remove directors and make future amendments received a majority of the votes cast. Item 4, approval of amendments to the company's articles of incorporation, providing that shareholders holding at least 25% of the outstanding common stock of the company may call a special meeting of shareholders, has received a majority of the votes cast. Item 5, approval of the EQT 2020 Long-Term Incentive Plan has received a majority of the votes cast. And Item 6, ratification of the appointment of Ernst & Young for 2020 received a majority of the votes cast.

Thank you. I hereby declare that the 12 nominees listed in the proxy statement have been elected directors of the company and each of the proposal Items 2 through 6 have been approved by our shareholders. Since the business portion of this meeting is now completed, as Chairman of this meeting, I declare the annual meeting to be officially concluded. Before we move on to the question-and-answer session, I'd like to provide a few comments on the actions that EQT's Board and management team have taken to create a more durable, stable and sustainable company. I realize that many of you closely follow our financial and operational performance through our quarterly and annual reporting cycles, so I'll keep my comments brief. You are likely familiar with our story thus far. In July 2019, an overwhelming majority of shareholders voted to refresh EQT's Board of Directors. Concurrently, the Board appointed me as President and CEO to lead EQT's transformational shift into a modern, digitally enabled, efficient and values-driven natural gas operator. We overhauled the executive team and added multiple department heads capable of driving organizational change. With the new leadership team in place, we streamlined the organizational structure, removing unnecessary layers, reducing overhead costs and creating better alignment and accountability. We also implemented a digital work environment that allows for enhanced connectivity and collaboration across the entire organization. With a proven team in place and the organization fully connected, we then turned our focus to strategically enhancing our operational and financial execution. Operationally, we have implemented our new development approach centered on combo development, which is data driven to maximize performance, optimize well design and extend our operations schedule. We also have created a Management Steering Committee to drive enhanced environmental, safety and governance performance tracking. Financially, we have enhanced EQT's financial reporting and long-term sustainability by successfully restructuring our hedge books, refinancing our near-term maturities to create financial flexibility, reducing our overhead cost structure, strategically monetizing a portion of our equity stake in Equitrans Midstream Corporation and renegotiating our gathering rate structure. The combination of these transformational efforts has resulted in 2020 capital spending plan that is nearly $600 million lower than 2019 levels while delivering the same level of production. We are committed to responsible and efficient capital deployment and reducing absolute debt, creating an even stronger and more durable business, all of which will maximize shareholder value. These highlights are just a fraction of what has been done to enhance EQT's financial footing and operational execution. The culture that we are building driven by our core values of trust, teamwork, heart and evolution has positioned us to continue to drive further operational and financial efficiencies and to realize the full potential of EQT's world-class asset base. While there is more work to do, I look forward to the future and to becoming the industry's clear operator of choice. Now let's move to the question-and-answer session. Those individuals that entered today's meeting as an authenticated shareholder may now ask a question. To submit a question, please click on the dialogue icon in the upper-right corner of the meeting center screen. Before we address your questions, I would like to remind everyone that questions must address the business and operations of the company. Individual matters not of concern to all shareholders generally will not be answered in this forum. Additionally, if your question relates to a subject matter covered by more than 1 submitted question, we will attempt to address the subject matter in a consolidated response and will not repeat duplicative questions. With that, let's open the floor to questions.

Mr. Rice, we have no questions in queue.

Okay. If you'd like to have an opportunity to ask a question in the future, I encourage you to contact our Corporate Secretary, Nicole King Yohe. Nicole's contact information is on the agenda through the link on the meeting portal. And with that, I'd like to thank everyone for attending and participating in today's meeting.

This concludes the meeting. You may now disconnect.