What changed in this filing

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Item 3. Legal Proceedings

2021-02-17 compared with 2020-02-27 · 55 added, 50 removed, 51 unchanged (67% of the section changed)

Legal Proceedings

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against the Company.

While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings.

The Company accrues legal and other direct costs related to loss contingencies when actually incurred.

The Company has established reserves it believes to be appropriate for pending matters and, after consultation with counsel and giving appropriate consideration to available insurance, the Company believes that the ultimate outcome of any matter currently pending against the Company will not materially affect the financial position, results of operations or liquidity of the Company.

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against us.

While the amounts claimed may be substantial, we are unable to predict with certainty the ultimate outcome of such claims and proceedings.

We accrue legal and other direct costs related to loss contingencies when actually incurred.

We have established reserves in amounts that we believe to be appropriate for pending matters and, after consultation with counsel and giving appropriate consideration to available insurance, we believe that the ultimate outcome of any matter currently pending against us will not materially impact our financial position, results of operations or liquidity.

Environmental Proceedings

Erosion and Sedimentation Release, Greene County, Pennsylvania.

Between September 2018 and December 2018, the Company received multiple Notices of Violation (NOVs) from the PADEP relating to the Don Flamenco Pad in Greene County, Pennsylvania.

The NOVs alleged violations of the Oil and Gas Act and The Clean Streams Law in connection with erosion and sedimentation controls and an unstabilized fill slope.

The Company cooperated fully with the PADEP to take appropriate actions to address the erosion and sedimentation control issues and the unstabilized fill slope.

The Company entered into a Consent Order and Agreement with the PADEP on January 10, 2020 and under the terms of the agreement, the Company paid a civil penalty of $151,415 in January 2020 to resolve this matter.

The payment of the civil penalty did not have a material impact on the financial position, results of operations or liquidity of the Company.

Produced Water Release, Marshall County, West Virginia.

On November 12, 2019, the Company received an NOV from the West Virginia Department of Environmental Protection (the WVDEP) relating to the Goshorn Pad in Marshall County, West Virginia.

On November 12, 2019, we received a Notice of Violation (NOV) from the West Virginia Department of Environmental Protection (WVDEP) relating to the Goshorn Pad in Marshall County, West Virginia.

The NOV alleged violations of Water Pollution Control Rules in connection with a release of produced water from secondary containment at a Goshorn Pad tank battery.

The Company cooperated fully with the WVDEP to take appropriate actions to address the secondary containment issues and remediation of the release.

While the Company expects the WVDEP's claims to result in penalties that exceed $100,000, the Company expects that the resolution of this matter will not have a material impact on the financial position, results of operations or liquidity of the Company.

We cooperated fully with WVDEP to take appropriate actions to address the secondary containment issues and remediation of the release, and this matter was substantially resolved in March 2020.

We were not assessed any monetary penalty for this matter, and the resolution of this matter did not have a material impact on our financial position, results of operations or liquidity.

Secondary Containment underneath Gas Processing Units (GPUs), Allegheny, Greene and Washington Counties, Pennsylvania.

On April 1, 2020, we received a draft Consent Order and Agreement from the Pennsylvania Department of Environmental Protection (PADEP) claiming that we failed to install secondary containment systems in accordance with 25 Pa.

Code § 78a.64a(b) underneath 228 GPUs located in southwest Pennsylvania between October 8, 2016 and February 4, 2019.

On February 4, 2019, we voluntarily disclosed a list of GPUs that did not meet the requirements of 25 Pa.

Code § 78a.64a(b).

On December 17, 2020, we entered into the Consent Order and Agreement with PADEP, pursuant to which we agreed to install

secondary containment systems in compliance with 25 Pa.

Code § 78a.64a(b) on all new GPU installations going forward, among other things, and this matter was resolved.

We were not assessed any monetary penalty for this matter, and the resolution of this matter did not have a material impact on our financial position, results of operations or liquidity.

