Conference Transcript - EQT 2026-04-22

Operator

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to EQT Q1 2026 quarterly results conference call. All lines have been placed on mute to prevent any backward noise. After the speaker's remarks, there will be a question and answer session. We request for today's session that you please limit to one question only and one follow-up. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Cameron Horwitz, Managing Director, Investor Relations and Strategy. You may begin.

Cameron Horwitz, Head of Investor Relations

Good morning, and thank you for joining our first quarter of the 2026 Earnings Results Conference Call. With me today are Toby Rice, President and Chief Executive Officer, and Jeremy Canote, Chief Financial Officer. In a moment, Toby and Jeremy will present their prepared remarks with a question and answer session to follow. An updated investor presentation has been posted to the investor relations portion of our website, and we will reference certain slides during today's discussion. A replay of today's call will be available on our website beginning this evening. I'd like to remind you that today's call may contain forward-looking statements. Actual results and future events could materially differ from these forward-looking statements because of factors described in yesterday's earnings release, in our investor presentation, the risk factors section of our most recent Form 10-K, and in subsequent filings we make with the SEC. We do not undertake any duty to update any forward-looking statements. Today's call also contains certain non-GAAP financial measures. Please refer to our most recent earnings release and investor presentation for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Toby.

Toby Rice, CEO

Thanks, Cam, and good morning, everyone. Our historic first quarter results are tangible proof of the differentiated value of EQT's platform. We generated more than 1.8 billion dollars of free cash flow in the first quarter, another record high for EQT. To put this into perspective, in just 90 days, we generated roughly as much free cash flow as we did during the entirety of 2022, a year when gas prices were over $6. This is a powerful illustration of how we've strategically transformed EQT over the past several years. Our vertical integration through the Equitrans acquisition and our low-cost operating model have fundamentally enhanced the earnings power of this company. That transformation has enabled us to enter this high-priced environment, largely unhedged, capturing the full upside of market volatility and accelerating our deleveraging plans. With leverage now below one-times net debt to EBITDA and our long-term $5 billion net debt target within reach by year-end, EQT has entered a new chapter, one defined by financial strength, durable free cash flow generation, and sustainable growth. Our operational performance remains the bedrock of our financial results. Despite the challenging weather conditions presented by Winter Storm Fern, our teams coordinated seamlessly to achieve production uptime that outperformed our peers by a factor of more than two times. Even with some minor volume impacts from the storm, production for the quarter came in above the high end of our guidance range. This is a testament to the strong underlying productivity of our asset base, the durability of our infrastructure, and the outstanding coordination across our upstream, midstream, and marketing teams to ensure our customers had access to reliable energy when they needed it most. Shifting to the macro environment, recent geopolitical developments once again highlight the strategic importance of U.S. natural gas and energy independence. Recent events in the Middle East have triggered the second global energy shock of this decade. Supply disruptions across the region have pushed global natural gas prices sharply higher. In fact, European natural gas prices nearly doubled following the disruption of Qatari LNG supply in the closure of the Strait of Hormuz. These developments underscore a clear reality. Global energy markets remain highly vulnerable to geopolitical risk. While these challenges are significant, they also reinforce the critical role of American energy and positioned producers like EQT to help meet the world's growing need for reliable supply. And yet, despite this global volatility, U.S. natural gas prices have remained stable, continuing to provide affordable energy for American consumers. This divergence highlights one of the most important advantages of U.S. natural gas, energy security and affordability. While global markets are experiencing sharp price increases, American citizens and businesses continue to benefit from low-cost domestic supply thanks to the shale revolution. In fact, in energy-equivalent terms, the price of U.S. natural gas today is equal to $16 per barrel of oil, even with record U.S. LNG exports and data center-driven domestic power demand growth. Recent events also reinforce another key takeaway. Energy reliability matters. global buyers are increasingly prioritizing secure and dependable sources of supply and the united states has emerged as the most reliable energy supplier in the world this reliability is becoming increasingly valuable to global customers and eqt is positioned to benefit from this dynamic our lng contracts position us to be a supplier of choice internationally providing secure supply to global buyers who increasingly value reliability and energy security, while at the same time providing attractive international market exposure for our investors. In fact, if our LNG portfolio was fully online today, with current PTF and JKM spreads to Henry Hub, our projected 2026 free cash flow would be approximately $6 billion. Positioning the company to materially enhance our free cash flow generation with only 15% of our volumes is a powerful illustration of the value our LNG portfolio could unlock. As global markets continue to prioritize dependable supply, we believe EQT is well positioned to capture demand growth, improve our price realizations, and further enhance the durability of our free cash flow generation. This geopolitical landscape reinforces what we've believed for a long time. Low-cost, reliable U.S. natural gas is essential for both American consumers and global energy security, and EQT is uniquely positioned at the center of that opportunity. I'll now turn the call over to Jeremy.

