efficiency, lowering our cost structure, and enhancing the returns we generate for shareholders. This strong operational execution, along with robust well performance, is leading to significant production outperformance, which is evident in our second quarter volumes coming in well above the high end of our guidance. A significant portion of this outperformance is coming from our base production, reflecting better than expected results from our midstream compression projects, which are extending flat times on new wells and shallowing base declines on older wells. As a reminder, these projects were a key piece of the synergies we projected when we acquired Equitrans, and they continue to exceed even our upside forecasts. We expect strong performance to continue throughout the year, and as such, we are raising our 2026 production guidance by roughly 90 BCFE at the midpoint. Another important milestone this quarter was the receipt of FERC authorization to begin construction activities on MBP Southgate. With all key regulatory approvals now in hand, we have elected to pull forward capital spending and accelerate construction timing of MBP Southgate into 2026 to de-risk project execution. The project will provide critical infrastructure needed to connect low-cost Appalachian natural gas supply with one of the fastest-growing demand regions in the country. Bringing additional supply into the Carolinas will help utilities meet growing energy needs, support system reliability, and help keep energy costs affordable for consumers. MBP Southgate enhances the strategic value of EQT's integrated platform, expanding market access for Appalachian Natural Gas, while providing an attractive combination of long-term contracted cash flow visibility and compelling risk-adjusted returns. As a reminder, neither MBP Southgate nor the MBP Boost expansion were included in our Equitrans underwriting case. Alongside this performance we're seeing from our compression projects, these successes demonstrate how our vertically integrated platform and aligned teams continue to unlock value across both our upstream and midstream businesses and drive incremental returns for shareholders. Turning to Appalachian Fundamentals, momentum continues to build for power generation and pipeline projects throughout the region, with an opportunity set in front of EQT today that is significantly larger than it was even six months ago. As illustrated on slide 22 of our investor presentation, our analysis suggests there are over 45 Appalachian demand and pipeline takeaway projects under construction or in evaluation, totaling nearly 20 BCF a day of potential demand. The success of even a fraction of these projects is expected to lead to significant strengthening of in-basin supply demand fundamentals. This demand backdrop creates upstream growth optionality for EQT thanks to our low-cost, peer-leading inventory depth and strong balance sheet position. However, any future growth will be measured and directly tied to demand underpinned by our commercial agreements. We have no interest in growing for growth's sake, as that is a strategy that has historically resulted in poor returns and value destruction in this industry. Instead, our focus remains on growth with durable contractual demand in a manner that is accretive to corporate returns, expands free cash flow per share, and creates long-term shareholder value. Wrapping up, the broad takeaway is clear. EQT is delivering at a high level across every part of our business, stacking up wins operationally and strategically. We continue to drive operational excellence, execute commercial agreements that catalyze in-base and demand, and improve price realizations for years to come, and also advance infrastructure projects that connect our low-cost supply to premium markets. As Appalachia continues to emerge as one of the epicenters for secular power-driven natural gas demand growth in North America, EQT is uniquely positioned to capture an outsized share of this opportunity. With a differentiated integrated platform, industry-leading execution, and a growing portfolio of demand-driven projects, we have a clear path to creating durable, long-term value for our shareholders. With that, I'll turn the call over to Jeremy.

