EQT Corporation (NYSE:EQT) Q1 2024 Earnings Call Transcript

And when we step back and compare and contrast LNG versus data center demand, I think what’s happening in the data centers will create a lot more like structural baseload demand not subject to is the arm open as the ARB closed for different periods of time. And that sort of stability is something that we really try to focus on in our business as we build it for the long-term. So we’ll have exposure to both, right? In certain periods, one will be better than the other. But I think that growing data center demand theme on the doorstep of our asset base is something that has really surprised us in the more we study it, the more excited we get.

Bertrand Donnes: Thanks, guys.

Operator: Your next question comes from Roger Read with Wells Fargo. Please go ahead.

RogerRead: Yeah, thank you. Good morning. Just want to follow-up. Is there any update on any of the regulatory hurdles related to the acquisition ETRN?

Toby Rice: Yeah. Part for the course, we pulled and refiled with the FTC and the sustained operating procedure. So we’ve continued to work alongside the FTC and provide updates along the way. We’re really encouraged about the opportunity to talk to the FTC about how this transaction makes America’s natural gas champion EQT a lower cost energy provider, delivering more reliable energy and also helping customers acquire cleaner energy sources. So a lot of great things for us to talk about with the FTC, and we’re excited about the process.

RogerRead: Understood. And along those lines, the long-term demand here on the AI side, is there anything data centers, let’s call it, is there anything else you’ve seen recently or heard recently or any sort of direct outreach from consumers to EQT?

Toby Rice: Yeah. I think there’s a new dynamic that’s really taking center stage here. Everybody understands the energy that they acquired. They want it affordable. They want it reliable and they want it clean. And certainly, with data centers liability is at the top of the list. But the other dynamic at play is going to be speed. And there’s only one energy source that has shown the proof of track record. We’re going to be able to meet any sort of demand from America and that is natural gas. Speed matters. And at a very high level. There’s a couple of things that’s going to allow natural gas to service this new demand quickly. Number one is leveraging existing power infrastructure, understanding that natural gas power plants are only running on average around a 60% utilization factor.

There’s an opportunity to leverage that underutilized capacity, and that could increase natural gas demand in the near short term. And then stepping back, I think people are getting — looking at how are they going to service this new demand. And all the challenges it takes to build any infrastructure even looking at natural gas, which will require a 20-acre footprint. And all the permits associated need to make that happen. Compare that to a 3,000-acre footprint if you’re going to do solar or a 5,000-acre footprint if you’re going to do wind. And you can understand that the best bet and the fastest option most proven is going to be leveraging natural gas to fill this demand.

Jeremy Knop: I think it’s super important to remember here, too, in terms of like in consumers reaching out wanting to buy gas, like if there is a first mover advantage in this, like we already have it, right? We already sold 1.2 Bcf a day on a 10-year basis to the two biggest utilities in this region, right? And so when you think about where all the demand for data centers is right now in the country, today, you have about 20 gigawatts of demand. 13 of that is in the Southeast market, right? So a tremendous amount. So when these utilities reach out and they say, we need long-term reliable gas from a stable producer like EQT is the first name on the list. That is why we are the only ones who have already done a deal like this and done it at a scale that I think dwarfs what most people could do because we’re the preferred supplier of gas.

And you have to have a lot of characteristics in your business to be able to be that preferred supplier part of it is scale, part of it is depth of inventory, its credit ratings. It’s having a really creative team that can work with utilities in buyers of gas to structure deals like this. So look, we think we’re really, really well-positioned to leverage what we’ve already done and accelerate that. And look, like we’ve already done. We’re taking molecules that anyone can produce and selling them at a premium. I mean, that’s the essence of what we’re doing. And I think we can do that and unlock sustainable demand in the process.

RogerRead: No argument for me. Thank you, gentlemen.

Operator: Your next question comes from Noel Parks with Tuohy Brothers. Please go ahead.

Noel Parks: Hi. I’ve got a couple of questions. Started on some of the same curve you’ve just been discussing. One of them was — well, maybe sort of a broader question. You guys have clearly done a lot of thinking about risk reward and LNG timing. And I just wondered if you had any thoughts sort of in hindsight on the Freeport LNG outage of a couple of years ago. As we have LNG taking up a greater percentage of the consumption, possibility of events like that seems to loan a little larger. I’m just wondering what your thoughts are on that, whether that’s something that’s best addressed through hedging or whether it’s just going to be another sort of potential volatility in the gas market.

Toby Rice: Yeah. I think the report outage is just an example of the uncertainties that exist in any market, natural gas not excluded. And the Ukraine war, who saw that happening in the positive catalyst that created on our market. I think how do we deal with these types of uncertainties. One is understand that these uncertainties will exist. And part of the way we handle that and position the business is to take a steady measured approach when we’re thinking about accessing new markets. I think — we certainly are the first ones to get excited. But when it comes to translating that to action, we are very strategic and very methodical on the steps that we’re taking to do that. And I think you look at these uncertainties, this volatility that we’re going to see in the natural gas market, we positioned our business at a very high level to be able to thrive in a volatile commodity price environment.