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Item 1. Financial Statements

2020-10-22 compared with 2020-07-27 · 169 added, 135 removed, 430 unchanged (41% of the section changed)

2 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED OPERATIONS (UNAUDITED)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

2 unchanged sentences

Sales of natural gas, natural gas liquids and oil $ 598,992 $ 769,627 $ 1,812,965 $ 2,941,767

Gain on derivatives not designated as hedges 26,426 407,635 415,862 275,639

(Loss) gain on derivatives not designated as hedges ( 427,182 ) 180,313 ( 11,320 ) 455,952

Net marketing services and other 317 1,636 4,613 7,282

8 unchanged sentences

Loss on sale/exchange of long-lived assets 4,662 13,935 102,721 13,935

Impairment of intangible assets — 15,411 — 15,411

Impairment and expiration of leases 50,449 49,601 145,496 127,719

2 unchanged sentences

Operating (loss) income ( 760,195 ) ( 161,529 ) ( 1,023,749 ) 309,957

Gain on Equitrans Share Exchange — — ( 187,223 ) —

Gain on Equitrans Share Exchange (see Note 9) — — ( 187,223 ) —

(Gain) loss on investment in Equitrans Midstream Corporation ( 3,801 ) 261,093 303,844 276,779

2 unchanged sentences

Interest expense 69,154 47,709 196,914 154,785

(Loss) income before income taxes ( 366,078 ) 164,431 ( 500,395 ) 393,356

Income tax (benefit) expense ( 103,003 ) 38,865 ( 70,181 ) 77,099

Net (loss) income $ ( 263,075 ) $ 125,566 $ ( 430,214 ) $ 316,257

(Loss) earnings per share of common stock:

Loss before income taxes ( 826,397 ) ( 447,371 ) ( 1,326,792 ) ( 54,015 )

Income tax benefit ( 225,757 ) ( 86,343 ) ( 295,938 ) ( 9,244 )

Net loss $ ( 600,640 ) $ ( 361,028 ) $ ( 1,030,854 ) $ ( 44,771 )

Loss per share of common stock:

Weighted average common stock outstanding 255,589 255,235 255,516 255,069

Net (loss) income $ ( 1.03 ) $ 0.49 $ ( 1.68 ) $ 1.24

Net loss $ ( 2.35 ) $ ( 1.41 ) $ ( 4.03 ) $ ( 0.18 )

Weighted average common stock outstanding 255,589 255,235 255,516 255,069

Net (loss) income $ ( 1.03 ) $ 0.49 $ ( 1.68 ) $ 1.24

Net loss $ ( 2.35 ) $ ( 1.41 ) $ ( 4.03 ) $ ( 0.18 )

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

1 unchanged sentence

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net (loss) income $ ( 263,075 ) $ 125,566 $ ( 430,214 ) $ 316,257

Net loss $ ( 600,640 ) $ ( 361,028 ) $ ( 1,030,854 ) $ ( 44,771 )

Other comprehensive income (loss), net of tax:

3 unchanged sentences

Other comprehensive income (loss) 72 120 156 ( 140 )

Comprehensive (loss) income $ ( 263,003 ) $ 125,684 $ ( 430,130 ) $ 315,997

(a) Net of tax expense of $ 10 and $ 20 for the three and six months ended June 30, 2019.

(b) Net of tax expense of $ 24 and $ 26 for the three months ended June 30, 2020 and 2019, respectively, and $ 48 and $ 52 for the six months ended June 30, 2020 and 2019, respectively.

Comprehensive loss $ ( 600,568 ) $ ( 360,908 ) $ ( 1,030,698 ) $ ( 44,911 )

(a) Net of tax expense of $ 10 and $ 30 for the three and nine months ended September 30, 2019.

(b) Net of tax expense of $ 23 and $ 26 for the three months ended September 30, 2020 and 2019, respectively, and $ 71 and $ 78 for the nine months ended September 30, 2020 and 2019, respectively.

2 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net (loss) income $ ( 430,214 ) $ 316,257

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net loss $ ( 1,030,854 ) $ ( 44,771 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Deferred income tax benefit ( 182,244 ) ( 10,407 )

1 unchanged sentence

Amortization of intangible assets 22,433 28,439

Impairment of leases and loss on sale/exchange of long-lived assets 193,106 78,118

Impairment of leases and intangible assets and loss on sale/exchange of long-lived assets 248,217 157,065

Gain on Equitrans Share Exchange ( 187,223 ) —

3 unchanged sentences

Amortization, accretion and other 25,236 19,385

Gain on derivatives not designated as hedges ( 415,862 ) ( 275,639 )

Cash settlements received (paid) on derivatives not designated as hedges 561,129 ( 10,490 )

Loss (gain) on derivatives not designated as hedges 11,320 ( 455,952 )

Cash settlements received on derivatives not designated as hedges 813,218 152,149

Net premiums (paid) received on derivative instruments ( 53,473 ) 22,512

34 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Current assets:

10 unchanged sentences

Net property, plant and equipment 15,557,417 16,155,490

Intangible assets, net 11,050 26,006

Net intangible assets 3,573 26,006

Contract asset 325,934 —

18 unchanged sentences

Common stock, no par value, shares authorized:

320,000 , shares issued:

640,000 and 320,000 , shares issued:

257,003 and 257,003

7,895,628 7,818,205

13 unchanged sentences

(Thousands, except per share amounts)