Thanks, Toby. The second quarter was another outstanding one for EQT. We again exceeded expectations across virtually every financial metric, including production, price realizations, operating costs, and capital spending. This resulted in $330 million of free cash flow attributable to EQT and Q2, despite natural gas prices averaging just $2.89 per MNBTU during the quarter, underscoring our advantaged position at the low end of the cost curve. Operational execution is leading to sustained production outperformance, and as a result, we are raising 2026 production guidance by approximately 90 BCFE, while also lowering full-year CAPEX by $25 million. As Toby mentioned, we have also decided to accelerate MVP Southgate construction timing and are thus pulling forward $85 million of capital contributions to equity method investments from 2027 into 2026. During the quarter, we continue to build momentum across our commercial platform. We recently signed a 10-year definitive agreement with Competitive Power Ventures to provide 325 million cubic feet per day of natural gas to a new 2-gigawatt power generation facility planned in Dodd Ridge County in the heart of West Virginia, which will pull gas south from EQT's core production base. This facility is expected to enter service in early 2031. Note this marks the second new combined cycle gas turbine project in West Virginia that EQT has helped catalyze following the Wolf Summit project we announced last year. Importantly, the CPV contract pricing is linked to PJM power pricing rather than a gas price index and represents EQT's second deal incorporating this structure. At the forward strip, we expect this agreement to provide EQT a material premium to local index pricing while also enhancing the project's ability to secure financing. This structure provides us direct exposure to strong PJM power pricing fundamentals without any capital commitment. This transaction is yet another example of how EQT is uniquely positioned to directly capture a material amount of demand growth in Appalachia and the associated pricing benefits. Our integrated platform, investment-grade ratings, commercial expertise, and reputation allow us to craft solutions that deliver superior value for customers while also improving returns for EQT shareholders. As power developers, data centers, and industrial customers look to secure gas supply, EQT is the clear partner of choice throughout the Appalachian region. We also announced the acquisition of Blackline Midstream for approximately $77 million. Blackline owns and operates two strategically located propane storage and distribution terminals in New England, representing the largest propane storage facility in the region with both rail and waterborne access. Collectively, the assets provide 46 million gallons of storage capacity, with EQT currently supplying approximately 60% of Blackline's propane volumes. This transaction is particularly attractive as it requires essentially no incremental capital investment while creating multiple opportunities for value creation. The assets provide physical optionality for EQT's propane production, improve flow assurance, enhance our ability to optimize pricing, and create additional commercial optionality through domestic and international supply channels. We also see opportunities to leverage our commercial relationships to drive growth and optimize costs over time. From a financial perspective, we project a 20% free cash flow yield under our base case underwriting. With upside optionality, that would roughly double this metric. Blackline is a natural fit within EQT's integrated platform, as the acquisition complements our existing upstream and midstream businesses, expands our commercial reach, and allows us to capture additional value from our existing production. Transactions like this demonstrate how our vertically integrated platform and strategic and commercial expertise can unlock unique value creation opportunities while enhancing the long-term earnings power of our business. Turning to our LNG portfolio, we recently executed a five-year offtake agreement with a large Asian integrated energy company for approximately half a million tons per annum of LNG sourced from various Gulf Coast LNG facilities beginning in 2028. This deal allows us to accelerate our LNG exposure and develop capabilities while reducing execution risk ahead of the planned commencement of our larger portfolio in 2030. Notably, the agreement was executed at a similar cost to our deals rather than current market economics. At recent strip pricing, we expect the contract will increase EQT's 2028 free cash flow by roughly $45 million. This deal demonstrates our steady progress in developing our LNG business and the relentless hustle of the team on the front lines as we develop important relationships around the world and improve EQT's access to premium markets. Turning to capital allocation, we are on the doorstep of achieving our long-term net debt target of $5 billion, a milestone that represents the culmination of years of commitment towards bulletproofing our balance sheet. During times of turbulence, our balance sheet will become a fortress and cash on hand, a strategic tool to fund aggressive share buybacks and long-term growth investments, even in low-price environments. To that end, in the near term, we intend to accumulate cash, which we plan to aggressively deploy into share buybacks during the industry's episodic down cycles. As we look ahead, we believe the next chapter of value creation at EQT will be driven by the combination of disciplined growth and capital returns, primarily through share buybacks. High return midstream investments provide visible cash flow growth today and connect our production to new demand, while future upstream growth is supported by both announced supply agreements and a growing number of new demand opportunities. When combined, the ability to repurchase meaningful amounts of stock along the way, we see a clear pathway to driving significant alpha due to the compounding nature of this strategy. And with that, we will now open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your headset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Josh Silverstein from UBS. Your line is open.

Thanks. Good morning, guys. Yep. Well, Jeremy, I wanted to start with just the last comments that you had made there. Clearly, the balance sheet continues to improve. The stock price has gone back towards a 52-week low. How much cash do you want on hand to take advantage of some of these periods of stock price weakness versus continuing to just kind of build cash? And what's the right level of cash for you guys to have on hand?

Yeah, good question. I think, look, we're going to be patient with it. We're not opposed to accumulating at certain points in the cycle up to a few billion dollars of cash. I think where the stock price is right now, I think we'd look to be more aggressive in the buybacks. But it just depends on what's going on in the market. And again, I think we'll be opportunistic and aggressive when we see those opportunities. But we certainly want to be counter-cyclical rather than pro-cyclical.

Got it. And then on the new LNG updates here, I want to see if you can provide a little bit more details on how you're implementing the the strategy and and the 2020 the 2028 offtake agreements here how are you sourcing the lng is the infrastructure in place and kind of capacity already lined up for this um yeah so the um for the new agreement specifically um we are we're able to pick the capacity up uh off a uh like we said in prepared remarks an integrated asian buyer that is um dealing with some tariff related issues.

So we worked with them to alleviate that really crafted a win win deal to where that is that is in the money for us today and adds meaningfully to our 2028 cash flow. Those are volumes that will be coming from two facilities that are nearing completion right now. So I would expect those that come online in early 2028 contractually it's January, but there's slippage in project timing, it could be a little bit delayed, But we have high confidence in that coming online during that year and contributing to uplift in realized pricing.

Your next question comes from Doug Leggett from Wolf. Your line is open. Please go ahead.

Thank you. Good morning, everybody. Jeremy, I wonder if I could, maybe this is for Toby, that the idea that you've laid out this extraordinary volume potential, obviously a lot of it's post-2030. But I'm curious, Toby, when you talk about you're only going to grow when you've got contractual agreements, I'm curious why, if these are premium priced deals in your backyard, why would you grow at all? Why wouldn't you reallocate existing volumes and get that premium price without having to incur the additional capital and ultimately the growth? That's my first question. yeah but you want to take your second question throw it out there yeah so it's a real quick one i just it was for jeremy really the compression is really is obviously having an impact on capital i'm just curious how much lower do you think how much better do you think your sustaining capital can become as a consequence of those compression projects and i said thank you yeah doug i think your first question i think hits on something that we spend a lot of time thinking about you know, the first step and our first focus is to get direct connections to this demand.