Jeremy Knop, CFO

Thanks, Toby. As Toby mentioned, the company delivered a record first quarter without performance across the board. We delivered sales volumes above the high end of guidance into peak winter pricing, while our cash operating expenses and capital costs came in below the low end of guidance due to improved efficiencies. All told, we generated more than $1.8 billion of free cash flow before the effects of $475 million of working capital inflows. As promised, we allocated post-dividend free cash flow to strengthening our balance sheet and retired more than $1.7 billion of senior notes during the quarter. We exited the quarter with net debt of just under $5.7 billion. This accelerated deleveraging has already been recognized by the credit rating agencies, with Fitch upgrading EQT to BBB during the quarter. This milestone further strengthens our brand while mitigating financial risk as we expand our gas sales portfolio. This rapid deleveraging also enhances our capital allocation flexibility. We are well positioned to continue investing in high-return growth projects, build on our track record of base dividend growth, and accumulate cash to aggressively repurchase our shares during times of market weakness. Turning to hedging, the benefits of our opportunistic strategy were on display as we captured nearly 100% of the surge in natural gas prices in the first quarter due to the attractive ceilings on the collars we put in place during periods of price strength in December. As prices have moderated into the spring, we are realizing the benefits with our balance-of-year hedge book in the money by $180 million. Turning to fundamentals, the global market has tightened meaningfully due to the conflict in the Middle East. Lasting damage to key LNG infrastructure has reduced near-term supply and delayed the timing of Qatar's large-scale expansions. At the same time, Europe is exiting winter with natural gas storage levels at the lowest level since 2022. U.S. LNG exports should be a primary beneficiary in this environment. In the near term, we expect LNG operators will defer maintenance to capture favorable margins, boosting export demand. In the medium term, the risk of an LNG glut in volumes backing up into the U.S. market is effectively gone. This environment also serves as a good case study for our thesis of the asymmetric upside exposure to global natural gas prices that EQT will have through our LNG portfolio. While our LNG contracts are forecasted to generate $500 million in annual free cash flow uplift when they begin in 2030 at the current strip, a repeat of the 2026 level volatility could drive that figure to $2.5 billion. This underscores the significant upside optionality for producers that can access the global markets. Shifting to the U.S., momentum in natural gas-fired power growth is accelerating beyond prior expectations. Recent announcements in our own discussions suggest upside to our base case power demand growth forecast of 6 BCF per day, with our initial bull case of 10 BCF per day looking more like the new base case. This view is informed by the swelling opportunity set in Appalachia, with a notable pickup in large-scale power, midstream, and data center projects where EQT is positioned as the preferred partner. This backdrop is increasing our confidence in the view that demand-pull projects will further improve Appalachian fundamentals through the end of the decade and create substantial high-return upstream and midstream growth optionality for EQT. Turning to the second quarter guidance, after surging production volumes into peak order pricing in Q1, We began tactically curtailing volumes this month to optimize price realizations during shoulder season and have embedded 10 to 15 BCF of curtailments into our second quarter production guidance. Our strategic curtailments act as a form of storage, keeping gas in the ground during seasonally low periods of demand and surging volumes above baseline when demand rebounds. This approach allows us to leverage the flexibility of our integrated asset base to maximize value in both peak and trough demand seasons from a capex standpoint the second quarter represents our peak capital investment period of the year driven by the timing of growth investments we expect to see meaningful declines in capital spending into the third and fourth quarters which should further support free cash flow generation in the back half of the year in closing this quarter is a tangible demonstration of the value creation possible through EQT's platform. With an integrated operating model, a peer-leading cost structure and a fortress balance sheet, the transformation of EQT is now complete. Our teams are now busy positioning the business to capture robust and sustainable growth opportunities, which should lock in the next leg of differentiated value creation for shareholders. And with that, we will

Operator

now open the line for questions. At this time, I would like to remind everyone, in order to ask a question press star then the number one on your telephone keypad we do request for today's session that you please limit to one question only and one follow-up we will pause for just a moment to compile the q a roster your first question comes from the line of dog the date with wolf

Doug Leggate, Analyst — Wolfe Research

research please go ahead uh good morning guys thanks for uh for having me on um i got one macro and one EQT transformation question just to pick up on Jeremy's comments there. Toby, I'm always interested in your macro view. Sadly, it seems that with LNG full, the US is back to an incremental cost of supply market, aka the Permian. The punchline is it seems that gas really hasn't benefited from all the resets that we've seen in terms of domestic demand. So my question is, what can you do to improve your realizations? And more specifically, can you accelerate your access to LNG on international markets, given your current plan is post 2030? That's my first one. My second one is specifically for Jeremy. The balance sheet you've talked about often, Jeremy, you've talked about the transformation is complete. So when given your inventory depth, why are buybacks the right answer for opportunistic cash flow versus offering EQT as a competitive dividend stock?