Balance at April 1, 2019 254,999 $ 7,817,227 $ ( 39,665 ) $ 3,367,810 $ ( 5,784 ) $ 11,139,588

Balance at July 1, 2019 254,796 $ 7,807,740 $ ( 39,310 ) $ 3,485,711 $ ( 5,666 ) $ 11,248,475

Comprehensive income, net of tax:

5 unchanged sentences

Share-based compensation plans 374 10,943 6,783 17,726

Other ( 222 ) ( 14,470 ) ( 14,470 )

Balance at June 30, 2019 254,796 $ 7,807,740 $ ( 39,310 ) $ 3,485,711 $ ( 5,666 ) $ 11,248,475

Balance at April 1, 2020 255,262 $ 7,821,631 $ ( 30,852 ) $ 1,848,286 $ ( 5,187 ) $ 9,633,878

Balance at September 30, 2019 255,170 $ 7,818,683 $ ( 32,527 ) $ 3,117,015 $ ( 5,546 ) $ 10,897,625

Balance at July 1, 2020 255,290 $ 7,889,072 $ ( 30,341 ) $ 1,585,211 $ ( 5,115 ) $ 9,438,827

Comprehensive loss, net of tax:

2 unchanged sentences

Share-based compensation plans 55 6,556 994 7,550

Equity component of convertible senior notes (See Note 6) 63,645 63,645

Balance at June 30, 2020 255,290 $ 7,889,072 $ ( 30,341 ) $ 1,585,211 $ ( 5,115 ) $ 9,438,827

Balance at September 30, 2020 255,345 $ 7,895,628 $ ( 29,347 ) $ 984,571 $ ( 5,043 ) $ 8,845,809

Common shares authorized:

320,000 shares.

320,000 and 640,000 at September 30, 2019 and 2020, respectively.

Preferred shares authorized:

3,000 shares.

There are no preferred shares issued or outstanding.

There were no preferred shares issued or outstanding.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

15 unchanged sentences

Other ( 222 ) ( 14,470 ) ( 14,470 )

Balance at June 30, 2019 254,796 $ 7,807,740 $ ( 39,310 ) $ 3,485,711 $ ( 5,666 ) $ 11,248,475

Balance at September 30, 2019 255,170 $ 7,818,683 $ ( 32,527 ) $ 3,117,015 $ ( 5,546 ) $ 10,897,625

Balance at January 1, 2020 255,171 $ 7,818,205 $ ( 32,507 ) $ 2,023,089 $ ( 5,199 ) $ 9,803,588

6 unchanged sentences

Equity component of convertible senior notes (See Note 6) 63,645 63,645

Balance at June 30, 2020 255,290 $ 7,889,072 $ ( 30,341 ) $ 1,585,211 $ ( 5,115 ) $ 9,438,827

Balance at September 30, 2020 255,345 $ 7,895,628 $ ( 29,347 ) $ 984,571 $ ( 5,043 ) $ 8,845,809

Common shares authorized:

320,000 shares.

320,000 and 640,000 at September 30, 2019 and 2020, respectively.

Preferred shares authorized:

3,000 shares.

There are no preferred shares issued or outstanding.

There were no preferred shares issued or outstanding.

(a) Related to adoption of ASU 2018-02 .

5 unchanged sentences

Accordingly, they do not include all information and notes required by GAAP for complete financial statements.

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of June 30, 2020 and December 31, 2019, the results of its operations and equity for the three and six month periods ended June 30, 2020 and 2019 and its cash flows for the six month periods ended June 30, 2020 and 2019.

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of September 30, 2020 and December 31, 2019, the results of its operations and equity for the three and nine month periods ended September 30, 2020 and 2019 and its cash flows for the nine month periods ended September 30, 2020 and 2019.

Certain previously reported amounts have been reclassified to conform to the current year presentation.

In this Quarterly Report on Form 10-Q, references to "EQT," "EQT Corporation" and "the Company" refer collectively to EQT Corporation and its consolidated subsidiaries.

The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all information and notes required by GAAP for complete financial statements.

The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited financial statements at that date.

For further information, refer to the Consolidated Financial Statements and accompanying notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

20 unchanged sentences

The Company adopted this ASU prospectively on January 1, 2020, at which point onward applicable costs were capitalized to the Condensed Consolidated Balance Sheet rather than expensed to selling, general and administrative expense in the Statement of Condensed Consolidated Operations.

For the three and six months ended June 30, 2020, such capitalized costs were approximately $ 3 million and $ 4 million, respectively.

For the three and nine months ended September 30, 2020, such capitalized costs were approximately $ 2 million and $ 6 million, respectively.

In December 2019, the FASB issued ASU 2019-12, Income Taxes:

1 unchanged sentence

This ASU simplifies accounting for income taxes by eliminating certain exceptions to ASC 740, Income Taxes, related to the general approach for intraperiod tax allocation, methodology for calculating income taxes in an interim period and recognition of deferred taxes when there are investment ownership changes.

In addition, this ASU simplifies aspects of accounting for franchise taxes and interim period effects of enacted changes in tax laws or rates and provides clarification on accounting for transactions that result in a step up in the tax basis of goodwill and allocation of consolidated income tax expense to separate financial statements of entities not subject to income tax.

This ASU is effective for fiscal years beginning after December 15, 2020, including interim

EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

in a step up in the tax basis of goodwill and allocation of consolidated income tax expense to separate financial statements of entities not subject to income tax.