And I think we're putting a lot of, showing a lot of progress on that front. But the next question that we're going to have to ask ourselves is what part of that demand are we actually going to grow organically into? And as you mentioned, strengthening basis is going to be one of those considerations, and that's going to have an impact of lifting all EQT volumes, not just the volumes that would be exposed to growth. So our first focus is capture as many of these opportunities as we can, and then we'll step back and make that evaluation. But there will be a portion that we'll consider growing, but it would not be the full amount of demand.

Yeah. And Doug, just to add to that and then address your second question, we have a disproportionate amount of our gas sold into first a month today on a short-term basis. I think it's about 30% of our volumes are sold on more medium and longer-term contracts. So there certainly is the ability to reallocate. And effectively, what happens is less volumes that are sold into that first-a-month market drives a little more scarcity in that market. And if all else is equal, it would lift index pricing. Most of those longer-term deals being indexed to first-a-month, you get that price benefit. So there's certainly a flexibility around that. And I think the way you structure those and where you index it back to to liquid hubs is really critical to make sure that you are able to have the flexibility in supplying those volumes over the longer term. So it's something that we're very focused on. And look, I think if you look at that slide 22, which I'd encourage everybody to look at, is really kind of the culmination of a lot of the analysis we're doing and the opportunities we're tracking in Appalachia today. We don't have to grow into this one for one day You do see a bit of what almost looks like a hockey stick ramp around the end of this decade. A lot of that's really just due to the fact that it takes three to five years to build most of this large-scale infrastructure. We're not looking to add any sort of step change in production. If you see two BCF a day added in a given year, we might grow a fraction of that, and over time, we fill it. But if the market's a little tighter in the intermediate term, there's ample gaps. The market will balance. But I think to your point, I think we still benefit because we're in a price times volume business. On your second question around midstream and compression, I mean, look, candidly, we're working with our reservoir team and our finance team just trying to recalibrate how we forecast some of this stuff. I think our original expectations on the impact on well performance and type curves from lower pressures have been kind of blown away. we're trying to recalibrate our hydraulic models and just how we forecast type curves and base declines that could lead to further outperformance but it's something we're still in the middle of the process of right now but obviously you know we're seeing quarter after quarter these big beats that continue to surprise us too and i think that that if that trend continues which feels like it is that will lead to continued capital efficiency uh in the years ahead that's great thanks fellas appreciate it operator we have the next question yes your next question

comes from betty zhang from barclays your line is open please go ahead hi good morning um i have i want to start with a bigger picture question speaking to that slide 22 just given where this market is going we're seeing more industry pipeline projects um how how do you guys see these projects ultimately get supplied? And how do you think about the competitive tension to fill these incremental egress projects and how that's creating tension against the in-basin power projects? And related to ETT, your ability to be able to leverage better pricing in these supply agreements that you're talking to.

Yeah. Betty, I'd say when we look at slide 22, I'd say probably one of the bigger moves that has become a lot clearer over the past few months, as we referenced in our last quarterly update, was just the number of pipeline takeaway opportunities that are showing up largely in that Clarington area. You know, those are going to be large potential projects. They're going to require supply to be brought from M2 or basically our core production region to fill those projects. And that's going to give us an opportunity to build infrastructure. And with infrastructure, I think we have an edge in making sure that we supply those projects as well. So that's sort of the dynamics that's really exciting to see materialize. And I think EQT will be able to continue to play a role in creating win-win solutions for our customers while giving our shareholders access to some premiums in the meantime. And those will come in the form of midstream fees. As we do anticipate these large egress projects, the capacity will be taken from utilities downstream. Great.

Thank you. And, Jeremy, a question to you on the CTV contract being linked to power price. How do you think about the upside-downside risk around that contract structure?

And is there a floor price for EGT to protect you if there's any downside risk protection to that? yeah great question betty um so just to frame this and put it into perspective um this is a deal that um if just say hypothetically this contract came online for the full year of 2027 and just flowed at full capacity obviously there will be a lower lower utilization so you can make your assumptions there it would improve our free cash flow by about a hundred million dollars a year, improve corporate overall differentials by like $0.05. So it is a material contract. It's a material premium. And honestly, it is a true win-win for us and the developer. We can hedge it if we would like to. But if you look at the way electricity prices and gas prices in PJM specifically are correlated just due to where gas is in the dispatch, they are tightly correlated. And as is is the cost of building new generation continues to rise, I would expect that spark spread to widen is there needs to be more and more of a market signal long term for more generation to be built. So we actually think we're on the right side of the bet here, having that long exposure into power. And to some degree, it's almost like what you're seeing in the liquids markets today, where you have a lot more tightness in the refined products market as opposed to in the crude market specifically from what's going on in the Middle East, I think you're going to see a lot of the same dynamics in power where that power market gets tighter and tighter. It will trickle through to gas, but not on a one-for-one basis. So being able to, in a manner without putting any capital in, get direct exposure to the other side of the generator, I think is really interesting. And again, it's our second deal like that um i'd be open to you know doing more deals like that um but again i think it speaks to just the the structural um creativity and what our team is capable of um to provide solutions for all these types of projects and play a lot of different roles to make them come to fruition all right thank you your next question comes from aran jayaram from jp morgan securities your line is open please go ahead yeah good yeah good morning uh team uh i want to go back to the shea energy project toby and jeremy i wondered if you could just discuss um what what has given

eqt perhaps the right to win on this project um you mentioned the wolf summit um you know that infrastructure project maybe was enabler. And perhaps you could talk about timing here. You mentioned as early as 2031. What are some of the gating items for this project to achieve that startup time, including permit approvals, which has been some of the question from investors on some of these large data center or power projects in the basin?