Toby Rice, CEO

Yeah, Doug, appreciate the questions. I'll tackle the first set. So when it comes to getting better realized pricing, I think there's a couple things we think about. One, attracting demand to our backyard, I think is going to be really important. That will have the impact of strengthening basis, which will benefit our business. We're really excited about the progress that we're seeing. I think you look at the slides we put out on data center demand, there's a lot of activity happening in our backyard. As it relates to LNG, you know, I think this quarter and what's happening right now around the world just really shows why the strategy that we took to position the company to get exposure to LNG, why it matters, because we see the same dynamic that you're seeing. We see prices around the world rising, and we're not seeing that benefit in the U.S. The only way to solve that is to get exposure to international pricing. So, you know, for us, We're proud of the decisions we've made. We're excited to start trading with LNG in the 2030 timeframe. As far as accelerating that today, we were actually talking about that this morning, but I think getting more exposure to that sooner, you're already taking into account the spreads and you're paying for that. So it's not much of an opportunity in the short term, but we're excited about how we position the company in the long term.

Jeremy Knop, CFO

Doug, on the second part of your question, look, our base dividend has been and will continue to be a key part of our capital allocation strategy. That is something we intend to grow annually for the foreseeable future. But, you know, when we step back and think about what creates the most value in the long term for shareholders and what compounds capital, it's not necessarily the dividend. You know, we see the most value upside certainly on an after-tax basis for shareholders being more so in buybacks, but also bringing back top line growth to the business. And in a capital intensive business, we need capital to be able to invest and do that. And so what you're seeing us do this year through our midstream growth projects, I think we continue to search for opportunities. And I think we're really finding some phenomenal ones right now. We plan to lean into those in the years ahead. And then I think at some point too, there will be an element of upstream growth that I think we bring back as the low cost producer, some sort of mid to low single-digit level of production growth. But we need to see that sustainable structural demand show up first. And that's what we're working through our midstream strategy to help enable and create and tie into. And I think when you have a growing top line in a business, both hopefully with price structurally over time, but also with production growth, that creates an ideal situation to be buying back the stock along the way and creating outsized returns over the long run.

Doug Leggate, Analyst — Wolfe Research

So far, guys. Well, thanks very much for taking my questions.

Operator

Thanks, Doug. Next question. Your next question comes from the line of delay. I come in with Bank of America. Please go ahead. Good morning, guys. Thanks for taking my question.

Jeremy Knop, CFO

My first question is on data centers. So, more and more projects are getting shovel ready. They need gas. You're having supply conversations. How would you guys frame up the near-term opportunity set in terms of scale and also curious the terms that are evolving beyond the

Toby Rice, CEO

NX plus fields that we've seen so far? Yeah, so a lot of opportunities in our backyard, as we mentioned on the call on the prepared remarks. You know, when we look high level, just what's happening in Basin, there's been some big announcements, you know, in Pennsylvania, Ohio, West Virginia, Pennsylvania, Nextera has come out and said that they're going going to look at putting 10 gigawatts. We've got that big facility in Ohio that just got announced at Portsmouth. That's over nine gigawatts. And then West Virginia has come out recently with their 50 by 50 plans, installing 50 gigawatts by 2050 in West Virginia. So these are big plans that are being put out in this area. So we're really excited about how Appalachia has positioned to be the home for a lot of these projects. And then for us, what that translates to EQT specifically, you know, we've got a robust pipeline of these opportunities that are currently being negotiated. I mean, we're looking at multiple BCF a day of supply opportunities. And other opportunities range from gathering to gas supply. The gas supply opportunity, I think it's important for people to know, you know, we are focusing these opportunities around our asset base. So that should set the table for some pretty good returns. I will also being able to offer low cost of service to these customers because we're leveraging our existing asset base. So I think a lot of opportunities in the air right now, I think that they're going to start landing in the second half of this year. And it's a really great setup, and we're excited about how we're positioned.

Jeremy Knop, CFO

Yeah, Clay, I think to put some more numbers to that too, if you look at the projects we've announced so far between our midstream projects and the other data center projects, you're, depending on utilization levels, call it two to three BCF per day of demand growth that we've already partnered with other parties to help underwrite. And then if we look at the other midstream projects that we are in discussions with people about that we think have a reasonable chance to come into fruition, I mean, that number could increase to eight, 10 BCF a day potentially of additional egress and pulls out of Appalachia for gas. Some of that goes more and more short haul into Ohio, as we talked about, but some of it also more down to the south and southeast markets. So I think the opportunity for producers specifically in southwest Appalachia, what we think of as like the gateway to the basin is really tremendous. And so going back to Doug's question, as we think about capital allocation, seeing that opportunity potentially coming around the corner and seeing that demand show up in the next two to three years is a phenomenal opportunity for us to reinvest and potentially grow structurally sustainably uh and create a lot of value through that good stuff guys i appreciate that my second question is on lng you guys have gone beyond pure financial exposure here as you wrap your head around the physical business are you seeing margin opportunities that maybe have both been overlooked by others and through your conversations what kind of contract terms are you seeing be favored by buyers at this point yeah i mean i think so we think of our lng business uh and that book being built out similar to how we have the book on our just-based domestic gas business, where we have some deals under longer-term and some under shorter-term tenors, and then a little bit in the spot market, too. I would expect most of that to be index-based, and then there's potential for structure around that. But look, you can also financially hedge that with structure, just like we do domestically in the financial market. So I think it'll be a combination of all the above. But we really envision that portfolio, I think, geographically being split pretty equally between Asia and Europe. But it's something that we will build out over the coming years, just like we do with our domestic guestbook. Yeah. And I just follow up with just one point