This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted.

periods within those fiscal years, and early adoption is permitted.

The Company is evaluating the impact this standard will have on its financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging:

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity .

This ASU simplifies accounting for convertible instruments by removing certain separation models for convertible instruments.

For convertible instruments with conversion features that are not accounted for as derivatives under ASC 815 or do not result in substantial premiums accounted for as paid-in capital, the convertible instrument's embedded conversion features are no longer separated from the host contract.

Consequently, and as long as no other feature requires bifurcation and recognition as a derivative, the convertible instrument is accounted for as a single liability measured at its amortized cost.

This ASU also amends the impact of convertible instruments on the calculation of diluted earnings per share (EPS) and adds several new disclosure requirements.

This ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Adoption beginning after December 15, 2020, including interim periods within those fiscal years, is permitted.

The Company has not determined the timing or method of adoption and is evaluating the impact this standard will have on its financial statements and related disclosures.

Revenue from Contracts with Customers

9 unchanged sentences

When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company is acting as an agent and, thus, reports the revenue on a net basis.

For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $ 197.7 million and $ 384.0 million in accounts receivable in the Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019, respectively.

For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $ 275.8 million and $ 384.0 million in accounts receivable in the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively.

EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The table below provides disaggregated information on the Company's revenues.

2 unchanged sentences

Derivative contracts are also outside the scope of ASU 2014-09.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

5 unchanged sentences

Other sources of revenue:

Gain on derivatives not designated as hedges 26,426 407,635 415,862 275,639

(Loss) gain on derivatives not designated as hedges ( 427,182 ) 180,313 ( 11,320 ) 455,952

Net marketing services and other 317 1,636 4,613 7,282

Total operating revenues $ 172,127 $ 951,576 $ 1,806,258 $ 3,405,001

EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of June 30, 2020.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of June 30, 2020.

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of September 30, 2020.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of September 30, 2020.

2020 (a) 2021 2022 2023 Total

Natural gas sales $ 8,461 $ 178,100 $ 8,158 $ 6,794 $ 201,513

(a) July 1 through December 31.

(a) October 1 through December 31.

Derivative Instruments

14 unchanged sentences

Contracts that result in the physical receipt or delivery of a commodity but are not designated or do not meet all of the criteria to qualify for the normal purchase and normal sale scope exception are subject to derivative accounting.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company's OTC derivative instruments generally require settlement in cash.

1 unchanged sentence

Settlements of derivative commodity instruments are reported as a component of cash flows from operating activities in the Statements of Condensed Consolidated Cash Flows.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 1,583 Bcf and 1,644 Bcf of natural gas as of June 30, 2020 and December 31, 2019, respectively.

The open positions at both June 30, 2020 and December 31, 2019 had maturities extending through December 2024.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 1,659 Bcf of natural gas and 1,723 Mbbl of NGLs as of September 30, 2020 and 1,644 Bcf of natural gas as of December 31, 2019.

The open positions at both September 30, 2020 and December 31, 2019 had maturities extending through December 2024.

Certain of the Company's OTC derivative instrument contracts provide that, if the Company's credit rating assigned by Moody's Investors Service, Inc.

5 unchanged sentences

Anything below these ratings is considered non-investment grade.

As of June 30, 2020, the Company's senior notes were rated "Ba3" by Moody's and "BB–" by S&P.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As of September 30, 2020, the Company's senior notes were rated "Ba3" by Moody's and "BB–" by S&P.

When the net fair value of any of the Company's OTC derivative instrument contracts represents a liability to the Company that is in excess of the agreed-upon dollar threshold for the Company's then-applicable credit rating, the counterparty has the right to require the Company to remit funds as a margin deposit in an amount equal to the portion of the derivative liability that is in excess of the dollar threshold amount.

The Company records these deposits as a current asset in the Condensed Consolidated Balance Sheets.

As of June 30, 2020, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 6.2 million, for which the Company deposited and recorded as a current asset $ 2.4 million.

As of September 30, 2020, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 228.8 million, for which the Company deposited and recorded as a current asset $ 142.0 million.

As of December 31, 2019, there were no such deposits recorded in the Condensed Consolidated Balance Sheet.

1 unchanged sentence

The Company records these deposits as a current liability in the Condensed Consolidated Balance Sheets.

As of June 30, 2020 and December 31, 2019, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

As of September 30, 2020 and December 31, 2019, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

When the Company enters into exchange traded natural gas contracts, exchanges may require the Company to remit funds to the corresponding broker as good-faith deposits to guard against the risks associated with changing market conditions.

5 unchanged sentences

The margin requirements are subject to change at the exchanges' discretion.

As of June 30, 2020 and December 31, 2019, the Company recorded $ 6.9 million and $ 12.6 million, respectively, of such deposits as a current asset.

As of June 30, 2020, the Company recorded $ 13.6 million of such deposits as a current liability.

As of December 31, 2019, there were no such deposits recorded as a current liability.

As of September 30, 2020 and December 31, 2019, the Company recorded $ 102.5 million and $ 12.6 million, respectively, of such deposits as a current asset in the Condensed Consolidated Balance Sheets.

Refer to Note 9 for a discussion of the derivative liability recorded in connection with the Equitrans Share Exchange (defined in Note 9).

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company has netting agreements with financial institutions and its brokers that permit net settlement of gross commodity derivative assets against gross commodity derivative liabilities.