Yeah. So in terms of competitive dynamics i mean i'd say we're probably i and we are close on other projects uh other projects also including west virginia um you know i think before the end of the year you'll probably see at least one more maybe maybe more uh potentially some very large ones too i think it's arun it's really what we've been saying for the past year um you know it's the power of the platform we put together and more than anything it's the quality of the team here at eqt um working in a really collaborative aligned way uh starting with you know our commercial team uh on our with our commodity traders out there structuring this stuff the depth of relationships the trust we have the balance sheet the integrated platform um we don't have to do the midstream we don't have to do certain pieces of this but we can understanding the whole the whole value chain i think adds a lot of value being comfortable doing things like we did on cpv shea uh pricing it linked to electricity not gas and showing that flexibility because it's best for the customer and really starting out with a mindset of what's best for the customer is what's going to win the deal and how do you create that win-win solution. I think when you put all those pieces together, we're just in a really unique spot and it's allowed us to continue building that momentum and that momentum builds more momentum, which is why we're in the position we are today. So again, I don't think we're done. I think there's a lot more to come.

Yeah, Arun, I just put some comments here. I mean, certainly have a mentality to help the customers and be creative. And we certainly have a number of capabilities from being an integrated producer. I'd also say, you know, we've got, you know, great support with the board. I mean, the governance on this, the ability to work through these issues, ask the questions that we need to be asked, allows us to stretch strategically and make, we think, a really high-quality decision. So, I mean, this organization is firing from top to bottom, and it's what it takes to produce these type of wins. And, you know, I think it's worth noting that, you know, EQT continues to put up these results, and we seem to be, you know, winning almost 100% of these deals that we're on. but it is a lot of work and we are really putting the customer first.

Yeah, Ruben, I think what's amazing too is, you know, we talked about, you know, feel like we have a new deal every quarter, it seems like lately to talk about. If you really rewind a couple of years back to the end of 2023, when we first announced those sales deals to some of the big utilities in the Southeast, those deals start to come online now at the end of next year and into 2028. Those deals alone are $300 million a year of uplift of value. At the time, and I'd argue today, we're still not getting credit for that. But we keep stacking up these deals, whether it's LNG deals or power deals or whatever it might be. And that value continues to build. From our perspective, EQT is really the only platform with that. And as that momentum grows, we're going to continue stacking that margin. At the same time, you have a macro backdrop you do, as we've talked about in prepared remarks, as we've illustrated on slide 22, which is a further tailwind. But again, it's focusing on what we control every day to differentiate EQT from the rest of the group and deliver the wins in a differentiated way. Got it.

A quick follow-up is I want to refer to slide seven. Kevin, you guys have highlighted your first half 26 till performance where you're beating your type curve by 8%. I was wondering if you could, Toby, may unpack what is going on. Are you drilling better rock? Is there different flowback procedures?

I was wondering if you could maybe help determine what is maybe driving this outperformance. yeah so the the the with the the till accelerations that we put in place really this just comes down to extending flat times and this is a byproduct of producing into uh optimal uh pressures on the gathering side so this is just another benefit from the compressions not just having impact on improving our base production it's also improving our our wedge performance which is the new tills that we're putting in so um you know it's one of the great things when when you know operationally these winds create other opportunities for us. I'd say some of the other things that we're looking at on compression that we haven't really wrapped our heads around, but as Jeremy mentioned, we're really digging into this. We also have a number of wells that could benefit from work overs that maybe not would have been a prize in a high pressure system, but now with the pressures lowered, those work overs make sense. I mean, all of these things are incremental and are just continue to strengthen the operational story that we have here at EQT. Great.

Your next question comes from Neil Mehta from Goldman Sachs. Your line is open. Please go ahead.

Yeah, good morning, Toby and Jeremy. Thanks for all the updates here. Just one, your perspective on the hedging strategy here. Saw you layered in a little bit more. And, you know, how are you thinking about, yeah, the optionality of running a little bit more on hedge? How are you thinking about being opportunistic around your hedging strategy?

Yeah, it's a good question. I mean, look, I think, candidly, we're seeing some of the same very near-term risks that others are seeing around Permian growth potential and some of the super El Nino weather patterns. I think for us, it's more of just ensuring, as we look into next year, the balance sheet's in a strong position. We are intending to start buying back quite a bit of stock. We want to make sure if there is a down cycle, there's nothing that holds us back from leaning in pretty aggressively and deploying a lot of cash into that. If that does happen, our hedging has been focused specifically on next summer where we would expect more of the weakness to show up. Making sure that through a cycle like that, if there is temporary weakness, that we can be aggressive and on offense. As you look into late 2027 and beyond, though, like we really see this inflecting again. this feels to us like potentially a very short-term soft spot. But I think the structural case for gas as you get into 2028 and 2029 with what's going on in power and LNG and production beyond this near-term potential bump from the Permian looks lackluster, increasingly lackluster to us. When you look at the Haynesville and some of the rest of these plays, we see a really strong macro backdrop And frankly, we want to be aggressive, trying to buy a lot of stock ahead of it. So that's kind of how we're thinking about the hedging strategy. I don't know if you'll see us add a bunch more at pricing levels around where the strip is right now. We don't think there's a lot more downside to come. But we're really just trying to put this in place so we can be aggressive.