Other Legal Proceedings

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On May 2, 2014, royalty owners whose predecessors had entered into a 960-acre lease (the Stout Lease) and several additional leases comprising 6,356-acres (the Cities Services Lease) with EQT Production Company's predecessor, each covering acreage in Doddridge County, West Virginia, filed a complaint in the Circuit Court of Doddridge County, West Virginia.

The complaint alleged that EQT Production Company and a number of related companies, including the Company, EQT Gathering, LLC, EQT Energy, LLC, and EQM Midstream Services, LLC (formerly known as EQT Midstream Services, LLC, the general partner of the Company's former midstream affiliate), underpaid on royalties for gas produced under the leases and took improper post-production deductions from the royalties paid.

With respect to the Stout Lease, the plaintiffs also asserted that the Company committed a trespass by drilling on the leased property, claiming that the Company had no right under the lease to drill in the Marcellus shale formation.

The complaint alleged that EQT Production Company and a number of related companies, including EQT Corporation, EQT Gathering, LLC, EQT Energy, LLC, and EQM Midstream Services, LLC (formerly known as EQT Midstream Services, LLC, the general partner of our former midstream affiliate), underpaid on royalties for gas produced under the leases and took improper post-production deductions from the royalties paid.

With respect to the Stout Lease, the plaintiffs also asserted that we committed a trespass by drilling on the leased property, claiming that we had no right under the lease to drill in the Marcellus Shale formation.

The plaintiffs also asserted claims for fraud, slander of title, punitive damages, pre-judgment interest and attorneys' fees.

1 unchanged sentence

On June 27, 2018, the Court held that EQT Production Company and its marketing affiliate EQT Energy, LLC are alter egos of one another and that royalties paid under the leases should have been based on the price of gas produced under the leases when sold to unaffiliated third parties, and not on the price when the gas was sold from EQT Production Company to EQT Energy, LLC.

Further, on January 14, 2019, the Court entered an Order granting the plaintiffs' motion for summary judgment and declaring that the Company did not have the right to drill in the Marcellus shale formation under the Stout Lease.

The Court also ruled that seven of the Company's wells that have been producing gas under the Stout Lease are trespassing, and that a jury will determine whether the trespass was willful or innocent.

On February 27, 2019, the Company filed a motion seeking permission to immediately appeal the trespass Order to the West Virginia Supreme Court;

Further, on January 14, 2019, the Court entered an Order granting the plaintiffs' motion for summary judgment and declaring that we did not have the right to drill in the Marcellus Shale formation under the Stout Lease.

The Court also ruled that seven of our wells that have been producing gas under the Stout Lease are trespassing, and that a jury will determine whether the trespass was willful or innocent.

On February 27, 2019, we filed a motion seeking permission to immediately appeal the trespass Order to the West Virginia Supreme Court;

however, the motion was denied on March 25, 2019, and the Court continued the trial to September 2019.

On May 28, 2019, the Court entered an Order excluding certain of the Company's costs that could have otherwise offset any damages for innocent trespass under the Stout Lease.

On August 8, 2019,

the Company reached a settlement with the plaintiffs to resolve all claims under the Stout Lease and the Cities Services Lease for $54 million plus lease modifications to address the trespass issue and the calculation of future royalty payments under the leases.

The Company paid $51 million of the settlement in October 2019 and the remaining $3 million of the settlement in January 2020.

Amendments to modify the terms of the Stout Lease are in process and, when finalized, an Order to dismiss the case will be filed with the Court to formally close this matter.

On May 28, 2019, the Court entered an Order excluding certain of our costs that could have otherwise offset any damages for innocent trespass under the Stout Lease.

On August 8, 2019, we reached a settlement with the plaintiffs to resolve all claims under the Stout Lease and the Cities Services Lease for $54 million plus lease modifications to address the trespass issue and the calculation of future royalty payments under the leases.

We paid $51 million of the settlement in October 2019 and the remaining $3 million of the settlement in January 2020, and the Stout Lease was subsequently amended to address the terms agreed to with the plaintiffs under the settlement.

On October 7, 2020, the plaintiffs filed a motion to amend their complaint and to stay entry of an Order of Dismissal.

On January 14, 2021, we filed a motion to enforce the settlement agreed to with the plaintiffs and to seek sanctions.

All recent motions are pending.

Hammerhead Gathering Agreement Dispute.

EQT Corporation and Equitrans Midstream, through certain of our and their subsidiaries, are parties to a gas gathering agreement (the Hammerhead Gathering Agreement) related to Equitrans Midstream's Hammerhead Gas Gathering System.

Pursuant to the terms of the Hammerhead Gathering Agreement, if the "In-Service Date" did not occur on or before October 1, 2020, we may terminate the Hammerhead Gathering Agreement and purchase the Hammerhead Gas Gathering System from Equitrans Midstream for an amount equal to 88% of expenses actually incurred and other obligations made or to be incurred by Equitrans Midstream.

The "In-Service Date" is defined in the Hammerhead Gathering Agreement as "the later of (i) the first Day of the Month immediately following the date on which Gatherer is first able to provide the Gathering Services to Shipper in accordance with the Hammerhead Gathering Agreement and (ii) the first Day of the Month immediately following the date on which the Interconnect Facilities connecting the Gathering System to the Mountain Valley Pipeline are first able to receive deliveries of the Contract MDQ." On September 24, 2020, we initiated arbitration proceedings against Equitrans Midstream, seeking a declaration that we are entitled to terminate the Hammerhead Gathering Agreement and purchase the Hammerhead Gas Gathering System.

The deadline for us to provide notice of our election to terminate the Hammerhead Gathering Agreement and purchase the Hammerhead Gas Gathering System has been tolled while the contract claim is pending in arbitration.

Mine Safety Disclosures

1 unchanged sentence

Information about our Executive Officers (as of February 17, 2021)

Current Title (Year Initially Elected an Executive Officer)

Business Experience

Tony Duran (41)

Chief Information Officer (2019)

Duran was appointed as the Chief Information Officer of the Company in July 2019.

Prior to joining the Company, Mr.

Name and Age Current Title (Year Initially Elected an Executive Officer) Business Experience

Tony Duran (42) Chief Information Officer (2019) Mr.

Duran was appointed as the Chief Information Officer of EQT Corporation in July 2019.

Prior to joining EQT Corporation, Mr.

Duran ran PH6 Labs, a technology incubator he founded, from December 2017 to July 2019.

Prior to that, he served as the Chief Information Officer of Rice Energy Inc.

(independent natural gas and oil company acquired by the Company in November 2017) from January 2016 to November 2017;

(independent natural gas and oil company acquired by EQT Corporation in November 2017) from January 2016 to November 2017;

and as the Interim Chief Information Officer of Express Energy Services (oilfield services company for well construction and well testing services) from September 2015 to December 2015.

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Duran held various positions at National Oilwell Varco (multinational corporation that provides equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry) from May 2002 to August 2015, where he last held the role of Assistant Chief Information Officer.

Lesley Evancho (42)

Chief Human Resources Officer (2019)

Evancho was appointed as the Chief Human Resources Officer of the Company in July 2019.

Prior to joining the Company, Ms.

Lesley Evancho (43) Chief Human Resources Officer (2019) Ms.

Evancho was appointed as the Chief Human Resources Officer of EQT Corporation in July 2019.

Prior to joining EQT Corporation, Ms.

Evancho served as Vice President, Global Talent Management at Westinghouse Electric Company, LLC (nuclear power, fuel and services company) from April 2019 to July 2019;

7 unchanged sentences

(manufacturer of industrial safety equipment) from November 2011 to April 2017.

Chief Accounting Officer (2019)

James was appointed as the Chief Accounting Officer of the Company in November 2019.

Previously, Mr.

James (38) Chief Accounting Officer (2019) Mr.

James was appointed as the Chief Accounting Officer of EQT Corporation in November 2019.

Prior to joining EQT Corporation, Mr.

James served as the Corporate Controller and Chief Accounting Officer of L.B.

1 unchanged sentence

Prior to that he served as the Senior Director, Technical Accounting and Financial Reporting at Rice Energy Inc.

from December 2014 through its acquisition by the Company in November 2017 and until February 2018.

from December 2014 through its acquisition by EQT Corporation in November 2017 and until February 2018.

Prior to joining Rice Energy, Mr.

James was a Senior Manager, Assurance at PricewaterhouseCoopers LLP (public accounting firm), where he worked from August 2005 to November 2014.

Executive Vice President and General Counsel (2019)

Jordan was appointed as the Executive Vice President and General Counsel of the Company in July 2019.

Jordan (40) Executive Vice President, General Counsel and Corporate Secretary (2019) Mr.

Jordan was appointed as the Executive Vice President and General Counsel of EQT Corporation in July 2019 and assumed the role of Corporate Secretary in November 2020.

Jordan served as an advisor to the Rice Investment Group (multi-strategy investment fund investing in all verticals of the oil and gas sectors) from May 2018 until July 2019.

Prior to that, he served as the Senior Vice President, General Counsel and Corporate Secretary of Rice Energy Inc.

and Senior Vice President, General Counsel and Corporate Secretary of Rice Midstream Partners LP (former midstream services affiliate of Rice Energy Inc.), in each case from January 2014 until their acquisition by the Company in November 2017.

From September 2005 to December 2013, Mr.

Jordan was an associate at Vinson & Elkins LLP (an international law firm) representing public and private companies in capital markets offerings and mergers and acquisitions, primarily in the oil and natural gas industry.

Chief Financial Officer (2020)

Khani was appointed as the Chief Financial Officer of the Company in January 2020.

Prior to joining the Company, Mr.

Khani (57) Chief Financial Officer (2020) Mr.

Khani was appointed as the Chief Financial Officer of EQT Corporation in January 2020.

Prior to joining EQT Corporation, Mr.

Khani served as the Executive Vice President and Chief Financial Officer of CONSOL Energy (energy company primarily focused on developing coal interests), from March 2013 to December 2019;

4 unchanged sentences

and as Chief Financial Officer and as a member of the Board of Directors of CONSOL Coal Resources (coal mining affiliate of CONSOL Energy) from August 2017 to December 2019.

President and Chief Executive Officer (2019)

Rice was appointed as President and Chief Executive Officer of the Company in July 2019, when he also was elected to the Company's Board of Directors.

Rice (39) President and Chief Executive Officer (2019) Mr.

Rice was appointed as President and Chief Executive Officer of EQT Corporation in July 2019, when he also was elected to EQT Corporation's Board of Directors.

Rice has served as a Partner at the Rice Investment Group, a multi-strategy fund investing in all verticals of the oil and gas sector, since May 2018.

From October 2014 until its acquisition by the Company in November 2017, Mr.

From October 2014 until its acquisition by EQT Corporation in November 2017, Mr.

Rice was President and Chief Operating Officer of Rice Energy Inc.

3 unchanged sentences

Rice is the brother of Daniel J.

Rice IV, a member of the Company's Board of Directors since November 2017.

All executive officers other than Mr.

Rice have executed non-compete agreements with the Company and serve at the pleasure of the Company's Board of Directors.

Rice IV, a member of EQT Corporation's Board of Directors since November 2017.

All executive officers have either elected to participate in the EQT Corporation Executive Severance Plan (which includes confidentiality and non-compete provisions) or executed non-compete agreements with EQT Corporation, and each of the executive officers serve at the pleasure of our Board of Directors.

Officers are elected annually to serve during the ensuing year or until their successors are elected and qualified, or until death, resignation or removal.

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-K

Item 3. Legal Proceedings