2 unchanged sentences

master netting agreements Margin requirements with counterparties Net derivative instruments

June 30, 2020

September 30, 2020

Asset derivative instruments, at fair value $ 503,648 $ ( 433,954 ) $ — $ 69,694

Liability derivative instruments, at fair value 894,618 ( 433,954 ) ( 244,457 ) 216,207

625,808 ( 441,923 ) ( 9,257 ) 174,628

December 31, 2019

1 unchanged sentence

Liability derivative instruments, at fair value 312,696 ( 226,116 ) ( 12,606 ) 73,974

312,696 ( 226,116 ) ( 12,606 ) 73,974

The Company has not executed any interest rate swaps since 2011.

As of December 31, 2019, amounts related to historical interest rate swaps that had been previously recorded in accumulated other comprehensive income (OCI) were fully reclassified into interest expense.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Fair Value Measurements

11 unchanged sentences

The significant observable inputs used by the option pricing models include NYMEX forward curves, natural gas volatilities and LIBOR-based discount rates.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below summarizes assets and liabilities measured at fair value on a recurring basis.

4 unchanged sentences

(Level 2) Significant unobservable inputs

June 30, 2020

September 30, 2020

Asset derivative instruments, at fair value $ 503,648 $ 66,840 $ 436,808 $ —

7 unchanged sentences

The carrying value of the Company's investment in Equitrans Midstream Corporation (Equitrans Midstream) approximates fair value as Equitrans Midstream is a publicly traded company.

The carrying values of borrowings on the Company's credit facility and term loan facility approximate fair value as the interest rates are based on prevailing market rates.

The carrying values of borrowings on the Company's credit facility and term loan facility (which was fully repaid in the second quarter of 2020) approximate fair value as the interest rates are based on prevailing market rates.

The Company considered all of these fair values to be Level 1 fair value measurements.

3 unchanged sentences

Because not all of the Company's senior notes are actively traded, their fair value is a Level 2 fair value measurement.

As of June 30, 2020 and December 31, 2019, the Company's senior notes had a fair value of approximately $ 4.4 billion and $ 3.9 billion, respectively, and a carrying value of approximately $ 4.5 billion and $ 3.9 billion, respectively, inclusive of any current portion.

The fair value of the Company's note payable to EQM Midstream Partners, LP (EQM) is estimated using an income approach model with a market-

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

based discount rate and is a Level 3 fair value measurement.

As of June 30, 2020 and December 31, 2019, the Company's note payable to EQM had a fair value of approximately $ 132 million and $ 128 million, respectively, and a carrying value of approximately $ 108 million and $ 110 million, respectively, inclusive of any current portion.

As of September 30, 2020 and December 31, 2019, the Company's senior notes had a fair value of approximately $ 4.8 billion and $ 3.9 billion, respectively, and a carrying value of approximately $ 4.4 billion and $ 3.9 billion, respectively, inclusive of any current portion.

The fair value of the Company's note payable to EQM Midstream Partners, LP (EQM) is estimated using an income approach model with a market-based discount rate and is a Level 3 fair value measurement.

As of September 30, 2020 and December 31, 2019, the Company's note payable to EQM had a fair value of approximately $ 131 million and $ 128 million, respectively, and a carrying value of approximately $ 106 million and $ 110 million, respectively, inclusive of any current portion.

See Note 6 for further discussion of the Company's debt.

3 unchanged sentences

See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the fair value of assets related to the impairment and expiration of leases.

For the six months ended June 30, 2020 and 2019, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the six months ended June 30, 2020.

The Company recorded income tax benefit at an effective tax rate of 14.0 % for the six months ended June 30, 2020 and income tax expense at an effective tax rate of 19.6 % for the six months ended June 30, 2019.

The Company's effective tax rate for the six months ended June 30, 2020 was lower compared to the U.S.

federal statutory rate due primarily to valuation allowances provided against federal and state deferred tax assets for the additional unrealized losses on the Company's investment in Equitrans Midstream incurred in the first half of 2020 that, if such investment is sold, would become capital losses.

For the nine months ended September 30, 2020, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

For the nine months ended September 30, 2019, the Company determined that this method of applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss did not provide a reliable estimate of the provision for income taxes because small fluctuations in estimated income resulted in significant changes in the estimated annual tax rate.

Therefore, the Company instead used a discrete effective tax rate method to

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

calculate taxes for the nine months ended September 30, 2019.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the nine months ended September 30, 2020.

The Company recorded income tax benefit at an effective tax rate of 22.3 % and 17.1 % for the nine months ended September 30, 2020 and 2019, respectively.

The Company's effective tax rate for the nine months ended September 30, 2020 was higher compared to the U.S.

federal statutory rate due primarily to state taxes, including valuation allowances that limit certain state tax benefits, and the benefit related to the settlement of the Company's 2010, 2011 and 2012 audit with the Internal Revenue Service (IRS).

These items were partly offset by valuation allowances provided against federal and state deferred tax assets for the additional unrealized losses on the Company's investment in Equitrans Midstream incurred through September 30, 2020 that, if such investment is sold, would become capital losses.

The Company believes it is more likely than not that such additional unrealized losses will not be realized for tax purposes.

The Company's effective tax rate for the six months ended June 30, 2019 was lower compared to the U.S.

federal statutory rate due primarily to the Company's reversal of its valuation allowances related to state net operating losses utilization against future taxable income and Alternative Minimum Tax (AMT) refund sequestration.