Toby Rice, CEO

here. I don't think these opportunities are being overlooked by our peers. I just think they're out of reach. And I think you need to have a large scale, high quality business like EQT to be able to play in this market and do it in a balanced way. I mean, for us to be able to reach a level of scale to be effective in this market, but still not be betting the farm on LNG, this is still a nice part of a diversified gas portfolio. Only companies of our scale, I think, can achieve

Operator

that. Thanks, guys. Good quarter. Thank you. Your next question comes from the line of Arun Jayaram. Please go ahead. Yeah, good morning, gentlemen. Jeremy, maybe for you,

Arun Jayaram, Analyst — JPMorgan Securities LLC

I was wondering if you could update us on the progress of some of your large-scale supply deals. I'm thinking Homer City, Shipping Port, and the Duke Energy and Southern Company deals. I think it's 2.6 BCF a day of supply in total. I think we're seeing early construction at Homer City, but would love to get an update on both of those key projects. Yeah, actually a lot of really

Jeremy Knop, CFO

great progress on both. I mean, the guys at Homer City are putting a lot of steel up and really moving that project forward. So we're pretty optimistic about the timing there. There's been a lot of good progress lately on shipping port too with the offtake. So we're very positive on that. both in terms of timing and also just the gas supply. But again, those aren't our projects. So we're going to hold off giving like specific updates. And I would look towards the developers on both of those for more specifics. But look, we remain a committed partner to anyone trying to develop anything in the region, both to midstream companies, to data center developers or power developers. And I think that's why you're seeing us laying so many demand projects. As it relates to the in-market power plants being built down in the southeast, our understanding is a lot of that will probably come online between 2029 and 2031. So I think there will be a ramp post that southeast supply enhancement project on Transco coming online. It won't immediately be consumed, but it will de-bottleneck the Appalachian markets and bring MVP up to full capacity. um but you know like like any of these projects it takes multiple years to get it built so it can't happen overnight unfortunately some of this has to happen sequentially given the uncertainty of timing for completion of these of these projects but everything's moving ahead where we remain opportunistic and i think the the opportunity set for more of these projects to get built is you know today as big as ever and i think continuing to accelerate we're feeling that in our day-to-day conversations. And I'd say the other thing too that's really changing, it's less so, you know, I think developers and these sort of upstart outfits trying to put these projects together, but it's increasingly really well capitalized names who you would recognize who are sort of playing catch up, but I think can put real dollars to work and give us a lot more confidence that a lot of this demand ends up showing up. So we're increasingly excited by it.

Arun Jayaram, Analyst — JPMorgan Securities LLC

Yeah, GEV had some really strong orders, so I know they raised their expectations on inbound to 110 gigawatts from 100, so obviously some good things happening in power. My follow-up, Jeremy and Toby, is just to talk a little bit about your discussions around LNG offtake. You have 6 million tons of capacity post-2030. How would you characterize the nature of those discussions post the war in Iran, and would it be your expectation that you could sign some offtake in this calendar year?

Toby Rice, CEO

Yeah, so the reaction with Iran, I think, you know, reinforces the reliability of U.S. supply, and that's certainly going to – it was valued before. I think it's even more valued now. So we think that the interest in U.S. energy is only going to continue to grow. So we do hope to see that the international community steps up and signs up for what we view as six BCF a day of available offtake from these facilities out on the Gulf Coast area. So there still is an opportunity for the market to give more exposure to USLG. And for us, with the international community, I mean, we're going to be building a portfolio. I think just you're going to see some of those agreements probably be timed closer to when that offtake will become available. So, you know, I expect those agreements to be more of a focus sort of in that 28, 29 timeframe.

Jeremy Knop, CFO

Yeah, I just remind you too, Arun, and I think anyone who's just in the market looking for offtake, you know, the international customers who have signed up for this capacity, whether it's out of Europe or out of Asia, while you see chaos in the global markets, uncertainty over security of physical volumes, but also just price uncertainty, those off-takers are buying gas at Henry Hub plus 115% today. So by buying US gas, they are effectively insulated from what's going on in the world. And so I think the relative attractiveness, both for existing off-takers, but also those still looking for offtake. I think the attractiveness of shifting to the U.S. just because you do have that inherent price security, being able to buy effectively at the same price that U.S. consumers are able to buy at is really unique, and you're not going to find that anywhere else in the world. Great. Thanks.

Operator

Your next question comes from the line of Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta, Analyst — Goldman Sachs

Yeah, thank you. We spent a lot of time on the last call just talking about winter storm fern but now with the with the clarity of the numbers and how robust the trading and marketing effort was in q1 maybe toby and jeremy you could just talk about lessons learned and confidence about the ability to replicate this in another period of high volatility

Toby Rice, CEO

yes this is something that we do believe we are going to replicate because this was very well orchestrated. You know, I'd also, I mean, this all starts with operations. You know, the entire team across the board on the commercial team did a fantastic job, but it starts with operations. The playbooks that we put in place that really the planning on this started in the summertime are things that we're going to be able to put out there and repeat that. It's hard to see that performance is going to get even better, but because, you know, just look at how our performance vary versus our peers. I mean, we had basically half the downtime than peers did, but there will be some opportunities. But the big part for us is really just continuing to keep the teams in great collaboration and coordinating across. And this is something where our technology platforms really bring that type of sustainability as we continue to scale this business. So we'll continue to look for ways to streamline communications. And that's a normal part of our business in this large-scale

Jeremy Knop, CFO

organization. Yeah, I think what's also unique this time and seeing the stress on the system is that now that we have the integration with midstream complete and we have effectively control and visibility of the molecule from the wellhead through our own systems for 90% of our volumes down to the end markets, it allows us to have a lot more accountability and visibility into like if something goes down, we can figure out what's happening really quickly. Historically, a lot of our traders would find themselves in situations where all of a sudden volume is lost and volume maybe they pre-sold and they're trying to figure out where the volume is to balance. They're not able to trade and capture arbitrage when they're trying to just, you know, minimize imbalances on the system, avoid OFO penalties. So, you know, the amount of collaboration this time, the ability to identify issues in the field and get them resolved within hours and allow the traders to do what they're there to do, and that's trade and create value, I think was on full display this time. But again, it's not just because the trader is doing well or just because ops are doing well. It's a collective effort of the whole team working really well together, and that's what's

Neil Mehta, Analyst — Goldman Sachs

important. Thank you. Very clear. Look, you guys got a ton of inventory at this point, and I know that the A&D market, it felt like the bid ask was pretty wide and it got overheated there for a period of time you know are there opportunities to continue to opportunistically bolt on stuff or is this really just an organic story given all the stuff you guys talked about earlier

Jeremy Knop, CFO

yeah i mean look we we were intentionally a first mover in m a um we thought there would be a snowball effect to that and and the best assets would go first i think what's left is of much lower quality um so look we're always opportunistic but we see when we look at the opportunity set and where to invest capital right now, it's organically. I think it's, you know, compared to where the A&D market is, I think our stock is much better value, candidly. And I think the organic reinvestment opportunity set is a significantly higher return on capital than putting cash into an acquisition of, I think, what would be an inferior asset. So, again, we're going to remain opportunistic and look around, as we always have, but I think the odds of something happening in the Andes space are significantly lower.

Neil Mehta, Analyst — Goldman Sachs

Yeah, very clear. Thanks, guys.

Operator

Your next question comes from the line of James West with Melias Research. Please go ahead.

James C. West, Analyst — Melius Research

Thanks. Good morning, guys. Toby, I wanted to quickly ask about if you're looking at any opportunities outside of Appalachia at this point, There's certainly international shales where you have tons of expertise you could provide. I'm thinking, you know, Guac Marta, which is probably, you know, 10 years behind the permit or so, or maybe seven. But any expansion opportunities outside of your current market that you're at least considering? At this point, I know you guys have a ton on your plate and there's a ton of growth in the domestic market, but just curious how you're thinking about that.

Toby Rice, CEO

Yeah, our view is pretty simple. we've got a massive asset base here in Appalachia that we believe will give us the ability to connect our gas to premium markets domestically around the world. And the key for us to unlocking that asset base is going to be to capturing that demand. So I'm more focused on looking for demand capture opportunities as opposed to supply opportunities. So we're staying focused on what we have right now. And it's just, there's all the great work we've done over the last five years, you know, bolting on and beefing up this asset base is where our focus is right now.

James C. West, Analyst — Melius Research

Okay. That's very clear. And then it'd be a quick follow-up on the LNG strategy. I think you addressed some of this earlier, but we clearly have a tight end of the market and changing dynamics there. Pricing has moved. Anything you think you would move on earlier than that in the time period you've already committed to getting into LNG?