Yeah, that makes a lot of sense. And then maybe the follow-up is just on M2. We've seen local pricing in Appalachia strengthen here in part because of in-basin demand. Can you talk about your conviction around that story and how are you seeing some of the moving pieces through the curve?

Yeah, I mean, it's been a story we've talked about for years, and I think the market's, you know, much more aware of it now. You know, all this demand we're talking about as we get, you know, later into this decade, I just don't think even if some of this doesn't happen and things get off track for some reason, I don't see a way for basis not to continue to strengthen materially. So, again, I think we're in a perfect position to benefit from a lot of that. And again, as we think about a potential strategy to start adding mid-single-digit type of growth at some point between now and the end of the decade, I think that's going to be a market that can absorb multiples of anything we could add. So our top line is price and volume. We can modestly add volume. I think we'll benefit from price all the same. And that's going to drive a lot of improvement in the bottom line as we're buying stock back at the same time. So we think it's a recipe for a lot of success. Thanks, Jeremy.

Your next question comes from Philip Youngworth of BMO. Your line is open. Please go ahead.

Coming back to the Appalachian Growth Wave slide, I know this is unrisked, but is there a good way to think about just risking of projects? I mean, you do list a lot of the parties behind these, but I guess what do you see as the biggest challenges to this demand materializing? And then also from EQTC, what are the things that you typically look for when deciding who to partner with on some of these?

Yeah, Phil, good question. I know you and I have spent some time in the last couple months talking about this, and I think you've done some good work on this as well. What we've done is we've tried to take a very intentional approach in listing all these out, having direct dialogue with most of these customers, and understanding what exactly their needs are and what their obstacles are to getting these projects to FID and finance and coming up with solutions to help alleviate some of those roadblocks. When we have gone through this internally and assigned probabilities across the spectrum for each project, we come up with a high single digit BCF a day of growth. So call it 40-ish percent of the total potential here, we think is probably realistic, as we alluded to in our conference call last quarter. You know, as we think about what does it take and where to focus to increase those odds, we see our role is taking what is in that navy color, that hockey stick wedge, and trying to understand where can we use the tools available, whether it's midstream or is it volumetric? Is it something else working with the downstream customers on gas supply or whatever it might be to use EQT platform and help actually improve the odds of success for these projects? So really just trying to be that partner of choice and work with them so they're a win-win solutions just like we've done with CPV. I think the reputation we've built by doing that makes more people want to work with EQT. And we've also attracted a lot of talent here that further enables our odds to be the best service provider available. And that's, I think, why you keep seeing us stack these wins up.

Okay, great. And then on the supply side, is there an upper limit on what you think Appalachia production can grow in any given year, just given inventory depth and also just logistics around gathering water? Just because the top operators are talking about growth, but it still probably sums up to less than a B if you add it all up. So just wondering if you've looked at all at an upper limit on what this could be, assuming demand growth materializes in the outer years.

Yeah, I think we're confident in Appalachia's ability to meet these volumes, but what I do think you're going to see price sensitivity from operators. While you hear some of the larger operators talking about their ability to grow, those operators typically have inventory to support that growth. That's not the case for a number of the other operators here in Appalachia. And I think they're going to be sensitive on price and a little bit more disciplined before they think about growing. I mean, the molecules are going to show up, but price will be a determination.

Yeah, I would add to that, you know, when we go with the data we have, land data and understanding inventory depth of peers, when you look at the peers who have inventory versus who don't, specifically in southwest Appalachia where most of this demand is showing up, We think about a third of the basin's total supply will be challenged to hold flat, actually, by the time you get towards the end of this decade. And so if you have, like, the Ohio Utica, you have some producers in, like, the panhandle of West Virginia area, and, you know, I think up in Northeast PA, you know, struggle to hold flat while you have demand showing up. I think you get to this inflection point, what we keep referring to as a paradigm shift that happens towards the end of this decade, where the demand in these long-term infrastructure projects come online, they will pull gas right at the time where I think you have operators like EQT who can meet the moment and grow into that. I think other operators that are going to struggle. So I think to your point, the ability to grow year over year and meet this, I think you're going to have to see pricing that provides a further incentive to go into zones that are less economic so certain operators can still have the economic justification to drill. But if you're EQT and we actually see our cost structure falling in time, not holding flat, not rising, but falling, I think you're going to see significant margin enhancement from that as the marginal producers push pricing up while our pricing falls and we grow volume into that. And that's how you create outsized value in the alpha we refer to in prepared remarks.

Your next question comes from Neil Dingman from William Blair. Your line is open. Please go ahead.