The Company's reversal of its AMT refund valuation allowance resulted from a first quarter 2019 Internal Revenue Service (IRS) announcement that reversed the IRS's prior position that 6.2 % of AMT refunds are subject to sequestration by the U.S.

The Company's effective tax rate for the nine months ended September 30, 2019 was lower compared to the U.S.

federal statutory rate due primarily to state valuation allowances that limit certain state tax benefits as well as the Company's recognition of executive compensation and transaction costs, which are not deductible for tax purposes, partly offset by state taxes recorded in 2019 and the Company's reversal of its valuation allowances related to state net operating losses utilization against future taxable income and Alternative Minimum Tax (AMT) refund sequestration.

The Company's reversal of its AMT refund valuation allowance resulted from a first quarter 2019 IRS announcement that reversed the IRS's prior position that 6.2 % of AMT refunds are subject to sequestration by the U.S.

federal government.

1 unchanged sentence

Congress enacted the Coronavirus Aid, Relief and Economic Security Act (the CARES Act).

The CARES Act accelerated the Company's ability to claim federal refunds of AMT credits, increasing the Company's expected, collectable refund in 2020 by $ 94.8 million to $ 379.3 million, of which $ 189.6 million was received during the three months ended June 30, 2020 and the remainder is recorded in tax receivable in the Condensed Consolidated Balance Sheet as of June 30, 2020.

The CARES Act accelerated the Company's ability to claim federal refunds of AMT credits, increasing the Company's expected collectable refund in 2020 by $ 94.8 million to $ 379.3 million, all of which, plus interest of $ 12.1 million, was received during the nine months ended September 30, 2020.

The CARES Act also increased the interest expense limitation from 30% to 50% of adjusted taxable income (ATI) and provides the Company the option to use its 2019 ATI in 2020.

3 unchanged sentences

The Company has a $ 2.5 billion credit facility that expires in July 2022.

The Company had $ 0.8 billion of letters of credit outstanding under its credit facility as of June 30, 2020 and no letters of credit outstanding under its credit facility as of December 31, 2019.

Under the Company's credit facility, for the three months ended June 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $ 173 million and $ 572 million, respectively, the average daily balances were approximately $ 35 million and $ 276 million, respectively, and interest was incurred at weighted average annual interest rates of 2.4 % and 4.0 %, respectively.

Under the Company's credit facility, for the six months ended June 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $ 356 million and $ 1,108 million, respectively, the average daily balances were approximately $ 60 million and $ 459 million, respectively, and interest was incurred at weighted average annual interest rates of 2.9 % and 4.0 %, respectively.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Based on the Company's senior notes credit rating as of June 30, 2020, the margin on base rate loans under the Company's credit facility was 1.00 % and the margin on Eurodollar rate loans was 2.00 %.

The Company had $ 0.8 billion of letters of credit outstanding under its credit facility as of September 30, 2020 and no letters of credit outstanding under its credit facility as of December 31, 2019.

Under the Company's credit facility, for the three months ended September 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $ 399 million and $ 319 million, respectively, the average daily balances were approximately $ 149 million and $ 105 million, respectively, and interest was incurred at weighted average annual interest rates of 2.2 % and 3.6 %, respectively.

Under the Company's credit facility, for the nine months ended September 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $ 399 million and $ 1,108 million, respectively, the average daily balances were approximately $ 90 million and $ 340 million, respectively, and interest was incurred at weighted average annual interest rates of 2.5 % and 4.0 %, respectively.

Based on the Company's senior notes credit rating as of September 30, 2020, the margin on base rate loans under the Company's credit facility was 1.00 % and the margin on Eurodollar rate loans was 2.00 %.

Term loan facility.

The Company had a $ 1.0 billion term loan facility that was scheduled to mature in May 2021.

During the second quarter 2020, the Company used proceeds from the offering of its Convertible Notes (see below), income tax refunds received during the quarter (see Note 5) and proceeds from the 2020 Divestiture (see Note 10) to fully repay its term loan facility.

For the three and six months ended June 30, 2020, the average daily balances were approximately $ 431 million and $ 692 million, respectively, and interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 2.2 % and 2.6 %, respectively.

As of June 30, 2019, the Company had $ 1.0 billion of outstanding borrowings under its term loan facility.

For the period May 31, 2019 through June 30, 2019, interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 3.4 %.

Based on the Company's senior notes credit rating as of June 30, 2020 and December 31, 2019, the margin on the Company's term loan facility borrowings was 1.50 % and 1.00 %, respectively.

Under the Company's term loan facility, from January 1, 2020 through June 30, 2020, the average daily balance was approximately $ 692 million and interest was incurred at a weighted average annual interest rate of 2.6 %.

As of September 30, 2019, the Company had $ 1.0 billion of outstanding borrowings under its term loan facility.

For the period May 31, 2019 through September 30, 2019, interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 3.3 %.

Adjustable Rate Notes.

On January 21, 2020, the Company issued $ 1.0 billion aggregate principal amount of 6.125 % senior notes due February 1, 2025 and $ 750 million aggregate principal amount of 7.000 % senior notes due February 1, 2030 (together, the Adjustable Rate Notes).

The Company used the net proceeds from the Adjustable Rate Notes to repay $ 500 million aggregate principal amount of the Company's floating rate notes, $ 500 million aggregate principal amount of the Company's 2.50 % senior notes, $ 500 million aggregate principal amount of the Company's 4.875 % senior notes and $ 200 million of the Company's term loan facility borrowings.

