EQT Corp. in a letter to shareholders late Monday said it has reduced its workforce in a broader effort to appease restive investors and to drive stronger results.
CEO Robert McNally wrote that the company is “laser-focused” on reducing costs and improving operational efficiency in a way that creates more value for shareholders in a market fixated on capital discipline and better returns. The company completed staff reductions on Monday, removing management layers, streamlining functions and reducing shared services and contractor expenses,” McNally said. The cuts are expected to save the company $50 million annually.
It’s unclear exactly how many jobs were cut. Spokesperson Linda Robertson did not have numbers to share, but more than 100 were laid off, according to local news media reports. The decision to lay off people “was a difficult but necessary step in our ongoing effort to enhance performance,” she said.
“We understand that our recent operational performance was disappointing to shareholders as it was to the EQT team,” McNally said in his letter. “EQT can and must deliver improved financial and operational results. This team is taking aggressive, meaningful and decisive steps to strengthen our financial position and ensure that everyone at EQT is aligned with our objectives.”
The announcement comes less than a month after former Rice Energy Inc. co-founders Toby Rice and Derek Rice called for a “course correction” at EQT. The Rice family owns roughly 3% of EQT, which acquired Rice Energy for $8 billion in 2017. Toby and Derek Rice writing in a letter to the board said the company is severely undervalued and in need of executives with more experience.
The letter floated Toby to become McNally’s replacement and suggested a board shakeup that was backed by some other investors. The merger with Rice, which made EQT the nation’s largest gas producer, set off a series of transactions that upended operations, including a complex separation of its midstream and upstream segments, asset sales outside the Appalachian Basin and a wholesale change to the executive management team.
EQT’s CEO, general counsel, chief investor relations officer and president of exploration and production, among others, all departed last year. McNally was named CEO in August.
EQT had been scheduled to release its 2019 guidance last month but was forced to postpone the event following a death in McNally’s family. McNally said Monday the company is aiming for “mid-single digit” year/year production growth in 2019, along with “meaningful” cash flow.
The company was forced to cut its 2018 producion guidance late last year and increase spending in response to soaring costs after a frenzied stretch of drilling in the wake of the Rice acquisition put stress on its supply chain and logistics
“Our strategic priorities for the year include enhancing our focus on execution and operational improvement, reducing costs, improving operating efficiency and prioritizing the return of capital to shareholders while strengthening EQT’s balance sheet,” McNally said.