Good morning, guys. Thanks for the time. Toby, maybe for you or Jeremy, just a question on the power side also. I'm just wondering specifically, given your obvious leading integrated gas company status, and when you look at these future contracts that you've been discussing, is there potential for these contracts to maybe structure whereby you all would think about participating in some of the future data center upside? I'm just wondering more on the contract structures going forward.

Yeah, Neil, that would be a little bit of a jump to go from a spark spread to, I guess, token spread. It is a concept that we've thought about. I don't see the market opportunity right now. But, yeah, I mean, it is pretty insane to see the margins that are being created off of megawatt of power on the token side of things. But those aren't opportunities that are available on the market right now. But we'll keep an eye on that. Perfect.

And then just quickly, maybe could you all talk about what's your current reinvestment rate? Seems like it's now incredibly low. And given that, how low it is, does that imply, you know, would you all think now you have even more potential for M&A given how low your reinvestment rate is?

I mean, look, I think, I mean, it's been two, I mean, call it two years since we did any sort of big M&A. I think our focus right now is on what we feel like is a stock price that's somewhat dislocated, certainly for the quality of the business we've built. I think that is that is our M&A target right now. So, you know, buybacks are going to be a big part of our M&A strategy, if you want to think about it like that. You know, buying back the best company available in the market every day. That makes sense. Thanks, Jeremy.

Your next question comes from Sam Margolin from Wells Fargo.

Hey, good morning. Thanks for taking the question. Why don't I talk a little bit about MVP Southgate in Appalachia and then the southeast just from delivery point to this market? Does it basically what you'll see in Appalachia just a little bit extended or does it actually could it develop kind of a unique? What else but you seems to be?

Yeah, I mean, good question. I mean, we do see that zone five market is actually one of the most lucrative in probably, you know, all the continental U.S. because you have the demand pull south from LNG down Transco, which is pulling gas out of that market. Well, at the same time, you have the dynamics you just described locally in that market. So you really have the dual benefits.

That is why we are so attracted to it and why we're, you know, we're building Southgate to get more gas into the Carolinas, to Duke, into PS&C. um so yeah i mean i think long term it's a it's a tremendous market to have access to and i think we're one of the only producers that do at this point yeah and i would add um just given these dynamics that we're seeing you know we've announced to accelerate southgate uh we're not seeing any benefits of that right now but the commercial teams are out there working to pair up the accelerated construction and service date of our project with the uh commercial terms so maybe we'll some progress on that in the future.

That makes sense. And then, yeah, I mean, just this came up in the call. It's another last quarter, you know, maybe a little bit of an evolution in the outlook for the LNG market, where at one point there was obviously a lot of concern for a multi-year glut. And now just given geopolitical conditions, that's touch on LNG market in terms of either the shape of it or, you know, last quarter.

Yeah, I'd say what's changed over the last three months. I mean, certainly our view coming into this pre-Iran war was that 28, 29 was going to be a little bit oversupplied. I think that's gone away with Iran. That's been that that's now not going to be the situation. I think in the last three months, people were anticipating when the recovery was going to take place and when that that energy capacity was going to be restored. I think with the current conflict extending, that's just delaying the recovery, which is deepening the the hole in supply. I mean, right now you've got Europe sitting at storage levels north of 10 percent below year over year where they where they were. And it's starting to hit. I mean, you see spot prices internationally north of seventeen dollars. I mean, there's a there's a very large spread forming when we look at 28 on pricing. I mean, pre pre Iran to where we're at today, we've seen the Henry of ETF spread, you know, lift over two dollars. And it's another reason why, you know, this LNG deal that we just signed up coming in the market in 2028 is so attractive to us.

Your next question comes from Gabe Dowd from Truist. Your line is open. Please go ahead.

Thanks. Hey, morning, everyone. Maybe just going back to the West Virginia comments around maybe signing a couple more deals by your end. One of the bigger campuses there, maybe 60 miles west, is the Monarch campus. I was just curious, is your understanding that that camp is still on track for two gigawatts operational next year? And has construction started on that prosperity gas line?

Yeah, I mean, we're in discussions with them. Probably no surprise. You know, there's a lot of work to be done on that campus, but I think progress continues to be made. But I leave it up to the projects to give the specific updates. I mean, we're, again, more focused on the gas supply portion of it. But we don't see any obstacle to EQT being at least one of the gas suppliers for a site like that. And then, again, there's others that I think we're very close on down there in West Virginia and in southwest Pennsylvania. And we'll give updates as those get definitive documents signed.

Okay. Okay, cool. Thanks, Jeremy. Maybe just a quick follow-up would be some more comments around the Blackline midstream acquisition, maybe strategically. Could you just talk about how that maybe makes sense for you guys? I know you highlighted it in the prepared remarks, but curious if there's anything else that you could speak to.

Yeah, I would think about it kind of like Equitrans in a way. We're their largest customer, and we saw it as a way to effectively buy that contract in at a really attractive rate and then through the integrated platform squeeze even more value out of it. But the guy who ran Blackline is actually a former EQT employee from our NGL team in our trading business. So we have a lot of great relationships there already. Happy to welcome him back. And we see it as an opportunity where when you get an asset like that and then you give them access to, you know, investment-grade support, the relationships we have, the volume we have, the capital we have to support them and going from being capital constrained to really being able to think outside the box and how they optimize the facility like that. There's a lot of value that's created and that's exactly what we've done with Equitrans. And I think we see similar opportunities with this platform. It's obviously a lot smaller, but again, I think it shows what you're able to do with a platform like eqts where you just keep um building through adjacent adjacencies um as they become poor competencies and generate a lot of value in the process awesome awesome thanks and actually a quick follow-up the uh southgate did toby did you say you're working on accelerating in service date to 27 is that is that what i heard thanks guys yeah construction should be in should be available by the end of this year and and the question is going to be when can we start the commercial arrangements on that project.

So those are the conversations we're having right now is taking advantage of the acceleration of construction. And this obviously would all be upside for our 27 plans.

Your next question comes from James West from Melius Research. Your line is open. Please go ahead.

Hey, thanks. Good morning, guys. Obviously, the momentum in the business is extremely solid on the, you know, the base business, but your strategic momentum continues despite that. I'm curious, when we think about both midstream pulling the accelerating the timeline here, we think about the storage acquisition, you know, how are you guys thinking about balancing, you know, capital allocation to that? And then secondarily, if you could touch on kind of what are the additional opportunities to one pull forward on maybe the midstream and then to other M&A, smaller M&A tuck in opportunities like Blackline that are out there?

Yeah, great question. You know, we, I feel like our journey in driving growth of EQT, really growing free cash flow per share. We've really been handicapped by the fact that we've just been so relentlessly focusing on paying down our debt. And that's prevented us from using a tool, buybacks, to help drive free cash flow per share. Having such strong strategic momentum, I think, gives us even more excitement about ramping into buybacks. And so that certainly is going to be something that's more top of mind for us and allow us to continue this great momentum that we have in driving free cash flow per share as it relates to the sort of organic opportunities that we're capturing right now i mean these are all high quality projects um you know they provide pretty healthy uh free cash flow yields and so those are sort of an all-you-can-e opportunity for us um and when we think about those relative to doing buybacks i think we can look at our our stock as you know what what's the free cash flow yield embedded but just like we showed with with black line, you know, and these, these types of opportunities can, can present some, uh, healthier free cashflow yields. Um, but I mean, it's, it's, we want to get as many of these as we can. And with high quality opportunities, we'll have the ability to finance these in the most, uh, creative manner possible for the business.

Yeah. I'd also add to that. I mean, we, we look at a ton of stuff out there and we kind of, I mean, power LNG, I mean, gas storage, I mean, in this case, propane storage. We always try to ask ourselves the question of would we rather own or would we rather rent? Would we rather buy or would we rather be a customer? You know, we look at LNG, we see the returns in the high single digits, right? Like the exposure we want to get is the offtake in international exposure. Power, kind of same dynamic, right? It's so well capitalized. It doesn't need our capital. But we can do things to still get that exposure, like the contracts we have with Hilltop and now CPV Shea. where we are getting that exposure to spark spreads widening without putting capital. Blackline was a deal where we said the returns are so strong and it's smaller. Let's buy this, let's own it, and let's do what we did with Equitrans all over again. We look at everything through that lens and we get a lot of reps in doing it. And the more kind of muscle memory you build, seeing everything in the market, the better the decisions you can make. Our goal though is to reduce our capital base while improving our profitability to drive our return on capital higher. So again, like the beauty of being a public company and having the stock for sale every day and candidly having the stock for sale, not reflecting the platform value or any of these sort of value unlocks on the horizon for all the deals we've signed is we get to buy that back effectively for free ahead of time. And so we don't have to put the capital in. We can get the benefit and use the capital for buybacks. And that, I think, in the long term is going to drive much, much better sure price performance. That's great. Thanks, guys.

Your next question comes from Bob Brackett with Bernstein Research. Your line is open. Please go ahead.

Good morning. I'm intrigued by the record laterals. And I'm wondering, is there a limit to growth there where effectively the stage length gets too long? You're not fracking effectively or maybe there's an operational limit. What are you thinking of super long term?

Yeah, so sort of the way we define these records really just showcase what's possible. We always need to have this question, is this going to be best to roll out across the organization? You know, 30,000 foot laterals, the team has shown that it's proven to do that. I think what you're going to see at EQT is we're probably going to increase our normal lateral lengths to north of 15,000 feet, maybe targeting that 17,500. But again, there's other considerations that we're taking into place. I mean, the ultimate question in our development plan, while longer is better, we are looking to maximize the recovery from every acre. And so we do have some confines from an acreage perspective that we're working in. So it's not a complete blank slate, but the team, what's really exciting to see is the teams continue to push the technical limits. And that gives us a lot of optionality to access reserves that we may not have been able to access from site locations. but those are very small you know the benefits of having a large contiguous exposition that eqt has is um you know we we have eliminated a lot of constraints um but we will continue to look for ways to optimize operationally thanks your next question comes from jacob roberts from tph and company your line is open please go ahead good morning jeremy um starting on the good morning Starting on the CPV deal, I know you guys have done two of these now PJM netback type deals,

but I'm curious as you think about managing spark spread risk over these long-term contracts, is there a desire to have a mixed portfolio of perhaps fixed premium deals alongside these?

Yeah. I mean, we look at it like a portfolio. I mean, the beauty of the electricity-linked pricing is you do have, instead of gas, where you have your peak demand period in the winter And in power markets, you have it the summer and the winter. And so you do get that uplift, which should improve our seasonal pricing. And just like I said earlier, due to the correlation of gas and power in PJM, which is where gas sits in the generation stack, we think we're in a favorable position to probably leave this exposure open right now and just have further diversification. We can hedge it financially if we want to. But I think right now our bias is to keep it open. And if there's opportunities to duplicate this a couple times, if that's what is best for the customer, we're open-minded about doing that as well.

Okay, thank you. And, Toby, earlier you mentioned that some of the strategic growth on the compression side investments that you've made are beneficial, of course, to base the clients, but also new well volumes. And this might not be the right way to think about it, but when we're considering that strategic growth capital for this year, what is the timeline in terms of, like, new wells or wedge volumes that this year's spend could theoretically handle or fit before you need to start thinking about, you know, adding to that compression spend going forward?

So I'm not sure I totally understand the question.

Yeah, well, I'm trying to get at the strategic. Sure. The compression investments that you guys have made, I think you spoke to the fact that's boosting what we're seeing on these well results in terms of the new well volumes as part of – as you proceed to the till program for a year. And so I'm just wondering what the – to continue that trend, is there continued compression investment spend that we need to see as you drill two years out? And then maybe as a secondary, if that question doesn't make any sense, is how does this translate to a lower maintenance capital going forward?

Sure. Thanks for rephrasing that. I understand. Yeah, so for our compression program right now, we've identified, we've evaluated all the wells in the portfolio. Over 99% of our wells have evaluated the potential for compression projects, of which we have six compression projects going this year. We've identified probably another 30. Those are different size and scopes for those. But on average, over the next few years, we're going to be deploying compression on well bores that would have production of about half a BCF a day each year. And so we'll space that out over time. And the timing is really going to come to the vintage of the wells and the timing of when these wells will actually benefit from compression and make space for new wells that are coming in. So we've got a pretty integrated approach. you know, that we're looking at, you know, through 2029 right now. And so hopefully we can continue to promote this capital efficiency gains that we're seeing. And as we mentioned before, you know, the returns that we're expecting on compression, this is one of the best bang for the buck opportunities that we can spend. And that was before we've sort of surprised ourselves to the upside with the impact that we're seeing from compression.

All right. Thanks a lot. Sorry for the rough question. Appreciate the time as always.

All right. Thanks. Your next question comes from Kevin McCurdy with Pickering Energy Partners. Your line is open. Please go ahead.

Hey, I appreciate you taking my question. I just wanted to come back to slide 22, which is obviously a popular slide here. That wedge in late 2029 looks massive. At your 40% risk case, how early would you expect prices to react to this increased demand? And obviously, it's not really showing up in the future markets yet, but maybe you guys have a rule of thumb on when the market starts to price that?

Yeah, it's something we've talked about with our traders quite a bit. I think what we see on the ground, because we're in all these discussions, both with downstream customers, the midstream customers, players like CPV, I think we have a lens into it that others don't, which is why we wanted to put this together. In our view, you'll see a wide divergence across a lot of basis points in Appalachia and Appalachia relative to other points. I think in the next year or so, I think that this will become more and more real as I think what we see behind the scenes starts becoming more public and you see where those demand sinks show up. But I think it's one of those things where we talk about it, commodity markets not reflecting it. The equity market's not reflecting it. Stock's still trading with probably a mid $3 gas price implied. I mean, it's one of those things that we're moving to take advantage of. We're going to execute on one way or the other. And if the market's slow to react, I think you just see a more visceral reaction when it becomes obvious.

Great. And any key projects we should watch specifically for that 29 to 30 kind of demand wedge?

Yeah, I think the big ones that we're focused on right now are the big projects out of Clarington in the Ohio market that we've talked about for a couple quarters now. I mean, that's ground zero in our mind, where I think a lot of this gas is going to leave the basin. We're focused on making sure we get EQT gas to that point, to the receipt point on those pipelines, where all that gas needs to be delivered to, and work with the end customers, both on our own projects and other companies' projects, being a great partner to them to help get their projects done benefits them, benefits EQT, benefits the end customer. And it's really a win-win for everybody. I think you could see some movement on that before the end of the year, but you're talking about multiple BCF a day of additional demand if some of that comes to fruition. And these are all projects. I mean, you hear Borealis, you hear the Ports facility in Ohio. I think there's a lot of legs to these. And I think the developers are making good progress to turn those into reality. So So stay tuned and, you know, we'll do our part to try to make them all successful.

Great answer.

We have reached the end of the Q&A session. I'll now pass the call back to Toby Rice for closing remarks.

Thank you, Operator. It was another fantastic quarter for EQT. I just want to thank our shareholders for your support and really thank the crew for all the great work that they're doing and putting these numbers up. And we're certainly excited about the path forward and we'll look forward to updating you guys on what looks to be a pretty bright future in front of us. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.