The Company used the net proceeds from the Adjustable Rate Notes to repay $ 500 million aggregate

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

principal amount of the Company's floating rate notes, $ 500 million aggregate principal amount of the Company's 2.50 % senior notes, $ 500 million aggregate principal amount of the Company's 4.875 % senior notes and $ 200 million of the Company's term loan facility borrowings.

The Company fully redeemed its floating rate notes and 2.50 % senior notes at a price of 100 % and 100.446 % (inclusive of a make whole call premium), respectively, of each note's principal amount plus accrued but unpaid interest of $ 1.2 million and $ 4.2 million, respectively.

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The $ 500 million aggregate principal amount of the Company's 4.875 % senior notes was redeemed at a total cost of $ 517.4 million, inclusive of a tender premium of $ 10.0 million and accrued but unpaid interest of $ 7.4 million.

In addition, in April 2020, the Company repurchased $ 4.6 million aggregate principal amount of its 4.875 % senior notes pursuant to open market purchases.

As a result of downgrades of the Company's senior notes credit rating that occurred subsequent to the issuance of the Adjustable Rate Notes, the interest rate on the 6.125 % senior notes will increase to 7.875 % and the interest rate on the 7.000 % senior notes will increase to 8.750 % beginning with the interest payment period that starts on August 1, 2020.

As a result of downgrades of the Company's senior notes credit rating that occurred subsequent to the issuance of the Adjustable Rate Notes, the interest rate on the 6.125 % senior notes increased to 7.875 % and the interest rate on the 7.000 % senior notes increased to 8.750 % beginning with the interest payment period that started on August 1, 2020.

The adjusted interest rate under the Adjustable Rate Notes cannot exceed 2 % of the original interest rate first set forth on the face of the senior notes.

4.875 % Senior Notes .

In April 2020, the Company repurchased $ 4.6 million aggregate principal amount of its 4.875 % senior notes pursuant to open market purchases.

In August 2020, the Company repurchased $ 101.5 million aggregate principal amount of the Company's 4.875 % senior notes at a total cost of $ 105.9 million, inclusive of a tender premium of $ 3.3 million and accrued but unpaid interest of $ 1.1 million.

Convertible Notes .

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On or after February 1, 2026, holders of the Convertible Notes may convert their Convertible Notes, at their option, at any time until the close of business on the second scheduled trading date immediately preceding May 1, 2026.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Upon conversion of the Convertible Notes, the Company intends to use a combined settlement approach to satisfy its obligation by paying or delivering to holders of the Convertible Notes cash equal to the principal amount of the obligation and EQT common stock for amounts that exceed the principal amount of the obligation.

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A sinking fund is not provided for the Convertible Notes.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The initial conversion rate for the Convertible Notes is 66.6667 shares of EQT common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of $ 15.00 per share of EQT common stock.

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The cost to purchase the Capped Call Transactions were recorded as a reduction to equity and will not be remeasured.

As of June 30, 2020, the net carrying amount of the Convertible Notes liability component consisted of principal of $ 500 million less the unamortized debt discount of $ 138.7 million and unamortized issuance costs of $ 11.9 million.

During the three and six months ended June 30, 2020, the Company recognized interest expense related to the Convertible Notes of $ 4.9 million, consisting of contractual interest expense of $ 1.5 million, amortization of the debt discount of $ 3.2 million and amortization of issuance costs of $ 0.2 million.

For the three months ended June 30, 2020, the Convertible Notes had a net shareholders' equity impact of $ 63.6 million, which consisted of the conversion option equity component of $ 100.9 million less the Capped Call Transactions costs of $ 32.5 million and issuance costs attributable to the equity component of $ 4.8 million.

For the nine months ended September 30, 2020, the Convertible Notes had a net shareholders' equity impact of $ 63.6 million, which consisted of the conversion option equity component of $ 100.9 million less the Capped Call Transactions costs of $ 32.5 million and issuance costs attributable to the equity component of $ 4.8 million.

As of September 30, 2020, the net carrying amount of the Convertible Notes liability component consisted of principal of $ 500 million less the unamortized debt discount of $ 134.0 million and unamortized issuance costs of $ 11.6 million.

The table below summarizes the components of interest expense related to the Convertible Notes.

Three Months Ended

September 30, 2020 Nine Months Ended

September 30, 2020

Contractual interest expense $ 2,188 $ 3,695

Amortization of debt discount 4,767 7,998

Amortization of issuance costs 315 524

Total Convertible Notes interest expense $ 7,270 $ 12,217

Surety Bonds .

During the nine months ended September 30, 2020, the Company issued approximately $ 93 million in surety bonds in response to its credit downgrades by Moody's, S&P and Fitch.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Surety Bonds .

During the three months ended June 30, 2020, the Company issued approximately $ 93 million in surety bonds in response to its recent credit downgrades by Moody's, S&P and Fitch.

Earnings Per Share (EPS)

Earnings Per Share

In periods when the Company reports a net loss, all options, restricted stock, performance awards and stock appreciation rights are excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on loss per share.

As a result, for the three and six months ended June 30, 2020, all securities, totaling 6,769,822 and 6,739,305 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

For the three and six months ended June 30, 2019, potentially dilutive securities included in the calculation of diluted weighted average shares outstanding were 124,250 and 235,743 , respectively.