Jeremy Knop, CFO

I mean, I think as Toby said earlier, I mean, if you're going to take out capacity sooner, you're effectively buying it at the current strip and spread. So it's not like you're able to buy it at the same terms um i mean look if we have the opportunity we obviously take advantage of it it would be free money but i think the odds of that are pretty low got it thanks guys your

Operator

next question comes from the line of bob bracket with bernstein research please go ahead good

Bob Brackett, Analyst — Bernstein Research

morning i'm curious around your comments of attracting demand uh to your backyard one way to do that is simply commercially your low-cost operator you're well plumbed up there and the other is with some judicious, uh, midstream capital. Can you talk about what might be inbounds and out of bounds for the sorts of capital projects you'd put to work to attract that demand?

Toby Rice, CEO

Yeah, I would say, you know, what's inbounds right now, um, is, you know, our goal is to make sure that we're giving customers the best energy. That's the lowest cost energy, most reliable. And the key for us doing that is leveraging our existing asset base, the over 3,000 miles of pipeline infrastructure we have, and building off of that and extending that to be able to service these new demand hubs that we're talking about. So I'd say that's really our big focus. And I'd say we'd stay in that zone until we've exhausted all the opportunities, and then we could look out more broadly. But right now, just given the opportunity set we have in front of us the cup is full and now we're just looking to to to land some of these big opportunities

Operator

very clear thanks your next question comes from the line of Sam Margolin with Wells Fargo

Sam Margolin, Analyst — Wells Fargo

please go ahead good morning thanks for taking the question first one is on the shape of the capex that you referenced you know we're at a peak in in 2q for for the growth side Are there any – are there going to be any immediate returns with the startup of those projects, whether it's in sales mix and realizations or costs that we can expect?

Jeremy Knop, CFO

No, I wouldn't say it necessarily correlates with that. I think it just depends – it comes down to the lumpiness of large-scale operations and just the timing of some of our growth capital.

Sam Margolin, Analyst — Wells Fargo

Okay. Got it. So nothing in second half to point to. And then just on the operational side, within liquids, we got this inbound. There was a little bit of a mixed shift from C3 to ethane away from guidance. Was that just market-driven, you know, natural gas price contracts, or was there anything else to call out, as we're noting?

Jeremy Knop, CFO

Yeah, I mean, just slight tweaks based on GPM assumptions we're making, but i wouldn't say there's anything material to read into on that one perfect thank you so much

Operator

your next question comes from the line of lloyd bern with jeffries please go ahead

Lloyd Byrne, Analyst — Jefferies

hey good morning guys uh toby i just wanted to know if you uh give me an update on the regulatory standpoint with us infrastructure and whether um electricity pricing is finally going to get us over the hump there with respect to probably the Northeast?

Toby Rice, CEO

I hope that perm reform happens, and I think it needs to happen in the near term, so the next few months. I do think that there's a lot of focus on this, and I think the pressure is only ratcheting up on our leaders to take action and create a win for themselves going into midterms, that they're actually doing something to lower Americans' energy bills that have been up over 40% since 2020. So, you know, and I think that, you know, we saw just a couple of days ago, Trump put out executive determinations that just continue to reinforce the critical need to get energy infrastructure built. So all the signals are there. And I think the issues going on around the world, I mean, our energy independence, the value of that is on full display with international prices being up 10 bucks and natural gas prices here in the U.S. not moving. We've insulated Americans, but we can't take that for granted. We need more infrastructure to make sure we can preserve this really valuable opportunity we create for Americans. The American energy advantage is sort of at the end of its rope unless we get more infrastructure built. So I think people are recognizing this, but I hope they act.

Lloyd Byrne, Analyst — Jefferies

Yeah, it feels like we're finally making some progress there. So, all right. Thank you, guys. Thanks.

Operator

your next question comes from the line of philip johnworth with bmo capital markets

Philip Johnston, Analyst — BMO Capital Markets

please go ahead yeah thanks good morning uh last quarter you guys talked about industry having limited ohio utica dry gas inventory left and then in the last months we saw a nine gigawatt gas plant announced um to power data centers in southern ohio so um just as you see projects like this or other others in the midwest um announce how do you see these projects securing gas and is there an appetite to either expand existing pipelines or how much momentum do you think there

Toby Rice, CEO

is around uh proposed new builds right now so we think we do see that as a big source of some of the gas supply opportunities we're looking at and yeah while while our view is the the dry gas portion of the utica play in ohio may be light all it takes to get back to deep high quality the inventory in the Marcellus region in Pennsylvania and West Virginia is a 20-mile pipeline. So that is a very short bridge to build, and these are going to be some opportunities for us to be able to connect to those opportunities. Yeah, we see that Ohio market and that

Jeremy Knop, CFO

Clarington market as one of the greatest opportunities for us. I think there's a lot of low-risk pipe builds of significant size, both backfilling those utica dry gas declines, But also, I think a lot of the demand, maybe it gets built in Ohio or some of the egress that gets built out of that market through both brownfield or also greenfield expansion. So, again, I think, you know, if you're sitting in southwest Appalachia with a lot of inventory like EQT is and you're kind of first row beachfront real estate, get ready for that for that theme to really pick up. But that's something, as we said last quarter, we're super excited about based on the conversations we're having.

Philip Johnston, Analyst — BMO Capital Markets

Okay, great. And then one of the things you haven't talked about in the past is distributed power. It's smaller scale than what you've announced to date, but just wondering how you view this demand opportunity, and is it something that EQT could look to partner with as just adding another tool to the toolkit?

Jeremy Knop, CFO

Yeah, look, I think there are so many companies, and there's so much capital chasing that right you know I'd say it kind of falls in the same vein as like LNG and some of the other things that are tangential to our business we've looked at it all we've studied it and it ultimately comes back to we do we as EQT have an edge is the need capital is it expertise is it equipment I think where we we come back to is there's plenty of money to finance it it returns inferior I think to what we can generate just being a partner to those projects in our base business and we can create a lot of value by doing what we do best. So look, we see our position of the market as a partner, both to midstream companies, to power companies, to some of these developers of distributed power, to the data center developers. I mean, we're really an ally and partner to everybody. We're not really a competitor with anybody. We're just trying to help enable and facilitate all that gas demand to get built. So I think that's really one of the key reasons

Operator

we're seeing so much opportunity right now makes sense thanks your next question comes from the line of josh silverstein with ubs financial please go ahead hey thanks good good morning guys um for

Josh Silverstein, Analyst — UBS

the 2q guide you said you have about 10 to 15 bcf of strategic curtailments and it kind of acts like storage um i was curious what what kind of price point drove this decision uh maybe how much more you could curtail and then potentially if prices go back the other way, how much more could you potentially, say, bring out of your synthetic storage? Thanks.

Jeremy Knop, CFO

Yeah, good question. It changes depending on the season and the shape of the forward curve. We make those decisions really through the lens of a marketer and trader rather than necessarily operations in today's world. And so it's informed by a lot of different factors. We can curtail a lot, a whole lot more than what we were planning to curtail based on the guidance we gave. We just don't see the need for that, at least at this juncture. There's a chance that later this year in the fall we could choose to shut in a lot more. Economically, it's a lot easier to shut in large quantities right ahead of winter because you have so much contango in the curve. and the value in effectively storing gas in September, October is a whole lot higher versus storing it going into summer where the forward curve for the next six to nine months is pretty flat. So, look, we adapt and evolve with the market, but that's kind of the framework through which we think about it.

Josh Silverstein, Analyst — UBS

Got it. Okay. Well, yeah, and that kind of goes to the next question I had, because I was curious if you had strategic curtailments in a plan for the back half of this year, because the number of tills is kind of even in kind of the mid-30s number throughout the course of this year, but the production guide is much higher for the first half versus the back half of the year. So are you planning more of these curtailments? And this is kind of the game plan going forward where first-half volumes might be higher than second-half volumes.

Jeremy Knop, CFO

I wouldn't say it really comes down to planning for curtailments. I mean, our ops plan, you know, we map that out regardless of of things like curtailments curtailments are what we consider to be an optimization action i mean even if we were in growth mode uh from like a base ops standpoint we would still choose to curtail based on the factors i i mentioned previously so it's they're they're related but also not dependent on each other thank you for that question your next

Operator

question comes from the line of jacob roberts with tph please go ahead good morning good morning

Bob Brackett, Analyst — Bernstein Research

Hey, Jeremy. We spent some time on data centers, but I'm just curious, when I look at slide 16, can you talk about how internally you guys de-risk some of those numbers as to what might actually happen? And then you spent quite a bit of time talking about the partnership ability of ECT. I'm just curious if you could remind us where the guardrails are on that in terms of the type of counterparty risk you're willing to take or size or scale on the potential project.

Jeremy Knop, CFO

yeah i mean i guess slide 16 first um and this is data that we bought recently as we're analyzing where these projects are and trying to understand what what markets are seeing the most pull um i mean look we don't really see it our our is is our role to sort of de-risk this i think the best thing we can do to help enable these projects to go forward is be a um a reputable highly credit worthy reliable supplier of gas and the best thing we can do is provide a simple comprehensive solution which we you know from our platform see as being you know one where we can provide midstream if it's needed we can provide the gas supply um we can manage daily gas volumes and balancing um and you know we can participate in owning a midstream project we can let someone else build the midstream and just manage the gas and capacity it doesn't really matter that much to us i think for for us it's really about helping enable creating that demand and then tying that back to our operational and production base so that it effectively stimulates growth for our base business in the years ahead. So again, I think taking that approach and being a flexible partner, you know, is really, like I said before, what's driving a lot of the inbounds we have right

Bob Brackett, Analyst — Bernstein Research

now. I appreciate that. And Toby, I think you briefly mentioned you see the potential for long-haul egress needed out of the Northeast, maybe down to the Gulf Coast. And I think we generally agreed. We look across the other basins and they're staying power in terms of volume growth. So I'm curious if those conversations are happening now and potentially if you could opine on whether or not you think that the cost of those types would be borne by the end user or we see something similar going on in the past where you guys might have to pay for that.

Toby Rice, CEO

There are conversations right now about some of those pipelines. And then as far as who will bear you know the shipping rate for those i think you look at the open season we had with mbp boost as an indication on the market that we're in um you know mbp boost utilities signed up for 100 of that and it didn't did not require operators um to sign up and take the take on those liabilities um we think that we're in a demand pull uh for these type of projects and uh certainly the demand that's being created in the in the gulf coast region people are waking up and looking for where I going to get the supply and how can we get the infrastructure built to make sure reliable supply

Operator

is delivered? Thanks, guys. I appreciate the time. Your next question comes from the line of Gabe Dodd with Truist. Please go ahead. Hey, morning, everyone. Thanks for the time.

Gabe Dodd, Analyst — Truist

Maybe just a follow-up on that last question. Maybe from your perspective, what's the latest on the Borealis project? Is there still an open season or any kind of updates you could share as

Jeremy Knop, CFO

as far as you know incremental egress out of the basin yeah i i would just call that one of many projects um that is in the works uh in counterparties who we are in discussions with um you know in any of these pipes i think um the answer is going to be just it depends on who the shippers are um and what eqt's role is on many of these pipes i think it's probably reasonable to assume that we probably build back into basin from certain supply hubs and gather the production and deliver it there. And there's a host of other companies that are looking at projects like the one you mentioned or other brownfield expansions of existing interstate pipes that would probably take care of things from there. But again, it's a lot easier to get those built when you have a business like EQT on the supplying end of those pipes. If you even just look at the the southeast supply enhancement project on transco the expansion that was needed there and that was effectively paired up uh i mean the shippers the name shippers on that pipe effectively paired those agreements up with the gas supply deals we did with them um to enable that to happen and again it goes back to you know what i've said a couple times already i mean our goal is to be a partner choice um whether that's with utilities midstream companies uh power companies or you know whoever it might be um not really a competitor we're helping and uh you know trying to play our role in helping this market develop um and i think whether it's borealis or any of these other pipes in discussion um we're going to continue playing that role the best we can

Philip Johnston, Analyst — BMO Capital Markets

got it thanks that's helpful and then just a quick follow-up i think you alluded to this

Gabe Dodd, Analyst — Truist

earlier but just around growth expectations and maybe what governs that you have some pretty big projects coming on 27 28 is when we can get a little bit of that growth wedge uh uh you know

Toby Rice, CEO

materializing in numbers yes the the midstream the growth for capex growth on on midstream i mean that's that's in progress right now uh and i think we have visibility through 27 28 where these projects will uh ultimately come online the the conversations we're having right now the opportunities we have uh would allow us to extend that runway in that 28 through 30 time frame and then uh that's been the big focus right now on the midstream side and that will create optionality for us on the upstream side if and when we decide uh that makes sense okay okay got it thanks toby

Operator

thanks your last question comes from the line of leo marianne with a boss your line is now open

Leo Mariani, Analyst — Roth MKM

please go ahead. Hey guys, just wanted to follow up a little bit on your guidance here in 2026. So obviously, great start to the year, very, very strong volumes here in one queue. Also, your second quarter guide, you know, while production is down a little bit, also looks very strong. Just relative to kind of your full year guide, certainly starting to make maybe the rest of the year look, you know, a bit conservative. You did talk about some more potential shut-ins, you know, during the fall to capture that winter premium, but it certainly seems like you guys are trending pretty well, you know, versus the guide, you know, at this point. So should people think that, you know, you might be a little towards the higher end of the range on production here for

Jeremy Knop, CFO

the year? Yeah, look, I think two months after setting our initial guidance, we, you know, in our view, it's a little early to update something like full year guidance without a material change otherwise. But look, I think the business is humming as evidenced by our Q1 results um you know i think you know if there's a reason to update we'd probably look typically to do that by mid-year um but all else equal yeah i think we're you know at least at midpoint of guide uh so far through the year um and you know as we see how the market develops and and the likelihood of curtailments this fall we'll we'll adjust accordingly if it's merited and okay Okay. Appreciate that.

Leo Mariani, Analyst — Roth MKM

And then obviously, I have a lot of discussion on the macro here. You know, gas market's been a little bit weaker of late. Liquids markets have been robust. Does EQT see any optionality of trying to maybe shift activity to slightly more liquids-rich areas? Is that something you guys might consider here?

Toby Rice, CEO

Yeah. I mean, just so you understand how our operation scheduling works, I mean, we develop the most economic projects first. So if there's opportunity for us to develop more liquids that's already being taken into account, just given the size of our asset base, it's going to be hard for us to materially change our liquids mix in our production portfolio. But it is something that is taken into account in our normal operations. Okay. Thank you. All right. That's a great... Sorry, operator.

Operator

That concludes our Q&A session. Thank you all for joining and you may now disconnect. Everyone have a great day.