For both the three and six months ended June 30, 2019, options to purchase common stock of 1,885,529 were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

As a result, for the three and nine months ended September 30, 2020, all securities, totaling 6,671,532 and 6,715,083 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

Likewise, for the three and nine months ended September 30, 2019, all securities, totaling 2,998,033 and 3,070,567 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

As discussed in Note 6, the Company issued the Convertible Notes during the second quarter of 2020 and, upon conversion of the Convertible Notes, intends to use a combined settlement approach to satisfy its obligation under the Convertible Notes.

As such, there is no adjustment to the diluted EPS numerator for the cash-settled portion of the instrument.

In addition, for the three and six months ended June 30, 2020, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

In addition, for the three and nine months ended September 30, 2020, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

Changes in Accumulated OCI (Loss) by Component

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net of tax Accumulated OCI (loss),

April 1, 2019 $ ( 345 ) $ ( 5,439 ) $ ( 5,784 )

July 1, 2019 $ ( 303 ) $ ( 5,363 ) $ ( 5,666 )

Losses reclassified from accumulated OCI, net of tax 43 (a) 77 (b) 120

June 30, 2019 $ ( 303 ) $ ( 5,363 ) $ ( 5,666 )

April 1, 2020 $ — $ ( 5,187 ) $ ( 5,187 )

September 30, 2019 $ ( 260 ) $ ( 5,286 ) $ ( 5,546 )

July 1, 2020 $ — $ ( 5,115 ) $ ( 5,115 )

Losses reclassified from accumulated OCI, net of tax — 72 (b)

June 30, 2020 $ — $ ( 5,115 ) $ ( 5,115 )

September 30, 2020 $ — $ ( 5,043 ) $ ( 5,043 )

January 1, 2019 $ ( 387 ) $ ( 5,019 ) $ ( 5,406 )

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Change in accounting principle — ( 496 ) (c) ( 496 )

June 30, 2019 $ ( 303 ) $ ( 5,363 ) $ ( 5,666 )

September 30, 2019 $ ( 260 ) $ ( 5,286 ) $ ( 5,546 )

January 1, 2020 $ — $ ( 5,199 ) $ ( 5,199 )

Losses reclassified from accumulated OCI, net of tax — 156 (b)

June 30, 2020 $ — $ ( 5,115 ) $ ( 5,115 )

September 30, 2020 $ — $ ( 5,043 ) $ ( 5,043 )

(a) Losses, net of tax, related to interest rate cash flow hedges were reclassified from accumulated OCI into interest expense.

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EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Equitrans Share Exchange

On February 26, 2020, the Company entered into two share purchase agreements (the Share Purchase Agreements) with Equitrans Midstream, pursuant to which, among other things, the Company sold to Equitrans Midstream a total of 25,299,752 shares, or 50 % of its ownership, of Equitrans Midstream's common stock in exchange for approximately $ 52 million in cash and rate relief under certain of the Company's gathering contracts with EQM, an affiliate of Equitrans Midstream (the Equitrans Share Exchange).

The transactions contemplated by the Share Purchase Agreements closed on March 5, 2020 (the Share Purchase Closing Date).

The transactions contemplated by the Share Purchase Agreements closed on March 5, 2020 (the Share Purchase

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Closing Date).

The rate relief was effected through the execution of the Consolidated GGA (defined herein).

As of June 30, 2020, the Company owned 25,299,751 shares of Equitrans Midstream's common stock.

As of September 30, 2020, the Company owned 25,296,026 shares of Equitrans Midstream's common stock.

On February 26, 2020, the Company entered into a gas gathering and compression agreement (the Consolidated GGA) with an affiliate of EQM, pursuant to which, among other things, EQM agreed to provide to the Company gas gathering services in the Marcellus and Utica Shales of Pennsylvania and West Virginia, and the Company committed to an initial annual minimum volume commitment of 3.0 Bcf per day and an acreage dedication in Pennsylvania and West Virginia.

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In addition, the Consolidated GGA provides a cash payment option that grants the Company the right to receive payments from EQM in the event that the MVP in-service date has not occurred prior to January 1, 2022.

On the Share Purchase Closing Date, the Company recorded in the Condensed Consolidated Balance Sheet a contract asset representing the estimated fair value of the rate relief provided by the Consolidated GGA of $ 410 million, of which $ 54.5 million was classified as current as of June 30, 2020, a derivative liability related to the Henry Hub Cash Bonus of approximately $ 117 million and a decrease in the Company's investment in Equitrans Midstream of approximately $ 158 million.

On the Share Purchase Closing Date, the Company recorded in the Condensed Consolidated Balance Sheet a contract asset representing the estimated fair value of the rate relief provided by the Consolidated GGA of $ 410 million, a derivative liability related to the Henry Hub Cash Bonus of approximately $ 117 million and a decrease in the Company's investment in Equitrans Midstream of approximately $ 158 million.

The resulting gain of approximately $ 187 million was recorded in the Statement of Condensed Consolidated Operations.

Beginning in the first quarter of 2021, the Company will recognize amortization of the contract asset over a period of four years in a manner consistent with the expected timing of the Company's realization of the economic benefits of the rate relief provided by the Consolidated GGA.

As of June 30, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 130 million.

As of September 30, 2020, the current portion of the contract asset was approximately $ 84 million.

As of September 30, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 152 million.

The fair value of the contract asset was based on significant inputs that are not observable in the market and, as such, is a Level 3 fair value measurement.

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Asset Exchange Transactions.

During the first and second quarters of 2020, the Company closed on various acreage trade agreements (collectively, the 2020 Asset Exchange Transactions), pursuant to which the Company exchanged approximately 11,700 aggregate net revenue interest acres across Greene, Allegheny and Westmoreland Counties, Pennsylvania and Wetzel and Marshall Counties, West Virginia for approximately 11,700 aggregate net revenue interest acres across Greene and Washington Counties, Pennsylvania and Wetzel County, West Virginia.

As a result of the 2020 Asset Exchange Transactions, the Company recognized a loss of $ 6.7 million and $ 55.6 million in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the three and six months ended June 30, 2020, respectively.

The fair value of leases acquired were based on inputs that are not observable in the market and, as such, is a Level 3 fair value measurement.

During the nine months ended September 30, 2020, the Company closed on various acreage trade agreements (collectively, the 2020 Asset Exchange Transactions), pursuant to which the Company exchanged approximately 14,600 aggregate net revenue interest acres across Greene, Allegheny, Westmoreland and Washington Counties, Pennsylvania;

Wetzel and Marshall Counties, West Virginia;

and Belmont County, Ohio for approximately 14,600 aggregate net revenue interest acres across Greene and Washington Counties, Pennsylvania;

Wetzel County, West Virginia;

and Belmont County, Ohio.

As a result of the 2020 Asset Exchange Transactions, the Company recognized a loss of $ 11.6 million and $ 67.2 million in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the three and nine months ended September 30, 2020, respectively.

During the third quarter of 2019, the Company closed on an acreage trade agreement and purchase and sale agreement with a third party (the 2019 Asset Exchange Transaction), pursuant to which the Company exchanged approximately 16,000 net revenue interest acres primarily in Wetzel and Marion Counties, West Virginia.

Under the terms of the purchase and sale agreement, the Company assigned to the third party a gas gathering agreement that covers a portion of Tyler County, West Virginia and provides a firm gathering commitment, and the Company was released from its remaining obligations under that gas gathering agreement.

As consideration for the third party's assumption of the Tyler County gas gathering agreement, the Company agreed to reimburse the third party for certain firm gathering costs under the gas gathering agreement through December 2022 and assign the third party an additional approximately 3,000 net revenue interest acres in Tyler and Wetzel Counties, West Virginia.

As a result of the 2019 Asset Exchange Transaction, the Company recognized a net loss of $ 13.9 million in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the three months ended September 30, 2019.

As of September 30, 2020 and December 31, 2019, the liability for the reimbursement of those certain firm gathering costs was $ 28.7 million and $ 36.8 million and was recorded in other current and noncurrent liabilities in the Condensed Consolidated Balance Sheets.

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The fair value of leases acquired and, for the 2019 Asset Exchange Transaction, the fair value of the liability for the reimbursement of certain firm gathering costs were based on inputs that are not observable in the market and, as such, are a Level 3 fair value measurement.

See Note 4 for a description of the fair value hierarchy.

Key assumptions used in the fair value calculation included market-based prices for comparable acreage.

Key assumptions used in the fair value calculations included market-based prices for comparable acreage and the net present value of expected payments due for reimbursement.

2020 Divestiture.

On May 11, 2020, the Company closed a transaction to sell certain non-strategic assets located in Pennsylvania and West Virginia (the 2020 Divestiture) for an aggregate purchase price of approximately $ 125 million in cash, subject to customary purchase price adjustments and the Contingent Consideration defined and discussed below.

Pennsylvania assets sold included 80 Marcellus wells and approximately 33 miles of gathering lines;

West Virginia assets sold included 809 conventional wells and approximately 154 miles of gathering lines.

In addition, the 2020 Divestiture relieved the Company of approximately

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

$ 49 million in asset retirement obligations and other liabilities associated with the sold assets.

The Pennsylvania assets sold included 80 Marcellus wells and approximately 33 miles of gathering lines;

the West Virginia assets sold included 809 conventional wells and approximately 154 miles of gathering lines.

In addition, the 2020 Divestiture relieved the Company of approximately $ 49 million in asset retirement obligations and other liabilities associated with the sold assets.

Proceeds from the sale were used to pay down the Company's term loan facility.

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Such Contingent Consideration is conditioned upon the three-month average of the NYMEX Henry Hub natural gas settlement price relative to stated floor and target price thresholds beginning on August 31, 2020 and ending on November 30, 2022.

The Contingent Consideration represents an embedded derivative that had no fair value as of both May 11, 2020 and June 30, 2020.

The fair value of the Contingent Consideration was based on significant inputs that were interpolated from observable market data and, as such, is a Level 2 fair value measurement.

The Contingent Consideration represents an embedded derivative that is recorded at fair value in the Consolidated Balance Sheets.

The Contingent Consideration had no fair value as of May 11, 2020 and June 30, 2020 and a fair value of $ 5.1 million as of September 30, 2020.

Changes in fair value are recorded in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations.

The fair value of the Contingent Consideration is based on significant inputs that are interpolated from observable market data and, as such, is a Level 2 fair value measurement.

See Note 4 for a description of the fair value hierarchy.

As a result of the 2020 Divestiture, the Company recognized a loss of $ 42.5 million in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the second quarter of 2020.

As a result of the 2020 Divestiture, the Company recognized a net loss of $ 36.8 million, including the impact of the change in fair value of the Contingent Consideration, in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the nine months ended September 30, 2020.

Share-based Compensation Plans

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EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements