What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-17 compared with 2020-02-27 · 946 added, 786 removed, 766 unchanged (69% of the section changed)

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Statements of Consolidated Comprehensive Income for each of the three years in the period ended December 31, 2020

Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 2019

Consolidated Balance Sheets as of December 31, 2020 and 2019

Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 2020

Statements of Consolidated Equity for each of the three years in the period ended December 31, 2020

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Depreciation, depletion and amortization ('DD&A') of proved oil and natural gas properties

Description of the Matter

At December 31, 2019, the net book value of the Company's proved oil and natural gas properties was $12,592 million, and depreciation, depletion and amortization (DD&A) expense was $1,539 million for the year then ended.

Description of the Matter At December 31, 2020, the net book value of the Company's proved oil and natural gas properties was $13,613 million, and depreciation, depletion and amortization (DD&A) expense was $1,393 million for the year then ended.

As described in Note 1, under the successful efforts method of accounting, DD&A is recorded on a cost center basis using the units-of-production method.

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Auditing the Company’s DD&A calculation is especially complex because of the use of the work of the internal engineers and the independent engineers and the evaluation of management’s determination of the inputs described above used by the specialists in estimating proved natural gas, NGLs and oil reserves.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its process to calculate DD&A, including management's controls over the completeness and accuracy of the financial data provided to the specialists for use in estimating the proved natural gas, NGLs and oil reserves.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its process to calculate DD&A, including management’s controls over the completeness and accuracy of the financial data provided to the specialists for use in estimating the proved natural gas, NGLs and oil reserves.

Our audit procedures included, among others, evaluating the professional qualifications and objectivity of the Company engineer primarily responsible for overseeing the preparation of the reserve estimates by the internal engineering staff and the independent engineers used to audit the estimates.

In addition, in assessing whether we can use the work of the specialists we evaluated the completeness and accuracy of the financial data and inputs described above used by the specialists in estimating proved natural gas, NGLs and oil reserves by agreeing them to source documentation and we identified and evaluated corroborative and contrary evidence.

In addition, we evaluated the completeness and accuracy of the financial data and inputs described above used by the specialists in estimating proved natural gas, NGLs and oil reserves by agreeing them to source documentation and we identified and evaluated corroborative and contrary evidence.

For proved undeveloped reserves, we evaluated management’s development plan for compliance with the SEC rule that undrilled locations are scheduled to be drilled within five years, unless specific circumstances justify a longer time, by assessing consistency of the development projections with the Company’s drill plan and the availability of capital relative to the drill plan.

We also tested the mathematical accuracy of the DD&A calculations, including comparing the proved natural gas, NGLs and oil reserves amounts used to the Company’s reserve report.

Ohio Utica Long-Lived Assets Impairment

Description of the Matter

As more fully described in Note 1 to the consolidated financial statements, the Company recorded an impairment charge of $1,036 million associated with its Ohio Utica long-lived asset grouping for the year ended December 31, 2019.

The write-down to fair value was estimated based on the discounted future expected cash flows related to these assets and estimated proceeds from potentially selling the assets to a third-party.

The determination of fair value included significant judgment and assumptions by management, including risk adjustments for probable reserves, future commodity prices, anticipated production volumes, future operating and development costs, inflation, a weighted average cost of capital (WACC) and estimated proceeds that could be realized upon a potential disposition.

Auditing the Company's impairment calculation involved a high degree of subjectivity as the determination of fair value was based on assumptions as described above about future market and economic conditions.

In addition, the identification of proved properties and anticipated production volumes developed by the Company's engineering staff in conjunction with the reserve estimates described in the preceding critical audit matter, are used as inputs in the cash flow model.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process to estimate fair value for calculating the impairment charge.

For example, we tested controls over management's assessment of the appropriateness of the significant assumptions outlined above that are inputs to the fair value calculation.

Our testing of the Company's estimate of fair value of its Ohio Utica long-lived assets included, among other procedures, evaluating the significant assumptions used and testing the completeness and accuracy of the underlying data.

Accounting for the Equitrans gas gathering agreement

Description of the Matter As more fully described in Note 5 to the consolidated financial statements, on February 26, 2020, the Company entered into the Share Purchase Agreements and the Consolidated Gas Gathering Agreement (the Consolidated GGA) pursuant to which, among other things, the Company sold to Equitrans Midstream 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 Consolidated GGA provides for additional cash bonus payments (the Henry Hub Cash Bonus) payable by the Company to EQM conditioned upon the quarterly average of the NYMEX Henry Hub natural gas settlement price exceeding certain price thresholds during a specified period.

The Company’s initial entry to record this transaction included recognition of a contract asset representing the estimated fair value of the rate relief provided by the Consolidated GGA of $410 million and a derivative liability related to the Henry Hub Cash Bonus of approximately $117 million.

The determination of fair value of these components included significant judgment and assumptions by management, including an estimated production volume forecast, future commodity prices and price volatility, and a market-based discount rate.

Auditing the Company's initial accounting for the Consolidated GGA contract asset and Henry Hub Cash Bonus derivative liability involved a high degree of subjectivity as the determination of fair values was based on assumptions as described above about future market and economic conditions.

Additionally, a detailed analysis of the terms of the relevant agreements was required to determine the existence of any derivatives that may require separate accounting under applicable accounting guidance.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for the Consolidated GGA.

For example, we tested controls over management's assessment of the appropriateness of the significant assumptions outlined above that are inputs to the fair value calculations.

We also tested management’s evaluation of the Consolidated GGA and the identification and evaluation of specific features and the related accounting.

To test the initial accounting for the Consolidated GGA, our audit procedures included, among others, inspection of the underlying agreement and testing management’s application of the relevant accounting guidance, including the determination of the balance sheet classification of each transaction component and the identification of any derivatives included in the arrangements.

We involved professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the accounting for the Consolidated GGA, including conclusions reached with respect to identification and bifurcation of embedded features.

Our testing of the Company’s estimate of fair value of the contract asset and derivative liability related to the Henry Hub option included, among other procedures, evaluating the significant assumptions used and testing the completeness and accuracy of the underlying data.

The audit effort involved the use of our valuation specialists to assist in evaluating the appropriateness of the methodology used in the cash flow models, as well as testing the significant market-related assumptions, such as future commodity prices and the market-based discount rate, used to develop the fair value estimates.

Convertible Notes Issuance

Description of the Matter As described in Note 10 to the consolidated financial statements, in April 2020, the Company issued $500 million of aggregate principal of 1.75% convertible senior notes due May 2026 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

Additionally, the Company entered into separate capped call transactions to reduce potential dilution to the Company’s common stock upon any conversion of the Convertible Notes.

These transactions are collectively referred to as the Convertible Notes Transactions.

To account for the Convertible Notes, the Company was required to separate the Convertible Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have an associated conversion feature.

The carrying amount of the equity component was determined by deducting the fair value of the liability component from the principal value of the Convertible Notes.

Auditing the Company’s accounting for the Convertible Notes Transactions was complex due to the judgment that was required in determining the balance sheet classification of the elements of the Convertible Notes.

Additionally, a detailed analysis of the terms of the Convertible Notes Transactions was required to determine the existence of any derivatives that may require separate accounting under applicable accounting guidance.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Convertible Notes Transactions.

For example, we tested the Company's controls over the initial recognition and measurement of the Convertible Notes Transactions, including the recording of the associated liability and equity components.

We also tested the evaluation of the Convertible Notes and the identification and evaluation of specific features and the related accounting.

To test the initial accounting for the Convertible Notes Transactions, our audit procedures included, among others, inspection of the agreements underlying the Convertible Notes Transactions and testing management’s application of the relevant accounting guidance, including the determination of the balance sheet classification of each transaction and the identification of any derivatives included in the arrangements.

We involved professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the accounting for the convertible notes, including conclusions reached with respect to identification and bifurcation of embedded features.

Valuation of Acquired Proved Reserves

Description of the Matter As described in Note 6 to the consolidated financial statements, the Company completed the acquisition of the Appalachian assets of Chevron U.S.A.

during the year ended December 31, 2020.

The Company’s accounting for the acquisition included determining the fair value of the acquired proved reserves.

The determination of fair value of the acquired proved reserves included significant judgment and assumptions by management, including future commodity prices, anticipated production volumes, future operating costs, and a weighted average cost of capital (WACC).

Auditing the Company's valuation of acquired proved reserves involved a high degree of subjectivity as the determination of fair value was based on assumptions as described above about future market and economic conditions.

In addition, the certain of the assumptions developed by the Company’s engineering staff in conjunction with the reserve estimates described in the preceding critical audit matter, are used as inputs in the cash flow model.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process to estimate fair value for the acquired proved reserves.

For example, we tested controls over management's assessment of the appropriateness of the significant assumptions that are inputs to the fair value calculation and management’s review of the valuation model.

Our audit procedures included, among others, evaluating the professional qualifications and objectivity of the Company engineer primarily responsible for overseeing the preparation of the reserve estimates by the internal engineering staff, the independent engineers used to audit the estimates, and the external valuation specialist used to assist with the determination of the fair value of certain acquired assets.

Our testing of the Company’s estimate of fair value of the acquired proved reserves included, among other procedures, evaluating the significant assumptions used and testing the completeness and accuracy of the underlying data.

The audit effort involved the use of our valuation specialists to assist in evaluating the appropriateness of the methodology used in the cash flow model, as well as testing the significant market-related assumptions described above used to develop the fair value estimate.

We evaluated the reasonableness of management's assumptions by comparing the key market-related assumptions (including future natural gas prices and WACC rates) used in the cash flow model to external market and third-party data and proved locations and anticipated production volumes to the reserve estimates audited by the independent engineers in conjunction with the reserves estimation process.

We also performed sensitivity analyses and a retrospective comparison of forecasted cash flows to actual historical data.

Additionally, we assessed the likelihood of a potential market transaction and if such a transaction were to occur the estimated potential proceeds from such a transaction.

We evaluated the reasonableness of management's assumptions by comparing the key market-related assumptions (including future natural gas prices and WACC rates) used in the cash flow model to external market and third-party data and anticipated production volumes to the reserve estimates audited by the independent engineers.

/s/ Ernst & Young LLP

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In our opinion, EQT Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the assets acquired in the Chevron Acquisition, which are included in the 2020 consolidated financial statements of the Company and constituted 5% of total assets, as of December 31, 2020, and less than 1% of consolidated total operating revenues, for the year ended December 31, 2020.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of assets acquired in the Chevron Acquisition.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related statements of consolidated operations, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2020 and the related notes and the financial statement schedule listed in the Index at Item 15 (a) of the Company and our report dated February 17, 2021 expressed an unqualified opinion thereon.

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YEARS ENDED DECEMBER 31,

2020 2019 2018

(Thousands, except per share amounts)

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Transportation and processing 1,710,734 1,752,752 1,697,001

Production 155,403 153,785 195,775

Exploration 5,484 7,223 6,765

Selling, general and administrative 174,769 170,611 232,543

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Impairment/loss on sale/exchange of long-lived assets 100,729 1,138,287 2,709,976

Impairment of intangible assets

Impairment of intangible and other assets 34,694 15,411 —

Impairment of goodwill — — 530,811

Impairment and expiration of leases 306,688 556,424 279,708

Proxy, transaction and reorganization

Other operating expenses 28,537 199,440 78,008

Total operating expenses 3,936,509 5,568,594 7,340,992

Operating (loss) income

Unrealized loss on investment in Equitrans Midstream Corporation

Dividend and other (income) expense

Operating loss ( 877,666 ) ( 1,152,110 ) ( 2,783,124 )

Gain on Equitrans Share Exchange (see Note 5) ( 187,223 ) — —

Loss on investment in Equitrans Midstream Corporation 314,468 336,993 72,366

Dividend and other income ( 35,512 ) ( 91,483 ) ( 7,017 )

Loss on debt extinguishment 25,435 — —

Interest expense 271,200 199,851 228,958

(Loss) income from continuing operations before income taxes

Loss from continuing operations before income taxes ( 1,266,034 ) ( 1,597,471 ) ( 3,077,431 )

Income tax benefit ( 298,858 ) ( 375,776 ) ( 696,511 )

(Loss) income from continuing operations

Loss from continuing operations ( 967,176 ) ( 1,221,695 ) ( 2,380,920 )

Income from discontinued operations, net of tax — — 373,762

Net (loss) income

Net loss ( 967,176 ) ( 1,221,695 ) ( 2,007,158 )

Net loss attributable to noncontrolling interest ( 10 ) — —

Net income from discontinued operations attributable to noncontrolling interests — — 237,410

Net (loss) income attributable to EQT Corporation

Net loss attributable to EQT Corporation $ ( 967,166 ) $ ( 1,221,695 ) $ ( 2,244,568 )

Amounts attributable to EQT Corporation:

(Loss) income from continuing operations

Loss from continuing operations $ ( 967,166 ) $ ( 1,221,695 ) $ ( 2,380,920 )

Income from discontinued operations, net of tax — — 136,352

Net (loss) income

Earnings per share of common stock attributable to EQT Corporation:

Weighted average common stock outstanding

(Loss) income from continuing operations

Income from discontinued operations

Net (loss) income

Net loss $ ( 967,166 ) $ ( 1,221,695 ) $ ( 2,244,568 )

Loss per share of common stock attributable to EQT Corporation:

Basic and diluted:

Weighted average common stock outstanding 260,613 255,141 260,932

(Loss) income from continuing operations

Loss from continuing operations $ ( 3.71 ) $ ( 4.79 ) $ ( 9.12 )

Income from discontinued operations — — 0.52

Net (loss) income

Net loss $ ( 3.71 ) $ ( 4.79 ) $ ( 8.60 )

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

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YEARS ENDED DECEMBER 31,

Net (loss) income

Other comprehensive income (loss), net of tax:

2020 2019 2018

Net loss $ ( 967,176 ) $ ( 1,221,695 ) $ ( 2,007,158 )

Other comprehensive (loss) income, net of tax:

Net change in cash flow hedges:

Natural gas, net of tax expense (benefit):

$2,584 in 2018 and ($3,191) in 2017

Natural gas, net of tax expense:

$ 2,584 in 2018

— — ( 4,625 )

Interest rate, net of tax expense:

$210, $80 and $105

Other postretirement benefits liability adjustment, net of tax expense:

$ 210 in 2019 and $ 80 in 2018

Other postretirement benefits liability adjustment, net of tax (benefit) expense:

$( 36 ), $ 150 and $ 510

Change in accounting principle (a)

Other comprehensive income (loss)

Comprehensive (loss) income

( 156 ) 316 606

Change in accounting principle — ( 496 ) —

Other comprehensive (loss) income ( 156 ) 207 ( 3,851 )

Comprehensive loss ( 967,332 ) ( 1,221,488 ) ( 2,011,009 )

Comprehensive loss attributable to noncontrolling interest ( 10 ) — —

Comprehensive income from discontinued operations attributable to noncontrolling interests — — 237,410

Comprehensive (loss) income attributable to EQT Corporation

Related to adoption of Accounting Standards Update (ASU) 2018-02.

Comprehensive loss attributable to EQT Corporation $ ( 967,322 ) $ ( 1,221,488 ) $ ( 2,248,419 )

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

EQT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Current assets:

Cash and cash equivalents $ 18,210 $ 4,596

Accounts receivable (less provision for doubtful accounts:

$ 6,239 and $ 6,861 )

566,552 610,088

Derivative instruments, at fair value 527,073 812,664

Income tax receivable — 298,854

Prepaid expenses and other 103,615 28,653

Total current assets 1,215,450 1,754,855

Property, plant and equipment 21,995,249 21,655,351

Accumulated depreciation and depletion 5,940,984 5,499,861

Net property, plant and equipment 16,054,265 16,155,490

Contract asset 410,000 —

Investment in Equitrans Midstream Corporation 203,380 676,009

Other assets 230,374 222,873

Total assets $ 18,113,469 $ 18,809,227

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of debt $ 154,161 $ 16,204

Accounts payable 705,461 796,438

Derivative instruments, at fair value 600,877 312,696

Other current liabilities 301,911 220,564

Total current liabilities 1,762,410 1,345,902

Credit facility borrowings 300,000 294,000

Term Loan Facility borrowings — 999,353

Senior notes 4,371,467 3,878,366

Note payable to EQM Midstream Partners, LP 99,838 105,056

Deferred income taxes 1,371,967 1,485,814

Other liabilities and credits 945,057 897,148

Total liabilities 8,850,739 9,005,639

Shareholders' equity:

Common stock, no par value,

shares authorized:

640,000 and 320,000 , shares issued:

280,003 and 257,003

8,241,684 7,818,205

Treasury stock, shares at cost:

1,658 and 1,832

( 29,348 ) ( 32,507 )

Retained earnings 1,048,259 2,023,089

Accumulated other comprehensive loss ( 5,355 ) ( 5,199 )

Total common shareholders' equity 9,255,240 9,803,588

Noncontrolling interests in consolidated subsidiaries 7,490 —

Total equity 9,262,730 9,803,588

Total liabilities and shareholders' equity $ 18,113,469 $ 18,809,227

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

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

YEARS ENDED DECEMBER 31,

2020 2019 2018

Cash flows from operating activities:

Net (loss) income

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

Deferred income tax benefit

Net loss $ ( 967,176 ) $ ( 1,221,695 ) $ ( 2,007,158 )

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

Deferred income tax expense (benefit) ( 155,840 ) ( 275,063 ) ( 510,405 )

Depreciation and depletion 1,393,465 1,538,745 1,729,739

Amortization of intangible assets 26,006 35,916 77,374

Impairment of long-lived assets and leases and exploratory well costs

Impairment/loss on sale/exchange of long-lived assets and leases 442,111 1,710,122 2,989,684

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

Impairment of goodwill — — 798,689

Unrealized loss on investment in Equitrans Midstream Corporation

Loss on investment in Equitrans Midstream Corporation 314,468 336,993 72,366

Loss on debt extinguishment 25,435 — —

Amortization, accretion and other

Share-based compensation expense 19,552 31,233 25,189

Amortization, accretion and other 37,414 23,296 ( 33,039 )

(Gain) loss on derivatives not designated as hedges ( 400,214 ) ( 616,634 ) 178,591

Cash settlements received (paid) on derivatives not designated as hedges 897,190 246,639 ( 225,279 )

Net premiums received on derivative instruments

Net premiums (paid) received on derivative instruments ( 46,665 ) 22,616 —

Changes in other assets and liabilities:

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Accounts payable ( 29,193 ) ( 238,674 ) 457,113

Tax receivable

Income tax receivable and payable 322,763 ( 167,281 ) ( 117,188 )

Other current assets ( 68,628 ) 54,776 ( 28,256 )

Other items, net ( 49,468 ) ( 61,608 ) 7,898

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Capital expenditures ( 1,042,231 ) ( 1,602,454 ) ( 2,999,037 )

Cash paid for Rice Merger and other acquisitions (see Note 8), net of cash acquired

Cash paid for acquisitions (see Note 6) ( 691,942 ) — —

Capital expenditures for discontinued operations — — ( 732,727 )

Net sales of trading securities

Exploratory dry hole costs

Capital contributions to Mountain Valley Pipeline, LLC — — ( 820,943 )

Proceeds from sale of assets 126,080 — 583,381

Cash received for Equitrans Share Exchange 52,323 — —

Other investing activities ( 30 ) 1,312 ( 9,778 )

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Cash flows from financing activities:

Net proceeds from issuance of common stock 340,923 — —

Proceeds from borrowings on credit facility 3,118,250 2,978,750 8,637,500

Repayment of borrowings on credit facility ( 3,112,250 ) ( 3,484,750 ) ( 8,953,500 )

Proceeds from borrowings on term loan facility

Debt issuance costs and credit facility origination fees

Proceeds from issuance of debt 2,600,000 1,000,000 2,500,000

Debt issuance costs and Capped Call Transactions (See Note 10) ( 71,056 ) ( 913 ) ( 40,966 )

Repayments and retirements of debt ( 2,822,262 ) ( 704,661 ) ( 8,376 )

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Repurchase of common stock — — ( 27 )

Distributions to noncontrolling interests

Contribution to Strike Force Midstream LLC by minority owner, net of distribution

Contributions from (distributions to) noncontrolling interests 7,500 — ( 380,651 )

Acquisition of 25 % of Strike Force Midstream LLC

— — ( 175,000 )

Net cash transferred at Separation and Distribution — — ( 129,008 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities 31,713 ( 249,453 ) 859,020

Net change in cash and cash equivalents 13,614 1,109 ( 143,828 )

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EQT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Current assets:

Cash and cash equivalents

Accounts receivable (less provision for doubtful accounts:

$6,861 and $8,648)

Derivative instruments, at fair value

Tax receivable

Prepaid expenses and other

Total current assets

Property, plant and equipment

Accumulated depreciation and depletion

Net property, plant and equipment

Intangible assets, net

Investment in Equitrans Midstream Corporation

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of debt

Accounts payable

Derivative instruments, at fair value

Other current liabilities

Total current liabilities

Credit facility borrowings

Term loan facility borrowings

Note payable to EQM Midstream Partners, LP

Deferred income taxes

Other liabilities and credits

Total liabilities

Shareholders' Equity:

Common stock, no par value, shares authorized:

320,000, shares issued:

257,003 and 257,225

Treasury stock, shares at cost:

1,832 and 2,753

Retained earnings

Accumulated other comprehensive loss

Total shareholders' equity

Total liabilities and shareholders' equity

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

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED EQUITY

YEARS ENDED DECEMBER 31, 2020, 2019 and 2018

Accumulated Other

Comprehensive (Loss) Income

Noncontrolling Interests in

Discontinued Operations

Treasury Stock

Retained Earnings

Common Stock Accumulated Other

Comprehensive (Loss) Income Noncontrolling Interests in

Consolidated Subsidiaries

Shares No Par Value Treasury Stock Retained Earnings Total Equity

(Thousands, except per share or unit amounts)

Balance at December 31, 2017 264,320 $ 9,388,903 $ ( 63,602 ) $ 3,996,775 $ ( 2,458 ) $ 5,094,995 $ 18,414,613

Comprehensive income, net of tax:

Net change in cash flow hedges:

Natural gas, net of tax:

Interest rate, net of tax:

Other postretirement benefits liability adjustment, net of tax:

Dividends ($0.12 per share)

Share-based compensation plans, net

Distributions to noncontrolling interests in discontinued operations (a)

Rice Merger, net of withholdings

Contribution from noncontrolling interest, net of distribution

Repurchase of common stock

Balance at December 31, 2017

Comprehensive income, net of tax:

Comprehensive (loss) income, net of tax:

Net (loss) income ( 2,244,568 ) 237,410 ( 2,007,158 )

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Natural gas, net of tax:

( 4,625 ) ( 4,625 )

Interest rate, net of tax:

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Dividends ($ 0.12 per share)

( 31,375 ) ( 31,375 )

Share-based compensation plans, net 798 ( 6,976 ) 14,408 953 8,385

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Balance at December 31, 2018 254,472 $ 7,828,554 $ ( 49,194 ) $ 3,184,275 $ ( 5,406 ) $ — $ 10,958,229

Comprehensive income, net of tax:

Comprehensive (loss) income, net of tax:

Net loss ( 1,221,695 ) ( 1,221,695 )

Net change in interest rate cash flow hedges, net of tax:

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Dividends ($ 0.12 per share)

( 30,655 ) ( 30,655 )

Share-based compensation plans 921 6,355 16,687 23,042

Change in accounting principle (b)

Change in accounting principle 496 ( 496 ) —

Distribution of Equitrans Midstream Corporation (see Note 9) ( 2,234 ) 93,123 90,889

Other ( 222 ) ( 14,470 ) ( 2,455 ) ( 16,925 )

Balance at December 31, 2019 255,171 $ 7,818,205 $ ( 32,507 ) $ 2,023,089 $ ( 5,199 ) $ — $ 9,803,588

Comprehensive loss, net of tax:

Net loss ( 967,166 ) ( 10 ) ( 967,176 )

Other postretirement benefits liability adjustment, net of tax:

( 156 ) ( 156 )

Dividends ($ 0.03 per share)

( 7,664 ) ( 7,664 )

Share-based compensation plans 174 18,911 3,159 22,070

Equity component of convertible senior notes (see Note 10) 63,645 63,645

Issuance of common shares 23,000 340,923 340,923

Contributions from noncontrolling interests 7,500 7,500

Balance at December 31, 2020 278,345 $ 8,241,684 $ ( 29,348 ) $ 1,048,259 $ ( 5,355 ) $ 7,490 $ 9,262,730

Common shares authorized:

320,000 at December 31, 2018 and 2019 and 640,000 at December 31, 2020.

Preferred shares authorized:

There are no preferred shares issued or outstanding.

For the year ended December 31, 2017, distributions to noncontrolling interests were $ 3.655 and $ 0.806 per common unit for EQM Midstream Partners, LP and EQGP Holdings, LP, respectively.

For the year ended December 31, 2018, distributions to noncontrolling interests were $ 4.295 , $ 1.123 and $ 0.5966 per common unit for EQM Midstream Partners, LP, EQGP Holdings, LP and RM Partners LP (formerly known as Rice Midstream Partners LP), respectively.

Related to adoption of ASU 2018-02.

There were no preferred shares issued or outstanding.

(a) For the year ended December 31, 2018, distributions to noncontrolling interests were $ 4.295 , $ 1.123 and $ 0.5966 per common unit for EQM Midstream Partners, LP, EQGP Holdings, LP and RM Partners LP, respectively.

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

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The Consolidated Financial Statements include the accounts of EQT Corporation and all subsidiaries, ventures and partnerships in which EQT holds a controlling interest (collectively, EQT or the Company).

All significant intercompany accounts and transactions have been eliminated in consolidation.

Intercompany accounts and transactions have been eliminated in consolidation.

The Company records noncontrolling interest in its Consolidated Financial Statements for any non-wholly-owned consolidated subsidiary.

Investment in Consolidated Partnership.

In the fourth quarter of 2020, the Company entered into a partnership with a third-party investor (the Partnership).

Because the Company has the power to direct the activities that most significantly affect the Partnership's economic performance, the Company consolidates the Partnership.

The Company presents noncontrolling interest in the Partnership as a component of equity in the Consolidated Balance Sheet and an allocation of earnings attributable to the noncontrolling interest in the Statement of Consolidated Operations.

The Company's operations consist of one reportable segment.

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Substantially all of the Company's operating revenues, income from operations and assets are generated and located in the United States.

Reclassification.

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

Discontinued Operations.

For businesses classified as discontinued operations, balance sheet amounts and results of operations are reclassified from their historical presentation to assets and liabilities of discontinued operations in the Consolidated Balance Sheet and discontinued operations on the Statement of Consolidated Operations, respectively.

The Statement of Consolidated Cash Flows was not reclassified for discontinued operations.

Use of Estimates.

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Actual results could differ from those estimates.

Cash Equivalents.

Cash and Cash Equivalents.

The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents and accounts for such investments at cost.

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See Note 2 for a discussion of amounts due from contracts with customers.

Investment in Equitrans Midstream Corporation.

As of December 31, 2019, the Company owned approximately 19.9 % of the outstanding shares of common stock of Equitrans Midstream Corporation (Equitrans Midstream).

See Note 18 for a discussion of events occurring subsequent to December 31, 2019 that will, among other things, affect the Company's ownership of Equitrans Midstream.

The Company does not have the ability to exercise significant influence and does not have a controlling financial interest in Equitrans Midstream or any of its subsidiaries.

As such, its investment in Equitrans Midstream is accounted for as an investment in equity securities and recorded at fair value in the Consolidated Balance Sheets.

The fair value is calculated by multiplying the closing stock price of Equitrans Midstream's common stock by the number of shares of Equitrans Midstream's common stock owned by the Company.

Changes in fair value are recorded in unrealized loss on investment in Equitrans Midstream Corporation in the Statements of Consolidated Operations.

See Note 5 for a description of the fair value hierarchy.

Dividends received on the investment in Equitrans Midstream are recorded in dividend and other income in the Statements of Consolidated Operations.

Derivative Instruments.

See Note 3 for a discussion of the Company's derivative instruments and Note 4 for a discussion of the Company's fair value hierarchy and fair value measurements.

Prepaid Expenses and Other.

The following table summarizes the Company's prepaid expenses and other current assets.

Margin requirements with counterparties (See Note 3)

$ 82,552 $ 12,606

Prepaid expenses and other current assets 21,063 16,047

Total prepaid expenses and other $ 103,615 $ 28,653

Property, Plant and Equipment.

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Net property, plant and equipment $ 16,054,265 $ 16,155,490

The Company uses the successful efforts method of accounting for oil and gas producing activities.

The Company uses the successful efforts method of accounting for gas, NGL and oil producing activities.

Under this method, the cost of productive wells and related equipment, development dry holes and productive acreage, including productive mineral interests, are capitalized and depleted using the unit-of-production method.

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Depletion expense is calculated based on actual produced sales volumes multiplied by the applicable depletion rate per unit.

Depletion rates for leases and wells are each calculated by dividing net capitalized costs by the number of units expected to be produced over the life of the reserves

Depletion rates for leases and wells are each calculated by dividing net capitalized costs by the number of units expected to be produced over the life of the reserves separately.

Costs for exploratory dry holes, exploratory geological and geophysical activities and delay rentals as well as other property carrying costs are charged to exploration expense.

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There were no exploratory wells drilled during 2020, 2019 and 2018, and there were no capitalized exploratory well costs for the years ended December 31, 2020, 2019 and 2018.

During 2017, the Company drilled one exploratory dry hole within its non-core acreage, and the related expenditures were included in exploration expense in the Statement of Consolidated Operations for the year ended December 31, 2017.

Impairment of Long-lived Assets.

The carrying values of the Company's proved oil and gas properties are reviewed for impairment when events or circumstances indicate that the remaining carrying value may not be recoverable.

To determine whether impairment has occurred, the Company compares estimated expected undiscounted future cash flows from its oil and gas properties to the carrying values of those properties.

The estimated future cash flows used in the recoverability test are based on proved and, if determined reasonable by management, risk-adjusted probable reserves and assumptions generally consistent with the assumptions used by the Company for internal planning and budgeting purposes, including, among other things, the intended use of the asset, anticipated production from reserves, future market prices for natural gas, NGLs and oil adjusted for basis differentials, future operating costs and inflation.

To determine whether impairment of the Company's oil and gas properties has occurred, the Company compares the estimated expected undiscounted future cash flows to the carrying values of those properties.

Estimated future cash flows are based on proved and, if determined reasonable by management, risk-adjusted probable reserves and assumptions generally consistent with the assumptions used by the Company for internal planning and budgeting purposes, including, among other things, the intended use of the asset, anticipated production from reserves, future market prices for natural gas, NGLs and oil adjusted for basis differentials, future operating costs and inflation.

Proved oil and gas properties that have carrying amounts in excess of estimated future undiscounted cash flows are written down to fair value, which is estimated by discounting the estimated future cash flows using discount rates and other assumptions that marketplace participants would use in their fair value estimates.

There were no indicators of impairment identified in 2020.

During the fourth quarter of 2019, there were indicators that the carrying values of certain of the Company's properties may be impaired due to depressed natural gas prices and changes in the Company's development strategy, including the Company's contemplation of a potential asset divestiture of certain of its non-strategic exploration and production assets.

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During 2018, there were indicators that the carrying values of certain of the Company's oil and gas producing properties may be impaired due to the Company's intention to sell its Huron and Permian assets before the end of their useful lives.

As a result of the 2018 impairment evaluation, the Company recorded impairment of $ 2.4 billion associated with the Company's Huron and Permian assets.

As a result of

the 2018 impairment evaluation, the Company recorded impairment of $ 2.4 billion associated with the Company's Huron and Permian assets.

See Note 7 for discussion of the Huron and Permian assets divestitures.

There were no indicators of impairment identified in 2017.

Impairment and Expiration of Leases.

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Goodwill is the cost of an acquisition less the fair value of the identifiable net assets of the acquired business.

At December 31, 2018, the Company had no goodwill.

At November 30, 2018, prior to the completion of the 2018 annual goodwill impairment test, the Company's goodwill balance was $ 530.8 million .

Goodwill is tested for impairment at the Company's single reporting unit level on at least an annual basis or if events or circumstances indicate that it is more likely than not that the fair value of its reporting unit is below its carrying value.

The Company considers market capitalization and other valuation techniques, as applicable, when estimating fair value for goodwill impairment testing purposes.

In connection with the 2018 annual goodwill impairment test, the Company identified several qualitative factors that are generally considered when assessing goodwill for impairment, including the steep decline in the Company's stock price through the quarter ended December 31, 2018, the weak market performance of the Company's peers for the same period, the Company's excess capital spend compared to the capital budget announced in October 2018, the recent operational volume curtailments and the Company's strategy to slow the cadence of its future drilling operations to generate near-term free cash flow.

The Company performed the first step of the goodwill impairment test for its single reporting unit as of November 30, 2018.

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This impairment charge was classified as a component of operating expenses.

Contract Asset.

See Note 5 for discussion of the Company's contract asset.

The carrying value of the Company's contract asset is reviewed for impairment when events or circumstances indicate that the remaining carrying value may not be recoverable.

To determine whether impairment of the Company's contract asset has occurred, the Company compares the estimated undiscounted future cash flows to the carrying value.

Estimated future cash flows are based on the estimated volumes and the in-service date of the Mountain Valley Pipeline.

If the contract asset's carrying amount exceeds the estimated future undiscounted cash flows, it is written down to fair value, which is estimated by discounting the estimated future cash flows using discount rates and other assumptions that marketplace participants would use in their fair value estimates.

During 2020, the Company identified indicators that the carrying value of the contract asset may not be fully recoverable due to further delays of the timing of completion of the Mountain Valley Pipeline as well as changes to the regulatory landscape.

The Company performed the first step of the impairment test and determined the estimated expected undiscounted future cash flows exceeded the carrying value of the contract asset, indicating the contract asset was not impaired.

The estimated undiscounted future cash flows were based on significant inputs that are not observable in the market and, as such, are considered a Level 3 fair value measurement.

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

Key assumptions in the calculation of estimated undiscounted future cash flows included estimated production volumes subject to the Consolidated GGA (defined in Note 5 to the Consolidated Financial Statements) and a probability-weighted estimate of the in-service date of the Mountain Valley Pipeline.

Investment in Equitrans Midstream Corporation.

As of December 31, 2020, the Company owned approximately 25 million shares of common stock of Equitrans Midstream Corporation (Equitrans Midstream).

The Company does not have the ability to exercise significant influence and does not have a controlling financial interest in Equitrans Midstream or any of its subsidiaries.

As such, its investment in Equitrans Midstream is accounted for as an investment in equity securities and recorded at fair value in the Consolidated Balance Sheets.

The fair value is calculated by multiplying the closing stock price of Equitrans Midstream's common stock by the number of shares of Equitrans Midstream's common stock owned by the Company.

in fair value are recorded in loss on investment in Equitrans Midstream Corporation in the Statements of Consolidated Operations.

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

Dividends received on the investment in Equitrans Midstream are recorded in dividend and other income in the Statements of Consolidated Operations.

See Note 5 and Note 8.

Intangible Assets.

The Company's intangible assets were recorded under the acquisition method of accounting at their estimated fair values at the Rice Merger (defined in Note 8 ) acquisition date.

The Company's intangible assets are composed of non-compete agreements with former Rice Energy Inc.

(Rice Energy) executives.

The non-compete agreements have a useful life of 3 years.

The Company's intangible assets were recorded under the acquisition method of accounting at their estimated fair values at the acquisition date of Rice Energy Inc.

(Rice Energy).

The Company's intangible assets were composed of non-compete agreements with former Rice Energy executives.

The non-compete agreements had a useful life of 3 years.

The Company calculates amortization on a straight-line basis over the estimated useful life of the intangible assets.

The estimated annual amortization expense for 2020 is $ 26.0 million .

The Company's intangible assets were fully amortized as of December 31, 2020.

The following table summarizes the Company's intangible assets.

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Intangible assets, net $ — $ 26,006

In 2019 the Company recognized impairment of its intangible assets associated with non-compete agreements for former Rice Energy executives who are now employees of the Company.

Derivative Instruments.

See Note 4 for further discussion of the Company's derivative instruments.

(a) In 2019 the Company recognized impairment of its intangible assets associated with non-compete agreements for former Rice Energy executives who are now employees of the Company.

Other Current Liabilities.

The following table summarizes the Company's other current liabilities.

Taxes other than income

Accrued interest payable $ 91,953 $ 36,590

Current portion of operating lease liability

Current portion of long-term capacity contracts 50,504 34,000

Taxes other than income 44,619 57,850

Incentive compensation 33,601 18,573

Current portion of operating lease liabilities 25,004 29,036

Income tax payable 23,909 —

Severance accrual 2,536 11,769

Legal reserve

Other accrued liabilities 29,785 32,746

Total other current liabilities $ 301,911 $ 220,564

Revenue Recognition.

For information on revenue recognition from contracts with customers and gains and losses on derivative commodity instruments see Notes 3 and 4 , respectively.

Unamortized Debt Discount and Issuance Expense.

Discounts and expenses incurred with the issuance of debt are amortized on a straight-line basis over the term of the debt.

Discounts and expenses incurred with the issuance of debt are amortized over the life of the debt.

These amounts are presented as a reduction of senior notes in the Consolidated Balance Sheets.

See Note 10 .

Transportation and Processing.

Costs incurred to gather, process and transport gas produced by the Company to market sales points are recorded as transportation and processing costs in the Statements of Consolidated Operations.

The Company markets some transportation for resale.

These costs, which are not incurred to transport gas produced by the Company, are reflected as a deduction from net marketing services and other revenues.

Income Taxes.

The Company files a consolidated federal income tax return and uses the asset and liability method to account for income taxes.

The Company files a consolidated U.S.

federal income tax return and uses the asset and liability method to account for income taxes.

The provision for income taxes represents amounts paid or estimated to be payable net of amounts refunded or estimated to be refunded for the current year and the change in deferred taxes exclusive of amounts recorded in other comprehensive income (OCI).

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In accounting for uncertainty of a tax position taken or expected to be taken in a tax return, the Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement.

The recognition threshold requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

The recognition threshold requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination,

including resolution of any related appeals or litigation processes, based on the technical merits of the position.

If it is more likely than not that a tax position will be sustained, the Company measures and recognizes the tax position at the largest amount of benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Provision for Doubtful Accounts.

Reserves for uncollectible accounts are recorded in selling, general and administrative expense in the Statements of Consolidated Operations.

Judgment is required to assess the ultimate realization of the Company's accounts receivable.

Reserves are based on historical experience, current and expected economic trends and specific information about customer accounts, such as the customer's creditworthiness.

Earnings Per Share (EPS).

Basic EPS is computed by dividing net income attributable to EQT by the weighted average number of common shares outstanding during the period.

Diluted EPS is computed by dividing net income attributable to EQT by the weighted average number of common shares and potentially dilutive securities, net of shares assumed to be repurchased using the treasury stock method.

Potentially dilutive securities arise from the assumed conversion of outstanding stock options and other share-based awards.

Purchases of treasury shares are calculated using the average share price of EQT common stock during the period.

The Company reported a net loss for the years ended December 31, 2019 and 2018;

therefore, all options and restricted stock were excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on EPS.

Restricted stock and performance awards excluded from the calculation due to their anti-dilutive effect on EPS totaled 184,075 and 234,149 for the years ended December 31, 2019 and 2018, respectively.

Options to purchase common stock that were excluded from potentially dilutive securities because they were anti-dilutive were 2,554,729 and 1,775,249 for the years ended December 31, 2019 and 2018, respectively.

Potentially dilutive securities (options and restricted stock) included in the calculation of diluted EPS totaled 346,528 shares for the year ended December 31, 2017.

Options to purchase common stock excluded from potentially dilutive securities because they were anti-dilutive totaled 429,785 shares for the year ended December 31, 2017.

The Company maintains insurance to cover traditional insurable risks such as general liability, workers compensation, auto liability, environmental liability, property damage, business interruption and other risks.

These policies may be subject to deductible or retention amounts, coverage limitations and exclusions.

The Company was previously self-insured for certain material losses related to general liability and certain other casualty coverages, such as workers compensation, auto liability and environmental liability.

However, the Company is no longer self-insured with respect to any material losses related to general liability, workers compensation or environmental liability arising on or after November 12, 2020, or for losses related to auto liability arising on or after November 12, 2019.

The recorded reserves represent estimates of the ultimate cost of claims incurred as of the balance sheet date.

Reserves are estimated based on analyses of historical data and actuarial estimates and are not discounted.

The liabilities are reviewed by the Company quarterly and by independent actuaries annually to ensure appropriateness.

While the Company believes these estimates are reasonable based on the information available, financial results could be impacted if actual trends, including the severity or frequency of claims, differ from estimates.

Asset Retirement Obligations.

The Company accrues a liability for asset retirement obligations based on an estimate of the timing and amount of settlement.

For oil and gas wells, the fair value of the Company's plugging and abandonment obligations is recorded at the time the obligations are incurred, which is typically at the time the wells are spud.

The Company accrues a liability for asset retirement obligations based on an estimate of the amount and timing of settlement.

For oil and gas wells, the fair value of the Company's plugging and abandonment obligations is recorded at the time the obligation is incurred, which is typically at the time the well is spud.

Upon initial recognition of an asset retirement obligation, the Company increases the carrying amount of the long-lived asset by the same amount as the liability.

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Liabilities settled ( 4,030 ) ( 3,569 )

Liabilities assumed in the Rice Merger

Liabilities assumed in acquisitions 45,825 —

Liabilities removed due to divestitures ( 54,836 ) ( 5,535 )

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The Company does not have any assets that are legally restricted for purposes of settling these obligations.

During 2019 and 2018 , the Company had changes in estimates for the plugging of horizontal and conventional wells that were related primarily to increased cost assumptions for the Company's compliance with existing regulatory requirements that were derived, in part, from recent plugging experience and actual costs incurred.

During 2020 and 2019, the Company had changes in estimates for the plugging of horizontal and conventional wells that were related primarily to pad reclamation and increased cost assumptions for the Company's compliance with existing regulatory requirements that were derived, in part, from recent plugging experience and actual costs incurred.

The Company operates in several states that have implemented expanded requirements that resulted in the Company's use of additional materials during the plugging process, which has increased the estimated cost for plugging horizontal and conventional wells.

Self-Insurance.

The Company is self-insured for certain losses related to workers' compensation and maintains a self-insured retention for general liability, automobile liability, environmental liability and other casualty coverage.

The Company maintains stop loss coverage with third-party insurers to limit the total exposure for general liability, automobile liability, environmental liability and workers' compensation.

The recorded reserves represent estimates of the ultimate cost of claims incurred as of the balance sheet date.

Reserves are estimated based on analyses of historical data and actuarial estimates and are not discounted.

The liabilities are reviewed by the Company quarterly and by independent actuaries annually to ensure appropriateness.

Revenue Recognition.

For information on revenue recognition from contracts with customers and gains and losses on derivative commodity instruments see Notes 2 and 3, respectively.

Transportation and Processing.

Costs incurred to gather, process and transport gas produced by the Company to market sales points are recorded as transportation and processing costs in the Statements of Consolidated Operations.

The Company markets some transportation for resale.

These costs, which are not incurred to transport gas produced by the Company, are reflected as a deduction from net marketing services and other revenues.

Share-based Compensation.

See Note 13 for a discussion of the Company's share-based compensation plans.

Provision for Doubtful Accounts.

Reserves for uncollectible accounts are recorded in selling, general and administrative expense in the Statements of Consolidated Operations.

Judgment is required to assess the ultimate realization of the Company's accounts receivable.

Reserves are based on historical experience, current and expected economic trends and specific information about customer accounts, such as the customer's creditworthiness.

Other Operating Expenses.

The following table summarizes the Company's other operating expenses.

Years Ended December 31,

2020 2019 2018

Changes in legal reserves, including settlements $ 11,350 $ 82,395 $ 51,677

Transactions 11,739 — 26,331

Reorganization, including severance and contract terminations 5,448 97,702 —

Proxy — 19,343 —

Total other operating expenses $ 28,537 $ 199,440 $ 78,008

Other Postretirement Benefits Plan.

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The Company recognized expense related to its defined contribution plan of $ 6.5 million, $ 8.9 million and $ 17.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Discontinued Operations.

The Statement of Consolidated Cash Flows was not reclassified for discontinued operations.

Earnings Per Share (EPS).

Basic EPS is computed by dividing net income attributable to EQT by the weighted average number of common shares outstanding during the period.

Potentially dilutive securities arise from the assumed conversion of outstanding stock options and other share-based awards as well as the conversion premium on the Convertible Notes.

Purchases of treasury shares are calculated using the average share price of EQT common stock during the period.

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 years ended December 31, 2020, 2019 and 2018, all securities, totaling 6,778,383 , 3,035,247 and 2,211,122 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

As discussed in Note 10, 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 settlement obligation under the Convertible Notes.

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

For the year ended December 31, 2020, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on loss per share.

Supplemental Cash Flow Information.

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Years Ended December 31,

2020 2019 2018

Cash paid (received) during the year for:

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Non-cash activity during the period for:

Changes in property, plant and equipment accruals

Increase in asset retirement costs and obligations $ 52,271 $ 169,387 $ 34,602

Increase in right-of-use lease assets and liabilities

Increase in right-of-use assets and lease liabilities, net 18,877 113,350 —

Capitalization of non-cash equity share-based compensation 3,142 — 4,314

Assumption of net liabilities from current period acquisitions

Measurement period adjustments for prior period acquisitions — — 14,377

Increase in capital contributions payable to Mountain Valley Pipeline, LLC

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases .

The standard requires entities to record assets and liabilities that arise from operating leases.

In July 2018, the FASB issued ASU 2018-11, Leases:

Targeted Improvements , which provided an optional transition method of adoption that permitted entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Under the optional transition method, comparative financial information and disclosures are not required.

The update also provided transition practical expedients.

The standard requires disclosure of the nature, maturity and value of an entity's lease liabilities and elections made by the entity.

In March 2019, the FASB issued ASU 2019-01, Leases:

Codification Improvements , which, among other things, clarified interim disclosure requirements in the year of ASU 2016-02 adoption.

The Company adopted ASU 2016-02, ASU 2018-11 and ASU 2019-01 on January 1, 2019 using the optional transition method of adoption.

The Company implemented a new lease accounting system to monitor its population of lease contracts.

The Company also implemented processes and controls to review both new contracts and modifications to existing contracts that contain or are leases for appropriate accounting treatment and generate disclosures required under the standards.

For the disclosures required by the standards, see Note 15 .

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses:

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments .

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The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from its scope that have a contractual right to receive cash.

This ASU will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period.

The Company plans to adopt this ASU in the first quarter of 2020 and expects this adoption to have no impact on its financial statements.

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

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income:

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

This ASU allows entities to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the Tax Cuts and Jobs Act) from accumulated OCI to retained earnings.

This ASU is effective for fiscal years beginning after December 15, 2018 and early adoption is permitted.

The reclassification permitted under this ASU should be applied either in the period of adoption or retrospectively to each period or periods in which the effect of the change in the U.S.

federal corporate income tax rate from the Tax Cuts and Jobs Act is recognized.

The Company adopted this ASU on January 1, 2019 and reclassified the income tax effects of the Tax Cuts and Jobs Act of $ 0.5 million from accumulated OCI to retained earnings.

This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures.

In July 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting .

This ASU expands the scope of Topic 718, Compensation – Share Compensation , to include share-based payment transactions where a grantor acquires goods or services from a nonemployee.

This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted.

The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, Changes to the Disclosure Requirements for Fair Value Measurement.

This ASU modifies the hierarchy associated with Level 1, 2 and 3 fair value measurements and the related disclosure requirements.

This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted.

The Company plans to adopt this ASU in the first quarter of 2020 and does not expect this adoption to have a material impact on its financial statements and related disclosures.

This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted.

The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software:

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract .

This ASU provides guidance on accounting for implementation costs incurred by a customer in a cloud computing arrangement that is a service contract.

This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted.

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

For the year ended December 31, 2020, such capitalized costs were approximately $ 9 million.

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

Simplifying the Accounting for Income Taxes.

This ASU simplifies accounting for income taxes by eliminating certain exceptions to ASC 740 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.

The new guidance also simplifies aspects of accounting for franchise taxes and interim period effects of enacted changes in tax laws or rates.

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

The Company plans to adopt this ASU in the first quarter of 2021 and does not expect this adoption to have a material impact 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 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.

The Company plans to adopt this ASU on January 1, 2022 using the full retrospective method of adoption.

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

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The Company has evaluated subsequent events through the date of the financial statement issuance.

Separation and Distribution and Discontinued Operations

On November 12, 2018, the Company completed the separation of its midstream business, which was composed of the separately operated natural gas gathering, transmission and storage and water services businesses of the Company, from its upstream business, which is composed of the natural gas, NGLs and oil development, production and sales and commercial operations of the Company (the Separation).

The Separation was effected by the transfer of the midstream business from the Company to Equitrans Midstream and the distribution of 80.1 % of the outstanding shares of Equitrans Midstream's common stock to the Company's shareholders (the Distribution).

The Company's shareholders received 0.80 shares of Equitrans Midstream's common stock for every one share of EQT common stock held as the close of business on November 1, 2018.

The Company retained 19.9 % of the outstanding shares of Equitrans Midstream's common stock.

See Note 1 for a discussion of the Company's accounting for the investment in Equitrans Midstream and Note 18 for a discussion of events occurring subsequent to December 31, 2019 that will, among other things, affect the Company's ownership of Equitrans Midstream.

In connection with the Separation and Distribution, the Company entered into several agreements with Equitrans Midstream to implement the legal and structural separation between the two companies, govern the relationship between the Company and Equitrans Midstream and allocate between the Company and Equitrans Midstream various assets, liabilities and obligations, including, among other things, employee benefits, litigation, contracts, equipment, real property, intellectual property and tax-related assets and liabilities.

In the ordinary course of business, the Company engages in transactions with EQM Midstream Partners, LP (EQM) and its affiliates including, but not limited to, gas gathering agreements, transportation service and precedent agreements, storage agreements and water services agreements.

These agreements have terms ranging from month-to-month up to 20 years.

Equitrans Midstream comprised the Company's former EQM Gathering, EQM Transmission and EQM Water segments.

For all periods prior to the Separation and Distribution, the results of operations of Equitrans Midstream are reflected as discontinued operations.

The Statements of Consolidated Operations for the years ended December 31, 2018 and 2017 have been recast to reflect discontinued operations presentation and include certain transportation and processing expenses in continuing operations that had previously been eliminated in consolidation.

Cash flows related to Equitrans Midstream are included in the Statements of Consolidated Cash Flows for all periods prior to the Separation and Distribution.

The results of operations of Equitrans Midstream are summarized below.

The Company allocated transaction costs associated with the Separation and Distribution and a portion of transaction costs associated with the Rice Merger (see Note 8 ) to discontinued operations.

January 1, 2018 to November 12, 2018

Year Ended December 31, 2017

Operating revenues

Transportation and processing

Operation and maintenance

Selling, general and administrative

Impairment of goodwill (a)

Transaction costs

Amortization of intangible assets

Interest expense

Income from discontinued operations before income taxes

Income tax expense

Income from discontinued operations after income taxes

Net income from discontinued operations attributable to noncontrolling interests

Net income from discontinued operations

Following the third quarter of 2018, and prior to the Separation and Distribution, indicators of goodwill impairment were identified in the form of the announced production curtailments, which could reduce the volumetric-based fee revenues of two reporting units to which the Company's goodwill was recorded.

The two reporting units, Rice Retained Midstream and RMP PA Gas Gathering, were allocated to discontinued operations as a result of the Separation and Distribution.

Both of these reporting units earned a substantial portion of their revenues from volumetric-based fees, which are sensitive to changes in development plans.

In estimating the fair value of these reporting units, a combination of the income approach and the market approach was used.

The discounted cash flow method income approach applies significant inputs that are not observable in the public market (Level 3), including estimates and assumptions related to future throughput volumes, operating costs, capital spending and changes in working capital.

The comparable company method market approach evaluates the value of a company using metrics of other businesses of similar size and industry.

The reference transaction method evaluates the value of a company based on pricing multiples derived from similar transactions entered into by similar companies.

For the year ended December 31, 2018, the fair value of the Rice Retained Midstream reporting unit was greater than its carrying value, but the carrying value of the RMP PA Gas Gathering reporting unit exceeded its fair value.

As a result, impairment of goodwill of $ 267.9 million was recorded with a corresponding decrease to goodwill in the Consolidated Balance Sheet and allocated to discontinued operations.

The following table presents cash flows from or used in discontinued operations related to Equitrans Midstream that are included, and not separately stated, in the Statements of Consolidated Cash Flows for the years ended December 31, 2018 and 2017.

January 1, 2018 to November 12, 2018

Year Ended December 31, 2017

Cash flows from operating activities:

Deferred income tax (benefit) expense

Amortization of intangibles

Impairment of goodwill

Share-based compensation expense

Cash flows from investing activities:

Capital expenditures

Capital contributions to Mountain Valley Pipeline, LLC (a)

Cash flows from financing activities:

Proceeds from issuance of debt

Increase in borrowings on credit facilities

Repayment of borrowings on credit facilities

Debt issuance costs and credit facility origination fees

Distributions to noncontrolling interests

Contribution to Strike Force Midstream LLC by minority owner, net of distribution

Acquisition of 25% of Strike Force Midstream LLC

Mountain Valley Pipeline, LLC is a joint venture that is constructing the Mountain Valley Pipeline.

EQM owns an interest in the joint venture and makes capital contributions to the joint venture.

Revenue from Contracts with Customers

Under the Company's natural gas, NGLs and oil sales contracts, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery.

Under the Company's natural gas, natural gas liquids (NGLs) and oil sales contracts, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery.

These contracts typically require payment within 25 days of the end of the calendar month in which the commodity is delivered.

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For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price.

Based on management's judgment, the performance obligations for the sale of natural gas, NGLs and oil are satisfied at a point in time because the customer obtains control and legal title of the asset when the natural gas, NGLs or oil are delivered to the designated sales point.

The sales of natural gas, NGLs and oil presented in the Statements of Consolidated Operations represent the Company's share of revenues net of royalties and excluding revenue interests owned by others.

When selling natural gas, NGLs and oil on behalf of royalty owners 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 recognized amounts due from contracts with customers of $ 384.0 million and $ 783.0 million in accounts receivable in the Consolidated Balance Sheets as of December 31, 2019 and 2018 ,

respectively.

Accounts receivable also includes amounts due from joint interest partners of $ 127.9 million and $ 324.2 million at December 31, 2019 and 2018 , respectively, and amounts due for settled derivative instruments.

The sales of natural gas, NGLs and oil presented in the Statements of Consolidated Operations represent the Company's share of revenues net of royalties and exclude revenue interests owned by others.

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 $ 394.1 million and $ 384.0 million in accounts receivable in the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

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

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Years Ended December 31,

2020 2019 2018

Revenues from contracts with customers:

Natural gas sales $ 2,459,854 $ 3,559,809 $ 4,217,684

NGLs sales 169,871 197,985 442,010

Oil sales 20,574 33,620 35,825

Net marketing services and other — — 13,865

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Total operating revenues $ 3,058,843 $ 4,416,484 $ 4,557,868

The following table includes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of December 31, 2019 and excludes all contracts that qualify for the exception to the relative standalone selling price method.

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of December 31, 2020.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of December 31, 2020.

2021 2022 2023 Total

Natural gas sales $ 178,100 $ 8,158 $ 6,794 $ 193,052

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The Company uses derivative commodity instruments to hedge its cash flows from sales of produced natural gas and NGLs.

The Company's overall objective in its hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices.

Derivative commodity instruments used by the Company are primarily swap, collar and option agreements.

The overall objective of the Company's hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices.

The derivative commodity instruments used by the Company are primarily swap, collar and option agreements.

These agreements may require payments to, or receipt of payments from, counterparties based on the differential between two prices for the commodity.

The Company uses these agreements to hedge its NYMEX and basis exposure.

The Company may also use other contractual agreements when implementing its commodity hedging strategy.

The Company may also use other contractual agreements when executing its commodity hedging strategy.

The Company typically enters into over the counter (OTC) derivative commodity instruments with financial institutions, and the creditworthiness of all counterparties is regularly monitored.

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Contracts that result in physical delivery of a commodity expected to be sold by the Company in the normal course of business are generally designated as normal sales and are exempt from derivative accounting.

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

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.

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

The Company also enters into exchange traded derivative commodity instruments, which are generally settled with offsetting positions.

Settlements of derivative commodity instruments are reported as a component of cash flows from operations in the Statements of 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 1,644 billion cubic feet (Bcf) of natural gas as of December 31, 2019 and 3,128 Bcf of natural gas and 1,505 thousand barrels (Mbbl) of NGLs as of December 31, 2018 .

The Company also enters into exchange traded derivative commodity instruments that are generally settled with offsetting positions.

Settlements of derivative commodity instruments are reported as a component of cash flows from operating activities in the Statements of 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 1,955 billion cubic feet (Bcf) of natural gas and 3,462 thousand barrels (Mbbl) of NGLs as of December 31, 2020 and 1,644 Bcf of natural gas as of December 31, 2019.

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

When the net fair value of any of the Company's swap agreements represents a liability to the Company that is in excess of the agreed-upon threshold between the Company and the counterparty, 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 threshold amount.

The Company records these deposits as a current asset.

When the net fair value of any of the Company's swap agreements represents an asset to the Company that is in excess of the agreed-upon threshold between the Company and the counterparty, the Company has the right to require the counterparty to remit funds as a margin deposit in an amount equal to the portion of the derivative asset that is in excess of the threshold amount.

The Company records a current liability for such amounts received.

The Company had no such deposits in its Consolidated Balance Sheets at both December 31, 2019 and 2018 .

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

(Moody's) or S&P Global Ratings (S&P) is below the agreed-upon credit rating threshold (typically, below investment grade), and if the associated derivative liability exceeds the agreed-upon dollar threshold for such credit rating, the counterparty to such contract can require the Company to deposit collateral.

Similarly, if such counterparty's credit rating assigned by Moody's or S&P is below the agreed-upon credit rating threshold, and if the associated derivative liability exceeds the agreed-upon dollar threshold for such credit rating, the Company can require the counterparty to deposit collateral with the Company.

Such collateral can be up to 100 % of the derivative liability.

Investment grade refers to the quality of a company's credit as assessed by one or more credit rating agencies.

To be considered investment grade, a company must be rated "Baa3" or higher by Moody's, "BBB–" or higher by S&P and "BBB–" or higher by Fitch Rating Service (Fitch).

Anything below these ratings is considered non-investment grade.

As of December 31, 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 Consolidated Balance Sheets.

As of December 31, 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 $ 137.7 million, for which the Company deposited and recorded $ 21.1 million as a current asset.

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

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

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

As of December 31, 2020 and 2019, there were no such deposits recorded in the 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.

The Company must make such deposits based on an established initial margin requirement and the net liability position, if any, of the fair value of the associated contracts.

The Company records these deposits as a current asset.

The Company is required to make such deposits based on an established initial margin requirement and the net liability position, if any, of the fair value of the associated contracts.

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

When the fair value of such contracts is in a net asset position, the broker may remit funds to the Company.

The Company records a current liability for any such amounts received.

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

The initial margin requirements are established by the exchanges based on the price, volatility and the time to expiration of the contract.

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

The Company recorded current assets of $ 12.6 million and $ 40.3 million in its Consolidated Balance Sheets as of December 31, 2019 and 2018 , respectively, for such deposits.

As of December 31, 2020 and 2019, the Company recorded $ 61.5 million and $ 12.6 million, respectively, of such deposits as a current asset in the Consolidated Balance Sheets.

Refer to Note 5 for a discussion of the derivative liability recorded in connection with the Equitrans Share Exchange (defined in Note 5).

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.

The table below reflects the impact of netting agreements and margin deposits on gross derivative assets and liabilities.

The table below summarizes the impact of netting agreements and margin deposits on gross derivative assets and liabilities.

Gross derivative instruments recorded in the

Consolidated Balance Sheet

Derivative instruments

Consolidated Balance Sheet Derivative instruments

subject to master

netting agreements

Margin deposits

counterparties

Net derivative

December 31, 2019

netting agreements Margin requirements with

counterparties Net derivative

December 31, 2020 (Thousands)

Asset derivative instruments at fair value $ 527,073 $ ( 328,809 ) $ — $ 198,264

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

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

(Moody's) or S&P Global Ratings (S&P) is below investment grade, additional collateral must be deposited with the counterparty if the associated derivative liability exceeds certain thresholds.

The additional collateral can be up to 100 % of the derivative liability.

Investment grade refers to the quality of a company's credit as assessed by one or more credit rating agencies.

To be considered investment grade, a company must be rated "Baa3" or higher by Moody's, "BBB–" or higher by S&P and "BBB–" or higher by Fitch Rating Service (Fitch).

Anything below these ratings is considered non-investment grade.

As of December 31, 2019 , the Company's senior notes were rated "Baa3" by Moody's and "BBB–" by S&P.

Margin deposits on the Company's derivative instruments are also subject to factors other than credit rating, such as natural gas prices and credit thresholds set forth in the agreements between hedging counterparties and the Company.

As of December 31, 2019 , the aggregate fair value of all OTC derivative instruments with credit risk-related contingent features that were in a net liability position was $ 76.7 million , for which the Company had no collateral posted.

If the Company's credit rating assigned by Moody's or S&P had been downgraded

as of December 31, 2019 , the Company would not have been required to post any additional collateral under its OTC derivative instrument contracts.

In January 2020, Moody's downgraded the Company's senior notes credit rating to "Ba1," and, in February 2020, S&P downgraded the Company's senior notes credit rating to "BB+";

however, as of February 26, 2020 , the changes in Moody's and S&P's credit rating of the Company's senior notes had no effect on margin deposits on the Company's derivative instruments.

See Note 10 for a discussion of the effects of the Moody's and S&P downgrades on the Company's collateral requirements under its midstream service contracts.

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

Amounts related to historical interest rate swaps were recorded to accumulated OCI and have been fully reclassified into interest expense as of December 31, 2019.

See Note 12 .

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

Fair Value Measurements

The Company records its financial instruments, principally derivative instruments, at fair value in its Consolidated Balance Sheets.

The Company estimates the fair value of its financial instruments using quoted market prices, where available.

If quoted market prices are not available, fair value is based on models that use market-based parameters as inputs, including forward curves, discount rates, volatilities and nonperformance risk.

The Company records its financial instruments, which are principally derivative instruments, at fair value in the Consolidated Balance Sheets.

The Company estimates the fair value of its financial instruments using quoted market prices when available.

If quoted market prices are not available, the fair value is based on models that use market-based parameters, including forward curves, discount rates, volatilities and nonperformance risk, as inputs.

Nonperformance risk considers the effect of the Company's credit standing on the fair value of liabilities and the effect of the counterparty's credit standing on the fair value of assets.

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The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

Assets and liabilities in Level 2 primarily include the Company's swap, collar and option agreements.

Exchange traded commodity swaps are included in Level 1.

The fair value of the commodity swaps included in Level 2 is based on standard industry income approach models that use significant observable inputs, including but not limited to NYMEX natural gas forward curves, LIBOR-based discount rates, basis forward curves and natural gas liquids forward curves.

The Company's collars and options are valued using standard industry income approach option models.

Assets and liabilities that use Level 2 inputs primarily include the Company's swap, collar and option agreements.

Exchange traded commodity swaps have Level 1 inputs.

The fair value of the commodity swaps with Level 2 inputs is based on standard industry income approach models that use significant observable inputs, including, but not limited to, NYMEX natural gas forward curves, LIBOR-based discount rates, basis forward curves and natural gas liquids forward curves.

The Company's

collars and options are valued using standard industry income approach option models.

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

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Fair value measurements at reporting date using:

Gross derivative instruments recorded in the Consolidated Balance Sheets

Quoted prices in active markets

Gross derivative instruments recorded in the Consolidated Balance Sheets Quoted prices in active markets

for identical assets

Significant other

(Level 1) Significant other

observable inputs

Significant unobservable inputs

December 31, 2019

(Level 2) Significant unobservable inputs

December 31, 2020 (Thousands)

Asset derivative instruments at fair value $ 527,073 $ 70,603 $ 456,470 $ —

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

The carrying values of borrowings under 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.

The Company has an immaterial investment in a fund that invests in companies developing technology and operating solutions for exploration and production companies for which the Company recognized a cumulative effect of accounting change in the

first quarter of 2018.

The investment is valued using, as a practical expedient, the net asset value provided in the financial statements received from fund managers.

The Company has an immaterial investment in a fund that invests in companies developing technology and operating solutions for exploration and production companies.

The Company recognized a cumulative effect of accounting change related to this investment in the first quarter of 2018.

The investment is valued using, as a practical expedient, the net asset value provided in the financial statements received from fund managers and is recorded in other assets in the Consolidated Balance Sheets.

The Company estimates the fair value of its senior notes using established fair value methodology.

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

As of December 31, 2019 and 2018 , the Company's senior notes had a fair value of approximately $ 3.9 billion and $ 4.4 billion , respectively, and a carrying value, as presented in the Consolidated Balance Sheets, of approximately $ 3.9 billion and $ 4.6 billion , respectively, inclusive of any current portion.

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

As of December 31, 2019 and 2018 , the Company's note payable to EQM had a fair value of $ 128.2 million and $ 121.8 million , respectively, and a carrying value, as presented in the Consolidated Balance Sheets of $ 110.1 million and $ 114.7 million , respectively, inclusive of any current portion.

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

As of December 31, 2020 and 2019, the Company's senior notes had a fair value of approximately $ 5.2 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-based discount rate and is a Level 3 fair value measurement.

As of December 31, 2020 and 2019, the Company's note payable to EQM had a fair value of approximately $ 130 million and $ 128 million, respectively, and a carrying value of approximately $ 105 million and $ 110 million, respectively, inclusive of any current portion.

See Note 10 for further discussion of the Company's debt.

The Company recognizes transfers between Levels as of the actual date of the event or change in circumstances that caused the transfer.

There were no transfers between Levels 1, 2 and 3 for the periods presented.

There were no transfers between Levels 1, 2 and 3 during the periods presented.

For information on the fair values, and impairments thereof, of proved and unproved oil and gas properties and other long-lived assets, see Note 1.

For information on the fair values related to the Asset Exchange Transaction (defined in Note 6 ), see Note 6 .

For information on the fair values of assets acquired in the Rice Merger (defined in Note 8 ) and in other acquisition transactions, see Note 8 .

For a discussion of other fair value measurements, see Note 5 for the Equitrans Share Exchange, Note 6 for the Chevron Acquisition and Asset Exchange Transactions (each defined in Note 6) and Note 7 for divestitures.

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

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.

The Consolidated GGA is effective through December 31, 2035 and will renew annually thereafter unless terminated by the Company or EQM.

The Consolidated GGA provides for additional cash bonus payments (the Henry Hub Cash Bonus) payable by the Company to EQM during the period beginning on the first day of the quarter in which the Mountain Valley Pipeline is placed in service and ending on the earlier of 36 months thereafter or December 31, 2024.

Such payments are conditioned upon the quarterly average of the NYMEX Henry Hub natural gas settlement price exceeding certain price thresholds.

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 Mountain Valley Pipeline in-service date has not occurred prior to January 1, 2022.

On the Share Purchase Closing Date, the Company recorded in the 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 Consolidated Operations.

Beginning with the Mountain Valley Pipeline in-service date, the Company expects to recognize amortization of the contract asset over a period of approximately 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 December 31, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 107 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.

Key assumptions used in the fair value calculation included an estimated production volume forecast, a market-based discount rate and a probability-weighted estimate of the in-service date of the Mountain Valley Pipeline.

The fair value of the derivative liability related to the Henry Hub Cash Bonus was based on significant inputs that were 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.

Acquisition and Exchange Transactions

Chevron Acquisition.

In the fourth quarter of 2020, the Company acquired upstream assets and an investment in midstream gathering assets located in the Appalachian Basin from Chevron U.S.A.

(Chevron) for an aggregate purchase price of $ 735 million, subject to certain purchase price adjustments (the Chevron Acquisition).

The transaction closed on November 30, 2020 and had an effective date of July 1, 2020.

The Chevron Acquisition included approximately 335,000 net Marcellus acres, approximately 400,000 net Utica acres, approximately 550 gross wells, which are producing approximately 450 net MMcfe per day, and approximately 100 work-in-process wells at various stages in the development cycle.

The Chevron Acquisition also included a 31 % investment in the Laurel Mountain Midstream (LMM) gathering assets, which are operated by The Williams Companies, Inc., and two water systems that provide both fresh and produced water handling capabilities.

The Company does not have the power to direct the activities that most significantly impact LMM's economic performance;

therefore, the Company is not the primary beneficiary and accounts for its investment in LMM as an equity method investment.

The Company's pro-rata share of earnings in LMM is recorded as equity income which is included in dividend and other income on the Statements of Consolidated Operations.

The Chevron Acquisition was accounted for as a business combination, using the acquisition method.

The following table summarizes the preliminary purchase price and the preliminary estimated fair values of assets acquired and liabilities assumed as of November 30, 2020.

Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, a final title defect analysis and final appraisals of assets acquired and liabilities assumed.

The Company expects to complete the purchase price allocation during the second quarter of 2021, at which time the value of the assets acquired and liabilities assumed will be revised, if necessary.

Preliminary Purchase Price Allocation

Cash consideration (a) $ 691,942

Fair value of liabilities assumed:

Accounts payable $ 3,347

Other current liabilities 16,566

Deferred tax liability 939

Other liabilities and credits (b) 109,876

Amount attributable to liabilities assumed $ 130,728

Fair value of assets acquired:

Other current assets $ 5,609

Net property, plant and equipment 720,315

Other assets 96,746

Amount attributable to assets acquired $ 822,670

(a) The difference between cash consideration and the aggregate purchase price of $ 735 million represents the results of operating activities between the effective date of July 1, 2020 and the closing date of November 30, 2020 as well as amounts related to customary post-closing matters.

(b) Other liabilities and credits included liabilities due to minimum volume commitment (MVC) contracts as well as liabilities for asset retirement obligations and environmental obligations.

The fair values of the acquired natural gas and oil properties were measured using discounted cash flow valuation techniques based on inputs that are not observable in the market and, as such, are considered Level 3 fair value measurements.

Significant inputs include future commodity prices, projections of estimated quantities of reserves, estimated future rates of production, projected reserve recovery factors, timing and amount of future development and operating costs and a weighted average cost of capital.

The fair value of the undeveloped properties were measured using the guideline transaction method based on inputs that are not observable in the market and, as such, are considered Level 3 fair value measurements.

Significant inputs include future development plans from a market participant perspective and value per undeveloped acre.

The fair value of the acquired investment in LMM, which is included in other assets on the Consolidated Balance Sheet, was primarily measured using discounted cash flow valuation techniques.

A majority of the inputs are not observable in the market and, as such, are considered Level 3 fair value measurements.

Significant inputs include projected revenues, expenses and capital expenditures.

The fair value of the acquired MVC liabilities were measured using expected throughput and annual MVCs per associated contract calculated on a discounted basis.

A majority of the inputs are not observable in the market and, as such, are considered Level 3 fair value measurements.

Significant inputs include estimated future volumes and market participant cost of debt.

2020 Asset Exchange Transactions.

During 2020, the Company closed on various acreage trade agreements (collectively, the 2020 Asset Exchange Transactions), pursuant to which the Company exchanged approximately 24,400 aggregate net revenue interest acres across Greene, Allegheny, Armstrong, Westmoreland and Washington Counties, Pennsylvania;

Wetzel and Marshall Counties, West Virginia;

and Belmont County, Ohio for approximately 19,400 aggregate net revenue interest acres across Greene and Washington Counties, Pennsylvania;

Marshall, Wetzel and Marion Counties, West Virginia;

and Belmont County, Ohio.

As a result of the 2020 Asset Exchange Transactions, the Company recognized a net loss of $ 61.6 million in impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations for the year ended December 31, 2020 .

2019 Asset Exchange Transaction.

During the third quarter of 2019, the Company closed on an acreage trade agreement and purchase and sale agreement with a third party (Asset Exchange Transaction), pursuant to which the Company exchanged approximately 16,000 net revenue interest acres primarily in Tyler and Wetzel Counties, West Virginia for 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 covering a portion of Tyler County and provided a firm gathering commitment, and the Company was released from its remaining obligations under the 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.

During the third quarter of 2019, as a result of the Asset Exchange Transaction, the Company recorded a net loss of $ 13.9 million in impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations for the year ended December 31, 2019.

As of December 31, 2019 , the liability for the reimbursement of certain firm gathering costs was $ 38.1 million , which is included in other current liabilities and other liabilities and credits in the Consolidated Balance Sheet.

The fair values of leases acquired and the liability for the reimbursement of certain firm gathering costs were based on significant inputs that are not observable in the market and, as such, are considered to be Level 3 fair value measurements.

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 impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations for the year ended December 31, 2019.

As of December 31, 2020 and 2019, the liability for the reimbursement of those certain firm gathering costs was $ 25.8 million and $ 36.8 million, respectively, and was recorded in other current and noncurrent liabilities in the Consolidated Balance Sheets.

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 included in the calculation of fair values included market-based prices for comparable acreage and a calculation of net present value of the expected payments due for reimbursement.

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 Divestitures.

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.

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.

The purchase and sale agreement for the 2020 Divestiture provides for additional cash bonus payments (the Contingent Consideration) payable to the Company of up to $ 20 million.

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 is recorded at fair value in the Consolidated Balance Sheets.

The Contingent Consideration had no fair value as of May 11, 2020 and a fair value of $ 1.9 million as of December 31, 2020 .

During the year ended December 31, 2020 , the Company received contingent consideration cash of $ 0.9 million.

Changes in fair value are recorded in impairment/loss on sale/exchange of long-lived assets in the Statements of 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 net loss of $ 39.1 million, including the impact of the change in fair value of the Contingent Consideration, in impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations during the year ended December 31, 2020 .

2018 Divestiture.

In 2018, the Company sold its non-core production and related midstream assets located in the Huron play and Permian Basin (the 2018 Divestitures).

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and a market-based weighted average cost of capital.

In connection with the closing of the 2018 Divestitures, the Company recorded a loss of $ 259.3 million during the third quarter of 2018 related to certain capacity contracts that the Company no longer has existing production to satisfy and does not plan to

use in the future.

The loss was recorded in impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations.

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

The key unobservable input in the calculation is the amount of potential future economic benefit from the contracts.

The key unobservable input in the

calculation is the amount of potential future economic benefit from the contracts.

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

Rice Merger and Other Acquisitions

On November 13, 2017, the Company completed its acquisition of Rice Energy (the Rice Merger).

Total consideration for the Rice Merger was approximately $ 7.8 billion , consisting of approximately 91 million shares of EQT common stock and approximately $ 1.6 billion in cash, net of cash acquired and inclusive of amounts payable to Rice Energy employees for severance and other termination benefits and $ 555.5 million of aggregate cash payments made to affiliates of EIG Global Energy Partners to redeem the EIG Global Energy Partners' respective interests in Rice Midstream Holdings LLC (Rice Midstream Holdings) and Rice Midstream GP Holdings, LP.

The Company accounted for the Rice Merger as a business combination using the acquisition method.

The fair value assigned to liabilities assumed was approximately $ 3.9 billion and was related primarily to long-term debt.

In connection with the closing of the Rice Merger, the Company repaid $ 508.5 million of outstanding principal and $ 1.7 million of interest and fees under Rice Energy's credit facilities, and the credit agreements were terminated.

In addition, in connection with Rice Energy's redemption and cancellation of its outstanding senior notes, the Company paid an aggregate $ 1.4 billion , including make whole call premiums of $ 63.8 million and interest payments of $ 13.4 million .

The fair value assigned to assets acquired was approximately $ 9.7 billion and was related primarily to acquired net property, plant and equipment, which included approximately 205,000 net Marcellus acres, approximately 65,000 net Ohio Utica acres and Upper Devonian and Utica drilling rights in Pennsylvania.

In addition, the Company identified intangible assets associated with non-compete agreements for former Rice Energy executives.

In 2019, the Company recognized impairment of these intangible assets.

Significant inputs include estimates of recoverable reserves, production rates, future operating and development costs, future commodity prices and market-based weighted average cost of capital.

The fair value of undeveloped property was based on a market approach of comparable transactions using Level 3 inputs.

The fair value of the identified intangible assets was determined using the income approach based on inputs that are not observable in the market and, as such, are considered Level 3 fair value measurements.

Significant unobservable inputs include estimates of future production levels, future revenues, future costs, the probability that former executives would compete in the absence of such non-compete agreements and customer retention rates.

The Company recorded approximately $ 2.0 billion in goodwill as a result of the Rice Merger.

During the year ended December 31, 2018, the Company recorded impairment of goodwill of $ 0.5 billion from continuing operations and $ 0.3 billion for discontinued operations and allocated $ 1.2 billion of goodwill to discontinued operations, including $ 387.1 million in unamortized carryover tax basis of tax-deductible goodwill.

See Note 1 for a discussion of the 2018 goodwill impairment test.

For the year ended December 31, 2018 and 2017, the Company recorded transaction costs related to the Rice Merger of $ 25.4 million and $ 152.2 million , respectively, from continuing operations and $ 13.5 million and $ 85.1 million , respectively, from discontinued operations.

For the year ended December 31, 2017, the Company recorded debt issuance costs related to the Rice Merger of $ 5.1 million from continuing operations and $ 2.9 million discontinued operations.

Other 2017 Acquisitions

In addition to the Rice Merger, the Company completed other acquisitions with third parties during the year ended December 31, 2017, through which the Company acquired, in the aggregate, approximately 158,500 net Marcellus acres, located primarily in West Virginia, and drilling rights on Ohio Utica acres.

In 2017, the Company paid, in the aggregate, net cash of $ 740.1 million in connection with the other 2017 acquisitions.

The fair value assigned, in the aggregate, to the acquired property, plant and equipment was $ 750.1 million .

In connection with the other 2017 acquisitions, the Company assumed $ 5.3 million of net current liabilities and $ 4.7 million of non-current liabilities.

In 2017, as a result of post-closing adjustments on acquisitions completed in 2016, the Company paid $ 78.9 million for additional undeveloped acreage and recorded $ 14.3 million in other non-cash adjustments, which reduced the fair value assigned to the acquired property, plant and equipment.

The Company accounted for the other 2017 acquisitions as business combinations using the acquisition method.

The fair value of undeveloped property was based on a market approach of comparable transactions using Level 3 inputs.

Separation and Distribution and Discontinued Operations

The Company's shareholders received 0.80 shares of Equitrans Midstream's common stock for every one share of EQT common stock held as the close of business on November 1, 2018.

The Company retained 19.9 % of the outstanding shares of Equitrans Midstream's common stock.

See Note 1 for a discussion of the Company's accounting for the investment in Equitrans Midstream and Note 5 for a discussion of the Company's sale of a portion of its shares of Equitrans Midstream's common stock in 2020.

In the ordinary course of business, the Company engages in transactions with Equitrans Midstream and its affiliates including, but not limited to, gas gathering agreements, transportation service and precedent agreements, storage agreements and water services agreements.

These agreements have terms ranging from month-to-month up to 20 years.

Equitrans Midstream comprised the Company's former EQM Gathering, EQM Transmission and EQM Water segments.

For all periods prior to the Separation and Distribution, the results of operations of Equitrans Midstream are reflected as discontinued operations.

The Statement of Consolidated Operations for the year ended December 31, 2018 has been recast to reflect discontinued operations presentation and include certain transportation and processing expenses in continuing operations that had previously been eliminated in consolidation.

Cash flows related to Equitrans Midstream are included in the Statement of Consolidated Cash Flows for the period prior to the Separation and Distribution.

The results of operations of Equitrans Midstream are summarized below.

The Company allocated transaction costs associated with the Separation and Distribution and a portion of transaction costs associated with the 2017 acquisition of Rice Energy Inc.

(the Rice Merger) to discontinued operations.

January 1, 2018 to November 12, 2018

Operating revenues $ 388,854

Transportation and processing ( 803,858 )

Operation and maintenance 99,671

Selling, general and administrative 62,702

Depreciation 160,701

Impairment of goodwill (a) 267,878

Transaction costs 93,062

Amortization of intangible assets 36,007

Other income 51,014

Interest expense 88,300

Income from discontinued operations before income taxes 435,405

Income tax expense 61,643

Income from discontinued operations after income taxes 373,762

Net income from discontinued operations attributable to noncontrolling interests 237,410

Net income from discontinued operations $ 136,352

(a) Following the third quarter of 2018, and prior to the Separation and Distribution, indicators of goodwill impairment were identified in the form of announced production curtailments, which could reduce the volumetric-based fee revenues of two reporting units to which the Company's goodwill was recorded.

The two reporting units, Rice Retained Midstream and RMP PA Gas Gathering, were allocated to discontinued operations as a result of the Separation and Distribution.

Both of these reporting units earned a substantial portion of their revenues from volumetric-based fees, which are sensitive to changes in development plans.

In estimating the fair value of these reporting units, a combination of the income approach and the market approach was used.

The comparable company method market approach evaluates the value of a company using metrics of other businesses of similar size and industry.

The reference transaction method evaluates the value of a company based on pricing multiples derived from similar transactions entered into by similar companies.

As a result, impairment of goodwill of $ 267.9 million was recorded with a corresponding decrease to goodwill in the Consolidated Balance Sheet and allocated to discontinued operations.

The following table presents cash flows from or used in discontinued operations related to Equitrans Midstream that are included, and not separately stated, in the Statement of Consolidated Cash Flows for the year ended December 31, 2018.

January 1, 2018 to November 12, 2018

Cash flows from operating activities:

Deferred income tax benefit $ ( 373,405 )

Depreciation 160,701

Amortization of intangibles 36,007

Impairment of goodwill 267,878

Other income ( 51,450 )

Share-based compensation expense 1,841

Cash flows from investing activities:

Capital expenditures $ ( 732,727 )

Capital contributions to Mountain Valley Pipeline, LLC (a) ( 820,943 )

Cash flows from financing activities:

Proceeds from issuance of debt $ 2,500,000

Proceeds in borrowings on credit facility 3,378,500

Repayment of borrowings on credit facility ( 3,219,500 )

Debt issuance costs ( 40,966 )

Distributions to noncontrolling interests ( 380,651 )

Acquisition of 25% of Strike Force Midstream LLC ( 175,000 )

(a) Mountain Valley Pipeline, LLC is a joint venture that is constructing the Mountain Valley Pipeline.

EQM owns an interest in the joint venture and makes capital contributions to the joint venture.

The following table summarizes income tax (benefit) expense.

Years Ended December 31,

2020 2019 2018

Federal $ ( 132,625 ) $ ( 106,487 ) $ ( 513,293 )

State ( 10,393 ) 5,774 ( 46,218 )

Subtotal ( 143,018 ) ( 100,713 ) ( 559,511 )

Federal ( 131,355 ) ( 213,397 ) 20,496

State ( 24,485 ) ( 61,666 ) ( 157,496 )

Subtotal ( 155,840 ) ( 275,063 ) ( 137,000 )

Total income tax benefit $ ( 298,858 ) $ ( 375,776 ) $ ( 696,511 )

For the year ended December 31, 2019 , the current federal income tax benefit consisted primarily of expected refunds of $ 120 million related to the Company's alternative minimum tax (AMT) credit carryforward and the Tax Cuts and Jobs Act.

For the year ended December 31, 2018 , the current federal income tax benefit consisted primarily of an expected refund of $ 141 million related to the Company's AMT credit carryforward, partly offset by $ 16 million of current state tax expense.

For the year ended December 31, 2017 , the current federal income tax benefit consisted primarily of expected refunds of $ 65 million related to amended returns the Company had filed to carryback federal and AMT net operating losses (NOLs) that were generated in 2017 and 2016.

The remaining current tax benefit of $ 435 million and $ 29 million for the years ended December 31, 2018 and 2017 , respectively, was offset by current expense related to discontinued operations and will not result in additional refunds to the Company.

For the year ended December 31, 2020, the current federal and state income tax benefit consisted primarily of refunds of $ 117 million, including interest, related to the Company's alternative minimum tax (AMT) credit carryforward, the Tax Cuts and Jobs Act of 2017 (the Tax Cuts and Jobs Act) and the acceleration of the receipt of such refunds with the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

The remainder of the tax benefit of $ 26 million, including interest, is related to federal and state audits that were settled in 2020.

For the year ended December 31, 2019, the current U.S.

federal income tax benefit consisted primarily of expected refunds of $ 120 million related to the Company's AMT credit carryforward and the Tax Cuts and Jobs Act.

For the year ended December 31, 2018, the current U.S.

federal income tax benefit consisted primarily of an expected refund of $ 141 million related to the Company's AMT credit carryforward, partly offset by $ 16 million of current state tax expense.

The remaining current tax benefit of $ 435 million for the year ended December 31, 2018, was offset by current expense related to discontinued operations and will not result in additional refunds to the Company.

On December 22, 2017, the U.S.

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federal income tax law, including lowering the federal corporate tax rate to 21% from 35% beginning January 1, 2018.

As a result of the change in the corporate tax rate the Company recorded a deferred tax benefit of $ 1.2 billion during the year ended December 31, 2017 to revalue its existing net deferred tax liabilities to the lower rate.

The Company applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Cuts and Jobs Act in 2017 and throughout 2018.

At December 31, 2017, the Company had not completed the accounting for all the enactment-date income tax effects of the legislation under Accounting Standards Codification (ASC) 740, Income Taxes , for the following aspects:

remeasurement of deferred tax assets and liabilities and incentive-based compensation limitations.

During 2018, the Company completed the accounting for all the enactment-date income tax effects of the Tax Cuts and Jobs Act and recognized adjustments of $ 5.3 million to the provisional amounts recorded at December 31, 2017.

These adjustments were included as a component of income tax expense from continuing operations.

The additional expense was primarily a result of adjustments to the increased limitations on deductible executive compensation.

The Tax Cuts and Jobs Act preserved deductibility of intangible drilling costs (IDCs) for federal income tax purposes, which allows the Company to deduct a portion of drilling costs in the year incurred and minimizes current taxes payable.

Prior to 2018, IDCs were limited for AMT purposes, which resulted in the Company paying AMT in periods when no other federal taxes were then currently payable.

The Tax Cuts and Jobs Act also repealed the AMT for tax years beginning January 1, 2018 and provided that existing AMT credit carryforwards can be used to offset current federal taxes owed in tax years 2018 through 2020.

In addition, 50% of any unused AMT credit carryforwards can be refunded during these years with any remaining AMT credit carryforward being fully refunded in 2021.

The Tax Cuts and Jobs Act also preserved deductibility of intangible drilling costs (IDCs) for U.S.

federal income tax purposes, which allows the Company to deduct a portion of drilling costs in the year incurred and minimizes current taxes payable.

Prior to 2018, IDCs were limited for AMT purposes, which resulted in the Company paying AMT in periods when no other federal taxes were currently payable.

With the passing of the CARES Act, the Company was able to accelerate these refunds to 2020.

As a result of an IRS announcement in January 2019 that reversed its position that AMT refunds were subject to sequestration by the federal government at a rate equal to 6.2 % of the refund, the Company reversed the related valuation allowance of $ 13 million in the first quarter of 2019.

As of December 31, 2019 , the Company had current income tax receivable of $ 299 million , which consisted of refunds of AMT credits of $ 95 million and $ 190 million for 2019 and 2018, respectively, and $ 14 million in state taxes previously paid related to the Company's 2018 tax return.

The Company expects to receive $ 95 million in refunds of AMT in 2020 and 2021.

The Tax Cuts and Jobs Act limited the deductibility of interest expense, and, as a result, the Company recorded a valuation allowance in 2019 for a portion of the interest expense limit imposed for separate company state income tax purposes.

The Company has federal NOL carryforwards related to the Rice Merger and NOLs generated in 2017 in excess of amounts carried back to prior years.

During 2020, final regulations were issued that provided clarity on several issues that were beneficial to the Company including (i) the exclusion of commitment fees and debt issuance costs from the definition of interest and (ii) the inclusion of the adding back depreciation, depletion and amortization associated with cost of goods sold to arrive at adjusted taxable income.

These changes eliminated the interest expense limitation for the Company and the related valuation allowance was reversed in 2020.

The Company has federal net operating loss (NOLs) carryforwards related to the Rice Merger and NOLs generated in 2017 in excess of amounts carried back to prior years.

The Company also has NOLs acquired in the Company's 2016 acquisition of Trans Energy, Inc., of which a nominal amount is available for use annually over the next 20 years.

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NOLs generated in 2018 and in future periods can be carried forward indefinitely.

Income tax benefit from continuing operations differed from amounts computed at the federal statutory rate of 21 % for 2019 and 2018 and 35 % for 2017 on pre-tax income for reasons summarized below.

As a result of the CARES Act, NOLs generated in 2018, 2019 and 2020 can be carried back five years and are allowed to fully offset taxable income ignoring the 80% limitation if utilized prior to 2021.

Income tax benefit from continuing operations differed from amounts computed at the federal statutory rate of 21 % on pre-tax income for reasons summarized below.

Years Ended December 31,

2020 2019 2018

Tax at statutory rate $ ( 265,867 ) $ ( 335,469 ) $ ( 646,261 )

Federal tax law change

State income taxes ( 75,035 ) ( 119,659 ) ( 251,780 )

Valuation allowance 106,548 81,522 88,785

Regulatory liability/asset

Federal tax credits

Tax settlements ( 33,384 ) — —

Federal and state tax credits ( 11,628 ) ( 7,908 ) ( 2,400 )

Goodwill impairment — — 111,470

Other ( 19,492 ) 5,738 3,675

Income tax benefit $ ( 298,858 ) $ ( 375,776 ) $ ( 696,511 )

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The Company's effective tax rate for the year ended December 31, 2020 was higher compared to the U.S.

federal statutory rate due primarily to state income taxes and federal and state income tax settlements, partly offset by valuation allowances that limit certain federal and state tax benefits.

The Company's effective tax rate for the year ended December 31, 2019 was higher compared to the U.S.

federal statutory rate due primarily to state income taxes and the release of the valuation allowance related to AMT sequestration, partly offset by valuation allowances that limit certain state tax benefits.

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The Company had no tax basis in the goodwill allocated to continuing operations that had been impaired in 2018.

The Company's effective tax rate for the year ended December 31, 2017 was lower compared to the U.S.

federal statutory rate due primarily to the effect of the Tax Cuts and Jobs Act on the Company's net deferred tax liability, which was remeasured at the updated corporate tax rate of 21% .

The effective tax rate was also lower compared to the U.S.

federal statutory rate due to an increase in federal tax credits generated during 2017 as a result of $ 30.2 million of federal marginal well tax credits.

The IRS notice supporting the calculation of the credit was not published until 2017 and, absent the IRS notice, the Company was unable to estimate the amount of this credit in 2016.

As a result, $ 6.1 million of this credit recorded in 2017 related to 2016 activity.

For the year ended December 31, 2017, the Company realized $ 10.5 million of tax expense associated with Federal Energy Regulatory Commission (FERC) regulated assets as a result of the corporate tax rate reduction from the Tax Cuts and Jobs Act.

Following the normalization rules of the Internal Revenue Code (IRC), this regulatory liability is amortized on a straight-line basis over the estimated remaining life of the related assets.

This regulatory liability was transferred to Equitrans Midstream in connection with the Separation and Distribution and was included in discontinued operations.

The Company believes that it is more likely than not that the benefit from certain state NOL carryforwards and certain federal NOLs acquired in recent acquisitions will not be realized.

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Uncertainties such as future commodity prices can affect the Company's calculations and its ability to use these NOLs prior to expiration.

Further, because of the Tax Cuts and Jobs Act, the Company recorded a valuation allowance against a deferred tax asset related to the interest expense limitation for separate company state income tax purposes and recorded a write-off of deferred tax assets related to certain executive incentive-based awards to be paid in a future year that will not be deductible.

During 2019, the Company recorded a partial valuation allowance against a deferred tax asset related to the unrealized loss recorded on its investment in Equitrans Midstream that it does not believe it will be able to utilize due to limitations imposed on capital losses.

Further, because of the Tax Cuts and Jobs Act, the Company recorded a write-off of deferred tax assets related to certain executive incentive-based awards to be paid in a future year that will not be deductible.

During 2020 and 2019, the Company recorded a partial valuation allowance against a deferred tax asset related to the unrealized loss recorded on its investment in Equitrans Midstream that it does not believe it will be able to utilize due to limitations imposed on capital losses.

The Company has capital loss carryback capacity and provided a valuation allowance on the portion in excess of the carryback.

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The following table reconciles the beginning and ending amount of reserve for uncertain tax positions, excluding interest and penalties.

2020 2019 2018

Balance at January 1 $ 259,588 $ 315,279 $ 301,558

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Reductions for tax positions taken in prior years ( 38,859 ) ( 84,051 ) ( 9,134 )

Reductions for tax positions settled with tax authorities ( 58,236 ) — —

Balance at December 31 $ 175,213 $ 259,588 $ 315,279

Included in the balances above are unrecognized tax benefits of $ 91.0 million, $ 150.9 million and $ 124.6 million that, if recognized, would affect the effective tax rates as of December 31, 2020, 2019 and 2018, respectively.

Also included in the balances above are uncertain tax positions of $ 113.7 million , $ 88.2 million , and $ 84.1 million for the years ended December 31, 2019 , 2018 and 2017 , respectively, that were recorded in the Consolidated Balance Sheets as a reduction of the related deferred tax asset for AMT and general business credit carryforwards and NOLs.

The Company released $ 84 million of reserves and reinstated the related deferred tax asset for AMT during 2019 due to settlement of the 2013 amended return refund claim with the IRS.

The state deferred tax asset was reduced for uncertain tax positions of approximately $ 0.3 million during the year ended December 31, 2017.

Also included in the balances above are uncertain tax positions of $ 90.3 million, $ 113.7 million, and $ 88.2 million for the years ended December 31, 2020, 2019 and 2018, respectively, that were recorded in the Consolidated Balance Sheets as a reduction of the related deferred tax asset for general business credit carryforwards and NOLs.

During 2020, the Company adjusted its tax reserves as a result of settling its 2010 – 2012 amended return refund claim with the IRS by (i) reducing the uncertain tax positions and increasing the amount of the deferred tax asset for AMT credits by $ 14.9 million, (ii) reducing the uncertain tax position offset to the deferred tax asset for Research and Experimentation credits by $ 35.3 million and (iii) writing down the deferred tax asset by $ 22.6 million to the settlement amount.

In addition, in 2020, the Company settled a dispute related to its 2013 Pennsylvania returns and reduced the uncertain tax positions by $ 46.9 million and agreed to remit $ 33.5 million to the Commonwealth of Pennsylvania.

During 2019, the Company released $ 84.0 million of reserves and reinstated the related deferred tax asset for AMT due to settlement of the 2013 amended return refund claim with the IRS.

Included in the balances above are $ 0.0 million, $ 0.7 million and $ 0.7 million, as of December 31, 2020, 2019 and 2018, respectively, for tax positions for which the ultimate deductibility is highly certain but there is uncertainty about the timing of tax deductions.

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The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

The Company recorded interest and penalties of approximately $ 3.3 million , $ 3.4 million and $ 3.2 million for 2019 , 2018 and 2017 , respectively.

Interest and penalties of $ 15.2 million , $ 11.9 million and $ 8.4 million were included in the Consolidated Balance Sheets at December 31, 2019 , 2018 and 2017 , respectively.

The Company recorded interest and penalties (income) expense of approximately $( 3.8 ) million, $ 3.3 million and $ 3.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Interest and penalties of $ 11.4 million and $ 15.2 million were included in the Consolidated Balance Sheets at December 31, 2020 and 2019, respectively.

As of December 31, 2020, 2019 and 2018, the Company believed that, as a result of potential settlements with, or legal or administrative guidance by, relevant taxing authorities or the lapse of applicable statutes of limitation, it is reasonably possible that a decrease of $ 125.9 million, $ 80.2 million and $ 33.3 million, respectively, in unrecognized tax benefits related to federal tax positions may be necessary within twelve months.

The consolidated federal income tax liability of the Company has been settled with the IRS through 2009.

The IRS has completed its review of the 2010, 2011 and 2012 tax years, and the Company is in the process of appealing its Research & Experimentation

(R&E) tax credit claim for such years.

In addition, the Company has filed refund claims related to R&E and AMT preference adjustments for 2010 through 2013.

The Company is under IRS audit for 2013 and agreed to a settlement related to a 2013 amended return refund claim in the fourth quarter of 2019.

The Company's consolidated U.S.

federal income tax liability has been settled with the IRS through 2013.

The Company is also the subject of various state income tax examinations.

With few exceptions, as of December 31, 2019 , the Company is no longer subject to state examinations by tax authorities for years before 2012.

As of December 31, 2020, with few exceptions, the Company is no longer subject to state examinations by tax authorities for years before 2015.

There were no material changes to the Company's methodology for accounting for unrecognized tax benefits during 2020.

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Incentive compensation and deferred compensation plans ( 22,419 ) ( 16,923 )

Net operating loss carryforwards

NOL carryforwards ( 789,544 ) ( 635,446 )

Alternative minimum tax credit carryforward ( 81,237 ) ( 190,992 )

Federal tax credits ( 79,846 ) ( 59,854 )

Unrealized gains (losses)

State capital loss carryforward ( 28,317 ) —

Unrealized (losses) gains ( 43,475 ) 54,460

Interest disallowance limitation ( 160 ) ( 46,776 )

Convertible debt 37,489 —

Other ( 1,126 ) ( 6,797 )

Total excluding valuation allowances 841,975 1,062,370

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Total net deferred income tax liabilities $ 1,371,967 $ 1,485,814

During 2019, net deferred tax liability decreased $ 337.6 million from 2018 due primarily to book impairments, which are included in drilling and development costs expensed for income tax reporting but are not currently deductible for tax purposes, and the Company's investment in Equitrans Midstream, partly offset by increased tax depreciation in excess of book depreciation.

During 2020, net deferred tax liability decreased by $ 113.8 million compared to 2019 due primarily to book impairments, which are included in drilling and development costs expensed for income tax reporting but are not currently deductible for tax purposes, and the Company's investment in Equitrans Midstream, partly offset by increased tax depreciation in excess of book depreciation.

As of December 31, 2020, the Company had a deferred tax asset of $ 233.2 million, net of valuation allowances of $ 22.8 million, related to tax benefits from federal NOL carryforwards generated prior to 2018 and expiring between 2035 to 2037.

Federal NOLs generated in 2018 and thereafter are represented by a deferred tax asset of $ 75.6 million and will carryforward indefinitely but will be limited to offset 80% of taxable income in each year.

As of December 31, 2020, the Company had a deferred tax asset of $ 480.8 million, net of valuation allowances of $ 387.7 million, related to tax benefits from state NOL carryforwards with expiration dates ranging from 2021 to 2040.

Due to a decrease in state apportionment rates and impairment of assets, the Company will have less realizable NOLs in future years on a separate company basis and, as such, in 2020 recorded a valuation allowance on its property, plant and equipment state deferred tax asset of $ 0.6 million.

In 2020, the Company incurred an unrealized loss on its investment in Equitrans Midstream.

This investment is a capital asset for tax purposes and capital losses can only be utilized to offset a capital gain and are limited to being carried back three years and forward five years for potential utilization.

Due to these limitations, the Company also recorded a valuation allowance on the deferred tax asset for its retained equity stake of Equitrans Midstream of $ 62.4 million for separate company state income tax reporting purposes and $ 56.4 million for federal.

As of December 31, 2019, the Company had a deferred tax asset of $ 218.8 million, net of valuation allowances of $ 22.8 million, related to tax benefits from federal NOL carryforwards expiring in 2037.

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As of December 31, 2019, the Company had a deferred tax asset of $ 416.7 million, net of valuation allowances of $ 324.1 million, related to tax benefits from state NOL carryforwards with various expiration dates ranging from 2020 to 2039.

Due to a decrease in state apportionment rates and impairment of assets, the Company will have less realizable NOL in future years and, as such, had to record a valuation allowance on its property, plant and equipment state deferred tax asset of $ 4.5 million in 2019.

Due to a decrease in state apportionment rates and impairment of assets, the Company will have less realizable NOLs in future years and, as such, had to record a valuation allowance on its property, plant and equipment state deferred tax asset of $ 4.5 million in 2019.

Additionally, for separate company state income tax reporting purposes, the Tax Cuts and Jobs Act interest deduction limitation resulted in a valuation allowance of $ 21.3 million recorded in 2019.

In 2019, the Company incurred an unrealized loss on its investment in Equitrans Midstream.

In 2019, the Company incurred an unrealized loss on its investment in

Equitrans Midstream.

Due to these limitations, the Company also recorded a valuation allowance on the deferred tax asset recorded for the retained stake of Equitrans Midstream of $ 42.4 million for separate company state income tax reporting purposes and $ 8.3 million for federal.

As of December 31, 2018, the Company had a deferred tax asset of $ 32.9 million , net of valuation allowances of $ 22.8 million , related to tax benefits from federal NOL carryforwards expiring in 2037 to 2038 .

As of December 31, 2018, the Company had a deferred tax asset of $ 94.7 million , net of valuation allowances of $ 279.5 million , related to tax benefits from state NOL

carryforwards with various expiration dates ranging from 2020 to 2037 .

In October 2017, Pennsylvania enacted a change in the limitation on Pennsylvania NOL utilization from 30% of taxable income to 35% of taxable income for tax years beginning in 2018 and 40% of taxable income for tax years beginning in 2019 and thereafter.

However, due to the decrease in state apportionment rates, the Company will have less realizable NOL in future years.

Additionally, the Tax Cuts and Jobs Act interest deduction limitation imposed for separate company state income tax reporting purposes resulted in a valuation allowance of $ 21.7 million .

The Company also recorded a valuation allowance on the retained stake of Equitrans Midstream of $ 14 million for separate company state income tax reporting purposes.

The Company reduced the valuation allowance on expected AMT credit refunds subject to federal sequestration to $ 13.3 million as a result of a change in estimate for the period ended December 31, 2018.

As a result of an IRS announcement in January 2019 that reversed its position that AMT refunds were subject to sequestration by the federal government, the Company reversed the related valuation allowance in the first quarter of 2019.

As of December 31, 2017, the Company had a deferred tax asset of $ 130 million , net of valuation allowances of $ 217.0 million , related to tax benefits from state NOL carryforwards with various expiration dates ranging from 2028 to 2038 .

Due to these limitations, the Company also recorded a valuation allowance on the deferred tax asset recorded for its retained equity stake of Equitrans Midstream of $ 42.4 million for separate company state income tax reporting purposes and $ 8.3 million for federal.

For the year ended December 31, 2019, the Company recorded a $ 90.9 million adjustment to retained earnings and additional paid-in-capital related to the Separation and Distribution.

4 unchanged sentences

This adjustment impacts the amount of deferred taxes transferred to Equitrans Midstream as of the Separation and Distribution date of November 12, 2018.

December 31, 2019

December 31, 2018

Principal Value

Carrying Value (a)

Fair Value (b)

Principal Value

Carrying Value (a)

Fair Value (b)

December 31, 2020 December 31, 2019

Principal Value Carrying Value (a) Fair Value (b) Principal Value Carrying Value (a) Fair Value (b)

Credit Facility expires July 2022 $ 300,000 $ 300,000 $ 300,000 $ 294,000 $ 294,000 $ 294,000

Term Loan Facility due May 31, 2021 — — — 1,000,000 999,353 999,353

Senior notes:

8.125% notes due June 1, 2019

Floating rate notes due October 1, 2020 — — — 500,000 499,238 500,290

2.50 % notes due October 1, 2020

8.81% to 9.00% series A due 2020 – 2021

— — — 500,000 499,228 500,950

8.81 % to 9.00 % series A notes due 2020 – 2021

24,000 24,000 25,232 35,200 35,200 37,380

4.875 % notes due November 15, 2021

125,118 124,943 128,231 750,000 747,571 774,173

3.00 % notes due October 1, 2022

7.42% series B due 2023

568,823 566,689 578,055 750,000 745,579 737,025

7.42 % series B notes due 2023

10,000 10,000 10,038 10,000 10,000 10,788

7.875 % notes due February 1, 2025 (c)

1,000,000 992,905 1,146,250 — — —

1.75 % convertible notes due May 1, 2026

500,000 359,635 587,385 — — —

7.75 % debentures due July 15, 2026

115,000 112,224 137,025 115,000 111,727 129,466

3.90 % notes due October 1, 2027

1,250,000 1,242,182 1,249,400 1,250,000 1,241,024 1,167,763

5.00 % notes due January 15, 2029

350,000 344,106 371,469 — — —

8.750 % notes due February 1, 2030 (c)

750,000 743,726 924,510 — — —

Note payable to EQM 105,056 105,056 130,464 110,059 110,059 128,241

Current portion of debt (c)

Total debt 5,097,997 4,925,466 5,588,059 5,314,259 5,292,979 5,279,429

Current portion of debt 154,336 154,161 159,943 16,204 16,204 17,436

Long-term debt $ 4,943,661 $ 4,771,305 $ 5,428,116 $ 5,298,055 $ 5,276,775 $ 5,261,993

For the note payable to EQM, the principal value represents the carrying value.

(a) For the note payable to EQM, the principal value represents the carrying value.

For all other debt, the principal value less the unamortized debt issuance costs and debt discounts represents the carrying value.

The carrying value of borrowings under the Company's Term Loan Facility approximates fair value as the interest rates are based on prevailing market rates;

therefore, it is a Level 1 fair value measurement.

(b) The carrying value of borrowings under the Company's credit facility and Term Loan Facility approximate fair value as the interest rates are based on prevailing market rates;

therefore, they are a Level 1 fair value measurement.

For the note payable to EQM, fair value is measured using Level 3 inputs.

For all other debt, fair value is measured using Level 2 inputs.

The Floating Rate notes and 2.50 % notes due in 2020 were classified as long-term due to the repayment in February 2020 described below.

Term Loan Facility .

On May 31, 2019, the Company entered into a Term Loan Agreement (the Term Loan Agreement) providing for a $ 1.0 billion unsecured term loan facility (the Term Loan Facility) and borrowed $ 1.0 billion under the Term Loan Facility.

The Company used the net proceeds to (i) repay $ 700 million aggregate principal amount of 8.125 % senior notes, (ii) repay

outstanding borrowings under the Company's $ 2.5 billion credit facility and (iii) pay accrued interest and fees and expenses related to the foregoing and the Term Loan Agreement.

Remaining proceeds from the borrowing were used by the Company for general corporate purposes.

At the Company's election, the $ 1.0 billion in borrowings under the Term Loan Facility bear interest at a Eurodollar rate defined in the Term Loan Agreement plus a margin based on the Company's credit ratings.

The Company may voluntarily prepay borrowings under the Term Loan Facility, in whole or in part, without premium or penalty, but subject to reimbursement of funding losses with respect to prepayment.

Borrowings under the Term Loan Facility that are repaid may not be reborrowed.

During the year ended December 31, 2019 , the Company incurred interest on Term Loan Facility borrowings at a weighted average annual interest rate of 3.1 % .

As a result of the Moody's, S&P and Fitch downgrades of the Company's senior notes credit rating (discussed in section "Security Ratings Events"), the margin on the Term Loan Facility borrowings increased from 1.00 % as of December 31, 2019 to 1.25 % as of February 26, 2020 .

The Term Loan Agreement contains certain representations and warranties and various affirmative and negative covenants and events of default, including (i) a restriction on the ability of the Company or its subsidiaries to incur or permit liens on assets, subject to certain significant exceptions, (ii) the establishment of a maximum ratio of consolidated debt-to-total capital of the Company and its subsidiaries such that consolidated debt shall at no time exceed 65 % of total capital, (iii) a limitation on certain fundamental changes to the Company's business, (iv) a limitation on dividends that may be issued by the Company and (v) certain restrictions related to mergers or acquisitions.

Senior Notes .

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

A s of December 31, 2020, aggregate maturities for the Company's senior notes were $ 149 million in 2021, $ 569 million in 2022, $ 10 million in 2023, $ 0 million in 2024, $ 1,000 million in 2025 and $ 2,965 million thereafter.

The indentures governing the Company's long-term indebtedness contain certain restrictive financial and operating covenants, including covenants that restrict, among other things, the Company's ability to incur, as applicable, indebtedness, incur liens, enter into sale and leaseback transactions, complete acquisitions, merge, sell assets and perform certain other corporate actions.

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 and $ 500 million aggregate principal amount of the Company's 2.50 % senior notes and expects to use the remaining proceeds to repay or redeem other outstanding indebtedness.

The Adjustable Rate Notes have covenants that are consistent with the Company's existing senior unsecured notes, with an additional interest rate adjustment provision that provides for adjustments to its interest rates based on credit ratings assigned by Moody's, S&P and Fitch to the Company's senior notes.

As a result of the S&P and Fitch downgrades of the Company's senior notes credit rating (discussed in section "Security Ratings Events"), the interest rate on the 6.125 % senior notes increased to 6.875 % and the interest rate on the 7.000 % senior notes increased to 7.750 % .

On February 3, 2020, the Company's 2.50 % senior notes and floating rate notes, each due October 1, 2020, were fully redeemed by the Company at a redemption price of 100.446 % and 100 % , respectively, plus accrued but unpaid interest of $ 4.2 million and $ 1.2 million , respectively.

This resulted in the payment of make whole call premiums of $ 2.2 million related to the 2.50 % senior notes.

On February 12, 2020, the Company announced its commencement of a cash tender offer (the Tender Offer) for up to $ 400 million aggregate principal amount of its 4.875 % senior notes due 2021 (the 4.875 % Notes).

Consideration paid in the Tender Offer for the 4.875 % Notes that are validly tendered on or prior to March 2, 2020, and accepted for purchase by the Company, will be $ 1,020 per $1,000 principal amount, including an early tender premium of $ 30 per $1,000 principal amount.

The settlement date for such notes is expected to be March 4, 2020.

Consideration paid in the Tender Offer for the 4.875 % Notes that are validly tendered after March 2, 2020 and on or prior to March 16, 2020, and accepted for purchase by the Company, will be $ 990 per $1,000 principal amount.

The settlement date for such notes is expected to be March 18, 2020.

Payments for the 4.875 % Notes purchased will also include accrued and unpaid interest from, and including, the last interest payment date on the 4.875 % Notes up to, but not including, the applicable settlement date for such 4.875 % Notes accepted for purchase by the Company.

Note Payable to EQM .

EQM owns a preferred interest in EQT Energy Supply, LLC (EES) that is accounted for as a note payable due to the terms of the operating agreement of EES.

The fair value of the note payable to EQM is a Level 3 fair value measurement and is estimated using an income approach model using a market-based discount rate.

Principal amounts due for the note payable to EQM are $ 5.0 million in 2020 , $ 5.2 million in 2021 , $ 5.5 million in 2022 , $ 5.8 million in 2023 , $ 6.3 million in 2024 and $ 82.3 million thereafter.

$ 2.5 Billion Facility.

$ 2.5 Billion Credit Facility.

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

The Company may request two one-year extensions of the expiration date, the approval of which is subject to satisfaction of certain conditions.

The Company may, on a one-time basis, request that the lenders' commitments be increased to an aggregate of up to $ 3.0 billion , subject to certain terms and conditions.

Company may, on a one-time basis, request that the lenders' commitments be increased to an aggregate of up to $ 3.0 billion, subject to certain terms and conditions.

Each lender in the facility may decide if it will increase its commitment.

4 unchanged sentences

Eurodollar rate loans bear interest at a Eurodollar rate plus a margin based on the Company's credit ratings.

As a result of the Moody's, S&P and Fitch downgrades of the Company's senior notes credit rating (discussed in section "Security Ratings Events"), the margin on base rate loans increased from 0.50 % as of December 31, 2019 to 0.75 % as of February 26, 2020 and the margin on Eurodollar rate loans increased from 1.50 % as of December 31, 2019 to 1.75 % as of February 26, 2020 .

Based on the Company's senior notes credit rating as of December 31, 2020, the margin on base rate loans was 1.00 % and the margin on Eurodollar rate loans was 2.00 %.

The Company is not required to maintain compensating bank balances.

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As of December 31, 2020, the Company was in compliance with all debt provisions and covenants.

The Company had $ 0.3 billion and $ 0.8 billion of borrowings outstanding under its credit facility as of December 31, 2019 and 2018 , respectively.

The Company had no letters of credit outstanding under its credit facility as of both December 31, 2019 and 2018 .

For each of the years ended December 31, 2019 , 2018 and 2017 , the Company incurred commitment fees of approximately 20 basis points on the undrawn portion of its credit facility to maintain credit availability.

As of December 31, 2019 , the Company had approximately $ 2.2 billion available under its credit facility.

For the years ended December 31, 2019 , 2018 and 2017 , the maximum amount of outstanding borrowings at any time under the credit facility was $ 1.1 billion , $ 1.6 billion and $ 1.4 billion , respectively, the average daily balance was approximately $ 340 million , $ 854 million and $ 191 million , respectively, and interest was incurred at weighted average annual interest rates of 3.8 % , 3.4 % and 2.8 % , respectively.

Security Ratings Events.

As of December 31, 2019 , the Company's senior notes were rated "Baa3" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

In January 2020, Moody's downgraded the Company's senior notes credit rating to "Ba1," and, in February 2020, S&P and Fitch downgraded the Company's senior notes rating to "BB+" and "BB," respectively.

As a result, certain of the Company's counterparties to its midstream services contracts requested additional assurances.

As of February 26, 2020 , these assurances were $ 0.6 billion in the aggregate, for which amount the Company posted letters of credit issued under its credit facility.

The letters of credit do not increase the Company's total debt but instead represent a decrease to the Company's available borrowing capacity under the credit facility.

In addition, the letters of credit are subject to a letters of credit fee based on the Company's credit ratings and a fronting fee.

As of February 26, 2020 , the Company had sufficient unused borrowing capacity under its credit facility, net of letters of credit, to satisfy any requests for margin deposit or other collateral that its counterparties would be permitted to request of the Company pursuant to the Company's derivative instruments and midstream services contracts in the event that Moody's and S&P downgrade the Company's credit rating two categories further.

As of February 26, 2020 , such margin deposit or other collateral amounts could be up to approximately $ 1.4 billion , inclusive of assurances posted.

Shares of authorized and unissued EQT Common Stock were reserved as follows.

December 31, 2019

Possible future acquisitions

Stock compensation plans

The Company made no share repurchases in 2019.

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

For each of the years ended December 31, 2020, 2019 and 2018, the Company incurred commitment fees of approximately 28 , 20 and 20 basis points, respectively, on the undrawn portion of its credit facility to maintain credit availability.

Under the Company's credit facility, for the years ended December 31, 2020, 2019 and 2018, the maximum amounts of outstanding borrowings were $ 0.7 billion, $ 1.1 billion and $ 1.6 billion, respectively, the average daily balances were approximately $ 148 million, $ 340 million and $ 854 million, respectively, and interest was incurred at weighted average annual interest rates of 2.3 %, 3.8 % and 3.4 %, respectively.

Term Loan Facility .

The Company had a $ 1.0 billion unsecured term loan facility (the Term Loan Facility) that was scheduled to mature in May 2021.

In 2019, the Company used the proceeds from borrowings of $ 1.0 billion under the Term Loan Facility to repay $ 700 million aggregate principal amount of 8.125 % senior notes, repay outstanding borrowings under the Company's $ 2.5 billion credit facility and pay accrued interest and fees and expenses related to the term loan agreement.

Borrowings under the Term Loan Facility that are repaid may not be reborrowed.

The Company used proceeds from the offering of its Convertible Notes (see below), income tax refunds received during 2020 (see Note 9 ) and proceeds from the 2020 Divestiture (see Note 7 ) to fully repay its Term Loan Facility on June 30, 2020.

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 %.

For the period May 31, 2019 through December 31, 2019, the average daily balance was $ 1.0 billion and interest was incurred at a weighted average annual interest rate of 3.1 %.

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 covenants of the Adjustable Rate Notes are consistent with the Company's existing senior unsecured notes, with an additional interest rate adjustment provision that provides for adjustments to the interest rates on the Adjustable Rate Notes based on credit ratings assigned by Moody's, S&P and Fitch to the Company's senior notes.

As a result of changes to the Company's senior notes credit rating, the interest rate on the 6.125 % senior notes and the 7.000 % senior notes was 7.875 % and

8.750 %, respectively, as of December 31, 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 Adjustable Rate Notes;

however, if the Company's credit ratings improve, the interest rate under the Adjustable Rate Notes could be reduced to as low as the original interest rate set forth on the face of the Adjustable Rate Notes.

Convertible Notes.

On April 28, 2020, the Company issued $ 500 million aggregate principal amount of 1.75 % convertible senior notes (the Convertible Notes) due May 1, 2026 unless earlier redeemed, repurchased or converted.

The Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

After deducting offering costs of $ 16.9 million and Capped Call Transactions (defined and discussed below) costs of $ 32.5 million, the net proceeds from the offering of $ 450.6 million were used to repay $ 450 million of the Company's Term Loan Facility borrowings as well as for general corporate purposes.

Holders of the Convertible Notes may convert their Convertible Notes, at their option, at any time prior to the close of business on January 30, 2026 under the following circumstances:

• during any quarter commencing after the quarter ended June 30, 2020 as long as the last reported price of EQT common stock for at least 20 trading days (consecutive or otherwise) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding quarter is greater than or equal to 130 % of the conversion price on each such trading day;

• during the five -business-day period after any five -consecutive-trading-day period (the measurement period) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period is less than 98 % of the product of the last reported price of EQT common stock and the conversion rate for the Convertible Notes on each such trading day;

• if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding such redemption date;

• upon the occurrence of certain corporate events set forth in the Convertible Notes indenture.

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.

Upon conversion of the Convertible Notes, the Company intends to use a combined settlement approach to satisfy its settlement 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.

The Company may not redeem the Convertible Notes prior to May 5, 2023.

On or after May 5, 2023 and prior to February 1, 2026, the Company may redeem for cash all or any portion of the Convertible Notes, at its option, at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest up to the redemption date as long as the last reported price per share of EQT common stock has been at least 130 % of the conversion price in effect for at least 20 trading days (consecutive or otherwise) during any 30 -consecutive-trading-day period ending on the trading day immediately preceding the date on which the Company delivers notice of redemption.

A sinking fund is not provided for the Convertible Notes.

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.

The initial conversion price represents a premium of 20 % to the $ 12.50 per share closing price of EQT common stock on April 23, 2020.

The conversion rate is subject to adjustment under certain circumstances.

In addition, following certain corporate events that occur prior to May 1, 2026 or if the Company delivers notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or notice of redemption.

In connection with the Convertible Notes offering, the Company entered into privately negotiated capped call transactions (the Capped Call Transactions), the purpose of which is to reduce the potential dilution to EQT common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such obligation, with such reduction and offset subject to a cap.

The Capped Call Transactions have an initial strike price of $ 15.00 per share of EQT common stock and an initial capped price of $ 18.75 per share of EQT common stock, each of which are subject to certain customary adjustments.

For accounting purposes, the Company separated the Convertible Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have

associated convertible features.

The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the principal value of the Convertible Notes.

The equity component is not remeasured as long as it continues to meet the condition for equity classification.

The excess of the principal amount of the liability component over its carrying amount (the debt discount) will be amortized to interest expense over the term of the Convertible Notes, which is approximately 6 years, at an effective interest rate of 8.4 %.

At inception, the Company recorded the Convertible Notes at fair value of approximately $ 358.1 million, a net deferred tax liability of $ 41.0 million and an equity component of $ 100.9 million.

Issuance costs were allocated to the liability and equity components of the Convertible Notes based on their relative fair values.

Issuance costs attributable to the liability component of $ 12.1 million were recorded as a reduction to the liability component of the Convertible Notes and will be amortized to interest expense over the term of the Convertible Notes at an effective interest rate of 8.4 %.

Issuance costs attributable to the equity component of $ 4.8 million, representing the conversion option, were netted with the equity component.

The Capped Call Transactions are separate from the Convertible Notes.

The Capped Call Transactions were recorded in shareholders' equity and were not accounted for as derivatives.

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

For the year ended December 31, 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 December 31, 2020, the net carrying amount of the Convertible Notes liability component consisted of principal of $ 500 million less the unamortized debt discount of $ 129.1 million and unamortized issuance costs of $ 11.3 million.

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

Year Ended December 31, 2020

Contractual interest expense $ 5,906

Amortization of debt discount 12,856

Amortization of issuance costs 853

Total Convertible Notes interest expense $ 19,615

5.00 % Senior Notes.

On November 16, 2020, the Company issued $ 350 million aggregate principal amount of 5.00 % senior notes due January 15, 2029.

After deducting offering costs of $ 6.0 million, the net proceeds from the offering of $ 344.0 million were used to fund a portion of the purchase price of the Chevron Acquisition described in Note 6.

The covenants of the 5.00 % senior notes are consistent with the Company's existing senior unsecured notes;

provided, however, that the 5.00 % senior notes include an additional offer to repurchase provision applicable upon the occurrence of certain change of control events specified in the related indenture.

2020 Debt Repayments.

In February 2020, t he 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 premium), respectively, of each note's principal amount plus accrued but unpaid interest of $ 1.2 million and $ 4.2 million, respectively.

This resulted in the payment of make whole call premiums of $ 2.2 million related to the 2.50 % senior notes.

Throughout 2020, the Company repurchased $ 624.9 million aggregate principal amount of the Company's 4.875 % senior notes at a total cost of $ 647.3 million, inclusive of tender premiums of $ 13.7 million and accrued but unpaid interest of $ 8.7 million.

In November 2020, the Company repurchased $ 181.2 million aggregate principal amount of the Company's 3.00 % senior notes at a total cost of $ 182.8 million, inclusive of a tender premium of $ 0.9 million and accrued but unpaid interest of $ 0.7 million.

Note Payable to EQM .

EQM owns a preferred interest in EQT Energy Supply, LLC (EES), a subsidiary of the Company, that is accounted for as a note payable due to the terms of the operating agreement of EES.

The fair value of the note payable to EQM is a Level 3 fair value measurement and is estimated using an income approach model using a market-based discount rate.

Principal amounts due for the note payable to EQM are $ 5.2 million in 2021, $ 5.5 million in 2022, $ 5.8 million in 2023, $ 6.3 million in 2024, $ 6.5 million in 2025 and $ 75.8 million thereafter.

Surety Bonds .

During the year ended December 31, 2020, the Company issued approximately $ 93 million in surety bonds in response to its credit downgrades by Moody's, S&P and Fitch.

Subsequent Events.

On February 1, 2021, the Company redeemed the remaining $ 125.1 million aggregate principal amount of the Company's 4.875 % senior notes at a total cost of $ 130.7 million, inclusive of redemption premiums of $ 4.3 million and accrued but unpaid interest of $ 1.3 million.

As of December 31, 2020, the Company reserved 13.7 million shares of authorized and unissued EQT common stock for stock compensation plans and 40 million shares of authorized and unissued EQT common stock for settlement of the Convertible Notes.

In October 2020, the Company entered into an underwriting agreement under which the Company sold 20,000,000 shares of common stock at a price to the public of $ 15.50 per share.

In November 2020, the option to purchase 3,000,000 additional shares was exercised by the underwriters on the same terms.

After deducting offering costs of $ 15.6 million, the net proceeds of $ 340.9 million were used to fund a portion of the purchase price of the Chevron Acquisition described in Note 6 .

The Company made no share repurchases in 2020 or 2019.

During 2018, the Company repurchased 10,646,382 shares of EQT common stock at an average price of $ 50.62 , which included $ 0.02 for commission, pursuant to the Company's previously announced share repurchase programs.

This exhausted the Company's share repurchase authorization under such programs.

In conjunction with the closing of the Rice Merger, on November 13, 2017 the Company issued approximately 91 million shares of EQT common stock to Rice Energy shareholders.

Changes in Accumulated OCI (Loss) by Component

1 unchanged sentence

Natural gas cash flow hedges,

Interest rate cash flow hedges,

Other postretirement

benefits liability adjustment, net of tax

net of tax Interest rate cash flow hedges,

net of tax Other postretirement

benefits liability adjustment, net of tax Accumulated

OCI (loss), net of tax

December 31, 2017 $ 4,625 $ ( 555 ) $ ( 6,528 ) $ ( 2,458 )

(Gains) losses reclassified from accumulated OCI, net of tax

December 31, 2017

(Gains) losses reclassified from accumulated OCI, net of tax

(Gains) losses reclassified from accumulated OCI, net of tax ( 4,625 ) (a) 168 (b) 606 (c) ( 3,851 )

Distribution to Equitrans Midstream Corporation — — 903 903

December 31, 2018 — ( 387 ) ( 5,019 ) ( 5,406 )

Losses reclassified from accumulated OCI, net of tax

Losses reclassified from accumulated OCI, net of tax — 387 (b) 316 (c) 703

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

December 31, 2019 — — ( 5,199 ) ( 5,199 )

Losses (gains), net of tax related to natural gas cash flow hedges were reclassified from accumulated OCI into operating revenues.

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

Noted accumulated OCI reclassification is attributable to the net actuarial loss and net prior service cost related to the Company's other postretirement benefits plan.

Related to adoption of ASU 2018-02.

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

December 31, 2020 $ — $ — $ ( 5,355 ) $ ( 5,355 )

(a) Gains, net of tax, related to natural gas cash flow hedges were reclassified from accumulated OCI into operating revenues.

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

(c) Losses, net of tax, related to other postretirement benefits liability adjustments were attributable to net actuarial losses and net prior service costs.

Share-Based Compensation Plans

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Years Ended December 31,

2015 Executive Performance Incentive Program

2016 Incentive Performance Share Unit Program

2017 Incentive Performance Share Unit Program

2018 Incentive Performance Share Unit Program

2019 Incentive Performance Share Unit Program

2016 EQT Value Driver Performance Share Unit Award Program

2017 EQT Value Driver Performance Share Unit Award Program

2018 EQT Value Driver Performance Share Unit Award Program

2019 EQT Value Driver Performance Share Unit Award Program

2020 2019 2018

Incentive Performance Share Unit Programs $ 10,457 $ 13,306 $ 14,072

Value Driver Performance Share Unit Award Programs 885 3,376 8,808

Restricted stock awards 10,480 14,430 14,503

Non-qualified stock options 848 4,774 2,757

Stock appreciation rights 2,724 — —

Other programs, including non-employee director awards 2,155 2,257 3,014

1 unchanged sentence

Total share-based compensation expense (a) $ 27,549 $ 38,143 $ 24,904

For the year ended December 31, 2019, share-based compensation expense of $ 28.6 million was included in proxy, transaction and reorganization expense.

(a) For the years ended December 31, 2020 and 2019 , share-based compensation expense of $ 2.1 million and $ 28.6 million, respectively, was included in other operating expenses related primarily to reorganization costs.

In connection with the Separation in 2018, the Company transferred obligations related to then-outstanding share-based compensation awards to Equitrans Midstream.

To preserve the aggregate fair value of awards held prior to the Separation, as measured immediately before and immediately after the Separation, each holder of share-based compensation awards generally received an adjusted award consisting of both a stock-based compensation award denominated in the Company equity and a stock-based compensation award denominated in Equitrans Midstream equity.

To preserve the aggregate fair value of awards held prior to the Separation, as measured immediately before and immediately after the Separation, each holder of share-based compensation awards generally received an adjusted award consisting of both a stock-based compensation award denominated in Company equity and a stock-based compensation award denominated in Equitrans Midstream equity.

These awards were adjusted in accordance with the basket method, which resulted in participants retaining one unit of the existing Company incentive award and receiving an additional 0.80 units of an Equitrans Midstream-based award.

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The Company typically uses treasury stock to fund awards paid in stock, but the Company can elect to fund such awards by stock acquired by the Company in the open market or from any other person, issued directly by the Company or any combination of the foregoing.

There was no cash received from exercises under all share-based payment arrangements for employees and directors for the year ended December 31, 2019 .

Cash received from exercises under all share-based payment arrangements for employees and directors for the years ended December 31, 2018 and 2017 was $ 1.9 million and $ 0.2 million , respectively.

There was no cash received from exercises under all share-based payment arrangements for employees and directors for the years ended December 31, 2020 and 2019.

Cash received from exercises under all share-based payment arrangements for employees and directors for the year ended December 31, 2018 was $ 1.9 million.

During the years ended December 31, 2020, 2019 and 2018, share-based payment arrangements paid in stock generated tax benefits of $ 1.0 million, $ 2.4 million and $ 13.4 million, respectively.

Executive Performance Incentive Programs – Equity & Liability

The Management Development and Compensation Committee of the Company's Board of Directors (the Compensation Committee) has adopted:

the 2015 Executive Performance Incentive Plan (the 2015 Incentive PSU Program) under the 2014 Long-Term Incentive Plan (the 2014 LTIP);

the 2016 Incentive Performance Share Unit Program (the 2016 Incentive PSU Program) under the 2014 LTIP;

the 2017 Incentive Performance Share Unit Program (the 2017 Incentive PSU Program) under the 2014 LTIP;

the 2018 Incentive Performance Share Unit Program (the 2018 Incentive PSU Program) under the 2014 LTIP;

the 2019 Incentive Performance Share Unit Program (the 2019 Incentive PSU Program) under the 2014 LTIP.

The 2015 Incentive PSU Program, 2016 Incentive PSU Program, 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program are collectively referred to as the Incentive PSU Programs.

Incentive Performance Share Unit Programs – Equity & Liability

The Management Development and Compensation Committee of the Company's Board of Directors (the Compensation Committee) has adopted the:

• 2016 Incentive Performance Share Unit Program (2016 Incentive PSU Program) under the 2014 Long-Term Incentive Plan (LTIP);

• 2017 Incentive Performance Share Unit Program (2017 Incentive PSU Program) under the 2014 LTIP;

• 2018 Incentive Performance Share Unit Program (2018 Incentive PSU Program) under the 2014 LTIP;

• 2019 Incentive Performance Share Unit Program (2019 Incentive PSU Program) under the 2014 LTIP;

• 2020 Incentive Performance Share Unit Program (2020 Incentive PSU Program) under the 2019 LTIP.

The programs noted above are collectively referred to as the Incentive PSU Programs.

The 2016 Incentive PSU Program and 2020 Incentive PSU Program granted equity awards.

The 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program granted both equity and liability awards.

The Incentive PSU Programs were established to provide long-term incentive opportunities to key employees to further align their interests with those of the Company's shareholders and with the strategic objectives of the Company.

The Incentive PSU Programs were established to provide long-term incentive opportunities to executives and key employees to further align their interests with those of the Company's shareholders and with the strategic objectives of the Company.

The performance period for each of the awards under the Incentive PSU Programs is 36 months, with vesting occurring upon payment following the expiration of the performance period.

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• the cumulative total sales volume growth, in each case, over the performance period.

Beginning with the 2018 Incentive PSU Program, awards granted are earned based on:

Executive performance incentive program awards granted in years 2018 and 2019 were earned based on:

• the level of total shareholder return relative to a predefined peer group;

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• return on capital employed.

The payout factor varies between zero and 300 % of the number of outstanding units contingent upon the performance metrics listed above.

The Company recorded the 2015 Incentive PSU Program, the 2016 Incentive PSU Program and the portion of the 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program to be settled in stock as equity awards using a grant date fair value determined through a Monte Carlo simulation, which projected the share price for the Company and its peers at the end point of the performance period.

Beginning in 2020, executive performance incentive program awards granted are earned based on:

• adjusted well costs;

• adjusted free cash flow;

• the level of total shareholder return relative to a predefined peer group.

Prior to 2020, the payout factor varies between zero and 300 % of the number of outstanding units contingent upon the performance metrics listed above.

The 2020 Incentive PSU Program has a payout factor that ranges from zero to 150 %.

The Company recorded the 2016 Incentive PSU Program, 2020 Incentive PSU Program and the portion of the 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program to be settled in stock as equity awards using a grant date fair value determined through a Monte Carlo simulation, which projected the share price for the Company and its peers at the end point of the performance period.

The 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program also included awards to be settled in cash, which are recorded at fair value as of the measurement date determined through a Monte Carlo simulation, which projected the share price for the Company and its peers at the end point of the performance period.

The expected share prices were generated using each company's annual volatility for the expected term and the commensurate three -year risk-free rate shown in the chart below for equity awards, one -year risk-free rate shown in the chart below for the 2018 Incentive PSU Program liability award and two -year risk-free rate shown in the chart below for the 2019 Incentive PSU Program liability award.

The expected share prices were generated using each company's annual volatility for the expected term and the commensurate three-year risk-free rate shown in the chart below.

As the Incentive PSU Programs include a performance condition that affects the number of shares that will ultimately vest, the Monte Carlo simulation computed either the grant date fair value for equity awards or the measurement date fair value for liability awards for each possible performance condition outcome on the grant date for equity awards or the measurement date for liability awards.

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Vesting of the units under each Incentive PSU Program occurs upon payment after the end of the performance period.

More detailed information on each award is set forth in the table below.

Incentive PSU Program

Accounting Treatment

Fair Value (a)

Risk-Free Rate

Vested/Payment Date

Unvested/Expected Payment Date

Awards Outstanding

as of December 31, 2019 (b)

February 2018

February 2019

First Quarter of 2020

First Quarter of 2021

First Quarter of 2022

Information for the valuation of the liability plans is shown as of December 31, 2019 .

Represents the number of outstanding units as of December 31, 2019 adjusted for forfeitures.

The 2016 Incentive PSU Program settled in stock included 130,393 for Equitrans Midstream employees that was settled by the Company.

The 2017 and 2018 Incentive PSU Programs to be settled in stock include 7,020 and 9,550 shares, respectively, for Equitrans Midstream employees that will be settled by the Company.

The 2017 and 2018 Incentive PSU Programs to be settled in cash include 40,018 and 55,210 shares, respectively, for Equitrans Midstream employees that will be settled by the Company.

As of January 1, 2019 , 44,573 units were outstanding under the 2017 Incentive PSU Program – Equity.

There were no forfeitures in 2019 and 44,573 outstanding units as of December 31, 2019 .

As of January 1, 2019 , 105,018 units were outstanding under the 2017 Incentive PSU Program – Liability.

Adjusting for 11,065 forfeitures, there were 93,953 outstanding units as of December 31, 2019 .

As of January 1, 2019 , 107,340 units were outstanding under the 2018 Incentive PSU Program – Equity.

There were no forfeitures in 2019 and 107,340 total outstanding units as of December 31, 2018.

As of January 1, 2019 , 124,820 units were outstanding under the 2018 Incentive PSU Program – Liability.

Adjusting for 11,303 forfeitures, there were 113,517 outstanding units as of December 31, 2019 .

A total of 463,380 units were granted under the 2019 Incentive PSU Program – Equity in 2019, and no additional units may be granted.

There were no forfeitures in 2019 and 463,380 total outstanding units as of December 31, 2019 .

A total of 255,920 units were granted under the 2019 Incentive PSU Program – Liability in 2019, and no additional units may be granted.

Adjusting for 10,980 forfeitures, there were 244,940 outstanding units as of December 31, 2019 .

The following table presents total capitalized compensation costs related to the Incentive PSU Programs.

Years Ended December 31,

2015 Incentive PSU Program

2016 Incentive PSU Program

2017 Incentive PSU Program (liability only)

2018 Incentive PSU Program (liability only)

2019 Incentive PSU Program (liability only)

As of December 31, 2019 , $ 0.2 million , $ 0.1 million and $ 1.2 million of unrecognized compensation cost (assuming no changes to the performance condition achievement level) related to the 2018 Incentive PSU Program – Liability, 2019 Incentive PSU Program – Equity and 2019 Incentive PSU Program – Liability, respectively, was expected to be recognized over the remainder of the performance periods.

Assuming no changes to the performance condition achievement level, there is no remaining unrecognized compensation cost related to the 2018 Incentive PSU Program – Equity.

F air value is estimated using a Monte Carlo simulation valuation method with the following weighted average assumptions:

The following table summarizes Incentive PSU Programs to be settled in stock and classified as equity awards:

Incentive PSU Programs - Equity Settled Nonvested Shares (a) Weighted Average

Fair Value Aggregate Fair Value

Outstanding at January 1, 2018

832,622 $ 115.10 $ 95,832,997

Granted 172,350 76.53 13,189,946

Vested ( 306,407 ) 141.11 ( 43,237,092 )

Forfeited ( 162,551 ) 93.55 ( 15,206,691 )

Outstanding at December 31, 2018

536,014 94.36 50,579,160

Granted 463,380 29.45 13,646,541

Vested ( 384,101 ) 96.30 ( 36,988,926 )

Outstanding at December 31, 2019

615,293 44.27 27,236,775

Granted 1,376,198 6.62 9,107,846

Vested ( 44,573 ) 120.60 ( 5,375,504 )

Forfeited ( 7,190 ) 13.28 ( 95,483 )

Outstanding at December 31, 2020

1,939,728 $ 15.92 $ 30,873,634

(a) For the years ended December 31, 2020 and 2019, the Company settled total shares of 7,020 and 130,393 , respectively, for Equitrans Midstream employees.

The following table summarizes Incentive PSU Programs to be settled in cash and classified as liability awards:

Incentive PSU Programs - Cash Settled Nonvested Shares (b) Weighted Average

Fair Value Aggregate Fair Value

Outstanding at January 1, 2018

117,530 $ 120.60 $ 14,174,118

Granted 142,890 76.53 10,935,371

Forfeited ( 30,582 ) 94.56 ( 2,891,844 )

Outstanding at December 31, 2018

229,838 96.67 22,217,645

Granted 255,920 29.45 7,536,844

Forfeited ( 33,348 ) 75.65 ( 2,522,819 )

Outstanding at December 31, 2019

452,410 60.19 27,231,670

Vested ( 93,359 ) 120.60 ( 11,259,095 )

Forfeited ( 19,356 ) 61.43 ( 1,189,050 )

Outstanding at December 31, 2020

339,695 $ 43.52 $ 14,783,525

(b) For the year ended December 31, 2020, the Company settled total shares paid in cash of 40,018 for Equitrans Midstream employees.

Total capitalized compensation costs related to the Incentive PSU Programs for the years ended December 31, 2020, 2019, and 2018 were $ 0.9 million, $( 0.8 ) million, and $ 3.7 million.

As of December 31, 2020, $ 0.1 million, $ 0.8 million and $ 6.2 million of unrecognized compensation cost (assuming no changes to the performance condition achievement level) related to the 2019 Incentive PSU Program – Equity, 2019 Incentive PSU Program – Liability and 2020 Incentive PSU Program, respectively, was expected to be recognized over the remainder of the performance periods.

Fair value is estimated using a Monte Carlo simulation valuation method with the following weighted average assumptions at grant date:

Incentive PSU Programs Issued During the Years Ended December 31,

Accounting Treatment

Liability (a)

Liability (b)

2020 (a) 2019 2018 2017 2016

Risk-free rate 1.22 % 2.44 % 1.97 % 1.47 % 1.31 %

Dividend Yield (c)

Volatility factor 45.41 % 54.60 % 32.60 % 32.30 % 28.43 %

Expected term

Information for the valuation of the liability plans is shown as of December 31, 2019 .

The 2017 Incentive PSU Program – Liability award fair value per unit is equal to EQT common stock price on the measurement date.

Expected term 3 years 3 years 3 years 3 years 3 years

Dividends paid from the beginning of the performance period will be cumulatively added as additional shares of common stock;

Value Driver Award Programs

The Compensation Committee has also adopted:

the 2016 Value Driver Performance Share Unit Award Program (the 2016 EQT VDPSU Program) under the 2014 LTIP;

the 2017 Value Driver Performance Share Unit Award Program (the 2017 EQT VDPSU Program) under the 2014 LTIP;

the 2018 Value Driver Performance Share Unit Award Program (the 2018 EQT VDPSU Program) under the 2014 LTIP;

the 2019 Value Driver Performance Share Unit Award Program (the 2019 EQT VDPSU Program) under the 2014 LTIP.

The 2016 EQT VDPSU Program, 2017 EQT VDPSU Program, 2018 EQT VDPSU Program and 2019 EQT VDPSU Program are collectively referred to as the VDPSU Programs.

therefore, dividend yield is not applicable.

(a) There were three grant dates for the 2020 Incentive PSU Program.

Amounts shown represent weighted average.

Value Driver Performance Share Unit Award Programs

Historically, the Compensation Committee adopted the following programs, collectively referred to as the VDPSU Programs:

• 2017 Value Driver Performance Share Unit Award Program (2017 EQT VDPSU Program) under the 2014 LTIP;

• 2018 Value Driver Performance Share Unit Award Program (2018 EQT VDPSU Program) under the 2014 LTIP;

• 2019 Value Driver Performance Share Unit Award Program (2019 EQT VDPSU Program) under the 2014 LTIP.

The programs noted above are collectively referred to as the VDPSU Programs.

The VDPSU Programs were established to align the interests of key employees with the interests of shareholders and customers and the strategic objectives of the Company.

Under each VDPSU Program, 50 % of the confirmed awards vest upon payment following the first anniversary of the grant date;

the remaining 50 % of the confirmed awards vest upon payment following the second anniversary of the grant date, subject to continued service through such date.

Under each VDPSU Program, 50 % of the confirmed awards vested upon payment following the first anniversary of the grant date;

the remaining 50 % of the confirmed awards vested upon payment following the second anniversary of the grant date, subject to continued service through such date.

Due to the graded vesting of each award under the VDPSU Programs, the Company recognized compensation cost over the requisite service period for each separately vesting tranche of the award as though each award was, in substance, multiple awards.

The payments are contingent upon adjusted earnings before interest, income taxes, depreciation and amortization performance as compared to the Company's annual business plan and individual, business unit and Company value driver performance over the respective one -year periods.

The following table provides additional detailed information on each award.

EQT VDPSU Program

Accounting Treatment

Fair Value per Unit (a)

Vested/Payment Date

Number of awards (including accrued dividends) or cash paid (Millions)

Unvested/Expected Payment Date

Awards Outstanding (including accrued dividends) as of December 31, 2019 (b)

February 2017

February 2018

February 2019

Second tranche first quarter of 2020

First tranche

first quarter of 2020

Second tranche first quarter of 2021

For liability awards, the fair value per unit is equal to EQT common stock price on the measurement date.

The 2017 EQT VDPSU Program and 2018 EQT VDPSU Program include 95,452 and 130,355 awards, respectively, for Equitrans Midstream employees that will be settled by the Company.

In addition to the $ 21.3 million in awards paid in February 2017, $ 0.2 million in awards were paid in 2017 in accordance with employee separation agreements.

The total liability recorded for the 2019 EQT VDPSU Program was $ 2.8 million as of December 31, 2019 .

The following table presents total capitalized compensation costs related to the VDPSU Programs.

Years Ended December 31,

2016 EQT VDPSU Program

2017 EQT VDPSU Program

2018 EQT VDPSU Program

2019 EQT VDPSU Program

Restricted Stock Awards – Equity

The Company granted 613,440 , 145,540 and 85,350 restricted stock equity awards to key employees of the Company during the years ended December 31, 2019 , 2018 and 2017 , respectively.

These restricted stock awards will be fully vested at the end of the three -year period commencing with the date of grant, assuming continued service through such date.

The payments were contingent upon adjusted earnings before interest, income taxes, depreciation and amortization performance as compared to the Company's annual business plan and individual,

business unit and Company value driver performance over the respective one-year periods.

The following table provides additional detailed information on each historical award.

VDPSU Program Accounting Treatment Weighted Average Fair Value Cash paid (Millions) Awards Outstanding (including accrued dividends) as of December 31, 2020 (a)

2017 Liability $ 65.40 $ 14.0 N/A

$ 65.40 $ 4.0 N/A

2018 Liability $ 56.92 $ 4.9 N/A

$ 56.92 $ 1.2 N/A

2019 (b) Liability $ 18.89 $ 1.7 N/A

$ 18.89 N/A 144,116

(a) The 2017 EQT VDPSU Program and 2018 EQT VDPSU Program included 95,452 and 130,355 awards, respectively, for Equitrans Midstream employees that were settled by the Company.

(b) The total liability recorded for the 2019 EQT VDPSU Program was $ 1.7 million as of December 31, 2020.

The second tranche of the 2019 EQT VDPSU Program will be paid during the first quarter of 2021.

Total capitalized compensation costs related to the VDPSU Programs for the years ended December 31, 2020, 2019 and 2018 were $ 0.4 million, $ 2.5 million and $ 3.4 million, respectively.

Restricted Stock Unit Awards – Equity

The Company granted 1,767,960 , 613,440 and 145,540 restricted stock unit equity awards to key employees of the Company during the years ended December 31, 2020, 2019 and 2018, respectively.

Awards granted in 2019 and 2018 will fully vest at the end of the three -year period commencing with the date of grant, assuming continued service through such date, while the 2020 awards are subject to a three-year graded vesting schedule, also assuming continued service through such date.

For the years ended December 31, 2020, 2019 and 2018, the weighted average fair value of these restricted stock grants, based on the grant date fair value of EQT common stock, was approximately $ 10.02 , $ 17.42 and $ 54.33 , respectively.

In conjunction with the closing of the Rice Merger, the Company converted Rice Energy restricted stock equity awards and performance share equity awards to 2,290,234 Company restricted stock equity awards.

Employees who were terminated on the Rice Merger closing date became immediately vested in their Company awards and received merger consideration cash of $ 5.30 per Rice Energy share.

Company awards of those employees who continued employment with the Company under a transition agreement vest upon the earlier of the end of the vesting period set forth in the original award agreement or the end of the employee's employment period set forth in his or her transition agreement, in both cases subject to continued service through such date.

Company awards of those employees who continued employment with the Company on an at-will basis vest in accordance with the vesting period set forth in the original award agreement, assuming continued service through such date.

The fair value of these restricted stock grants, based on the grant date fair value of EQT common stock, was approximately $ 65.18 .

See Note 8 for further discussion of the Rice Merger.

The total fair value of restricted stock awards vested during the years ended December 31, 2020, 2019 and 2018 was $ 3.2 million, $ 11.9 million and $ 39.8 million, respectively.

The 2017 amount includes $ 13.0 million for the cash payment for the merger consideration of $ 5.30 per Rice Energy share.

Total capitalized compensation costs related to the restricted stock unit equity awards was $ 3.0 million for the year ended December 31, 2020.

As of December 31, 2020, $ 9.3 million of unrecognized compensation cost related to nonvested restricted stock equity awards was expected to be recognized over a remaining weighted average vesting term of approximately 1.1 years.

The following table summarizes restricted stock equity award activity as of December 31, 2020.

Restricted Stock

Nonvested Shares (a)

Weighted Average

Aggregate Fair Value

Restricted Stock - Equity Settled Nonvested Shares (a) Weighted Average

Fair Value Aggregate Fair Value

Outstanding at January 1, 2020

310,997 $ 25.47 $ 7,921,313

Granted 1,767,960 10.02 17,711,033

Vested ( 130,487 ) 24.26 ( 3,165,269 )

Forfeited ( 80,070 ) 10.90 ( 872,763 )

Outstanding at December 31, 2020

Nonvested shares outstanding at December 31, 2019 included 71,313 shares for Equitrans Midstream employees that will be settled by the Company.

1,868,400 $ 11.56 $ 21,594,314

(a) Nonvested shares outstanding at December 31, 2020 includes 59,340 shares for an Equitrans Midstream employee that will be settled by the Company.

Restricted Stock Unit Awards – Liability

During the years ended December 31, 2019 and 2018, the Company granted 686,350 and 373,750 restricted stock unit liability awards, respectively, to key employees of the Company that will be paid in cash.

Adjusting for forfeitures, there were 741,819 awards outstanding as of December 31, 2019 .

The Company did not grant restricted stock unit awards to be paid in cash during 2020.

Adjusted for forfeitures, there were 554,306 awards outstanding as of December 31, 2020.

Because these awards are liability awards, the Company records compensation expense based on the fair value of the awards as remeasured at the end of each reporting period.

The restricted units granted will be fully vested at the end of the three -year period commencing with the date of grant, assuming continued service through such date.

The restricted units granted will be fully vested at the end of the three-year period commencing with the date

of grant, assuming continued service through such date.

The total liability recorded for these restricted units was $ 4.5 million, $ 4.4 million and $ 6.9 million as of December 31, 2020, 2019 and 2018, respectively.

Non-Qualified Stock Options

The fair value of the Company's option grants was estimated at the dates of grant using a Black-Scholes option-pricing model with the assumptions indicated in the table below for the years ended December 31, 2019 , 2018 and 2017 .

The fair value of the Company's option grants was estimated at the grant date using a Black-Scholes option-pricing model with the assumptions indicated in the table below for the years ended December 31, 2020, 2019 and 2018.

The risk-free rate for periods within the contractual life of the option is based on the U.S.

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Volatility factor 60.00 % 27.97 % 26.46 %

Expected term

Expected term 4 years 5 years 5 years

Number of Options Granted 1,000,000 779,300 287,800

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Total Intrinsic Value of Options Exercised (Millions) $ — $ — $ —

There were two grant dates for the 2019 and 2017 options.

Amounts shown represent weighted average.

(a) There were two grant dates for the 2019 options.

Amount shown represents weighted average.

As of December 31, 2020, $ 0.8 million of unrecognized compensation cost related to outstanding nonvested stock options was expected to be recognized by December 31, 2023.

The following table summarizes option activity as of December 31, 2020.

Non-Qualified Stock Options

Weighted Average

Exercise Price

Weighted Average

Remaining Contractual Term

Aggregate Intrinsic Value

Non-Qualified Stock Options Shares Weighted Average

Exercise Price Weighted Average

Remaining Contractual Term Aggregate Intrinsic Value

Outstanding at January 1, 2020

2,554,729 $ 28.37

Granted 1,000,000 10.00

Outstanding at December 31, 2020

3,554,729 23.20 5.3 years $ 2,710,000

Exercisable at December 31, 2020

2,543,829 $ 28.41 4.9 years $ —

Stock Appreciation Rights

During 2020, the Company granted stock appreciation rights subject to certain performance conditions, such as adjusted well costs and adjusted free cash flow.

Once vested, the participant is entitled to receive, upon exercise, a number of shares of EQT’s common stock, cash or a combination of the two, based upon the excess of the fair market value as of the date of exercise over a base price of $ 10.00 .

The awards are accounted for as liability awards and, as such, compensation expense is recorded based on the fair value of the awards as remeasured at the end of each reporting period using a Black-Scholes option-pricing model with the assumptions indicated in the table below.

The risk-free rate is based on the U.S.

Treasury yield curve in effect at the reporting date.

The dividend yield is based on the dividend yield of EQT common stock at the reporting date, which is set at zero for the stock appreciation rights as the Company suspended future dividends during 2020.

Expected volatilities are based on a 50-50 blend of the expected term-matched historical volatility as of the valuation date and the weighted-average implied volatility from thirty

days prior to the valuation date.

The expected term represents the period of time between the valuation date and the midpoint of the exercise window.

2020 Stock Appreciation Rights

Risk-free interest rate 0.30 %

Dividend yield — %

Volatility factor 67.50 %

Expected term 3.28 years

Number of Stock Appreciation Rights Granted 1,240,000

Weighted Average Grant Date Fair Value $ 2.61

Total Intrinsic Value of Exercises (Millions) $ —

As of December 31, 2020, $ 4.7 million of unrecognized compensation cost related to outstanding stock appreciation rights was expected to be recognized by December 31, 2022.

The following table summarizes stock appreciation rights activity as of December 31, 2020.

Stock Appreciation Rights Shares Weighted Average

Exercise Price Weighted Average

Remaining Contractual Term Aggregate Intrinsic Value

Outstanding at January 1, 2020

Granted 1,240,000 10.00

Outstanding at December 31, 2020

1,240,000 10.00 9.0 years $ 3,360,400

Exercisable at December 31, 2020

Non-employee Directors' Share-Based Awards

Prior to 2020, the Company historically granted to EQT non-employee directors share-based awards that vest upon grant.

The share-based awards are paid in cash or EQT common stock following a directors' termination of service on the Company's Board of Directors.

Beginning in 2020, the Company grants to EQT non-employee directors restricted stock unit awards that vest on the date of the Company's annual meeting of shareholders immediately following the grant of such awards.

Prior to 2020, the Company granted share-based awards that vested upon grant to non-employee directors.

The share-based awards were historically paid in cash or EQT common stock following a directors' termination of service on the Company's Board of Directors.

Beginning in 2020, the Company grants to non-employee directors restricted stock unit awards that vest on the date of the Company's annual meeting of shareholders immediately following the grant of such awards.

The restricted stock unit awards are settled in EQT common stock on the vesting date or, if elected by the director, following a director's termination of service on the Company's Board of Directors.

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Awards to be settled in EQT common stock are accounted for as equity awards and, as such, compensation expense is recorded based on the fair value of the awards at the grant date fair value.

A total of 259,443 non-employee director share-based awards, including

accrued dividends, were outstanding as of December 31, 2019 .

A total of 398,456 non-employee director share-based awards, including accrued dividends, were outstanding as of December 31, 2020.

A total of 201,300 , 146,790 and 50,979 share-based awards were granted to non-employee directors during the years ended December 31, 2020, 2019 and 2018, respectively.

The weighted average fair value of these grants, based on the closing EQT common stock price on the business day prior to the grant date, was $ 13.46 , $ 18.11 and $ 52.65 for the years ended December 31, 2020, 2019 and 2018, respectively.

Subsequent Events - 2021 Awards

Effective in 2021, the Compensation Committee adopted the 2021 Incentive Performance Share Unit Program (2021 Incentive PSU Program) under the 2020 LTIP.

The 2021 Incentive PSU Program was established to align the interests of executives and key employees with the interests of shareholders and the strategic objectives of the Company.

A total of 922,260 units were granted under the 2021 Incentive PSU Program.

The payout of the stock units will vary between zero and 200 % of the number of outstanding units contingent upon a combination of the Company's absolute total shareholder return and total shareholder return relative to a predefined peer group over the period January 1, 2021 through December 31, 2023.

Effective in 2021, the Compensation Committee granted 1,889,510 restricted stock equity awards that will follow a three-year graded vesting schedule commencing with the date of grant, assuming continued employment.

The share total includes the newly instituted "equity-for-all" program, which granted equity awards to all permanent full-time employees beginning in 2021.

Concentrations of Credit Risk

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The Company also contracts with certain processors to market a portion of NGLs on behalf of the Company.

No single customer accounted for more than 10% of the Company's revenues for 2019 , 2018 and 2017 .

We do not depend on any single customer and believe that the loss of any one customer would not have an adverse effect on our ability to sell our natural gas, NGLs and oil.

Approximately 86 % and 62 % of the Company's accounts receivable balances as of December 31, 2020 and 2019, respectively, represent amounts due from non-end users.

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The Company monitors market conditions that may impact the fair value of its derivative contracts.

The Company leases drilling rigs, facilities and other equipment.

As discussed in Note 1, the Company adopted ASU 2016-02, ASU 2018-11 and ASU 2019-01 on January 1, 2019 using the optional transition method of adoption.

The Company elected a package of practical expedients that together allows an entity to not reassess whether a contract is or contains a lease, lease classification and initial direct lease costs.

In addition, the Company elected the following practical expedients:

(i) to not reassess certain land easements, (ii) to not apply the recognition requirements under the standard to short-term leases and (iii) to combine and account for lease and nonlease contract components as a lease, where fixed nonlease payments are capitalized to the Consolidated Balance Sheet and variable nonlease payments are recognized as variable lease expense in the Statement of Consolidated Operations.

Nonlease payments include payments for property taxes and other operating and maintenance expenses incurred by the lessor but paid by the Company pursuant to the lease contract.

On January 1, 2019, the Company recorded in its Consolidated Balance Sheet a total of $ 89.0 million in right-of-use assets and corresponding lease liabilities, representing the present value of its future lease payments.

Adoption of the lease standards did not require an adjustment to the opening balance of retained earnings.

The discount rate used to determine present value was based on the rate of interest that the Company estimated it would have to pay to borrow, on a collateralized-basis over a similar term, an amount equal to the lease payments in a similar economic environment as of January 1, 2019.

The Company reassess the discount rate for new and modified lease contracts as of the lease effective date.

The right-of-use assets and lease liabilities recognized upon adoption of lease standards were based on lease classifications, commitment amounts and terms determined under the prior lease accounting guidance.

Leases with an initial term of twelve months or less are considered short-term leases and are not recorded in the Consolidated Balance Sheet.

Certain of the Company's lease contracts have multiple renewal periods at the Company's option;

if a renewal period option is reasonably assured to be

exercised, the associated operating lease payments are included in the present value of future operating lease payments.

As of December 31, 2019 , the Company had no finance leases and was not a lessor.

The Company primarily leases drilling rigs, other drilling equipment and facilities.

On January 1, 2019, in connection with the Company's adoption of ASU 2016-02, Leases , the Company recorded in its Consolidated Balance Sheet $ 89.0 million of right-of-use assets and lease liabilities representing the present value of the Company's right to use its leased assets and obligation to make lease payments on those leased assets, respectively.

To determine the present value of its right-of-use assets and lease liabilities at adoption and thereafter, the Company calculates a discount rate per lease contract based on an estimate of the rate of interest that the Company would pay to borrow (on a collateralized-basis over a similar term) an amount equal to the lease payment obligation.

Upon adoption of ASU 2016-02, the Company elected a practical expedient to forgo application of the recognition requirements under the standard to short-term leases;

as such, short-term leases are not recorded in the Consolidated Balance Sheets.

In addition, the Company elected a practical expedient to account for lease and nonlease components together as a lease.

Certain of the Company's lease contracts include variable lease payments, such as property taxes, other operating and maintenance expenses and payments based on asset use, which are not included in operating lease cost or the present value of the right-of-use asset or lease liability.

Certain of the Company's lease contracts provide renewal periods at the Company's option;

if a renewal period option is reasonably assured to be exercised, the associated lease payment obligations are included in the present value of the right-of-use asset and lease liability.

As of December 31, 2020 and 2019, the Company was not a lessor.

The following table summarizes the Company's lease costs.

December 31, 2019

Years Ended December 31,

Operating lease costs $ 28,286 $ 57,517

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Total lease costs (b) $ 44,208 $ 74,660

Includes short-term lease costs.

Includes drilling rig lease costs capitalized to property, plant and equipment of $ 58.5 million , of which $ 48.1 million are operating lease costs.

For the year ended December 31, 2019 , cash paid for operating lease liabilities, and reported in cash flows provided by operating activities on the Statement of Consolidated Cash Flows, was $ 10.8 million .

During the year ended December 31, 2019 , the Company recorded $ 24.3 million of right-of-use assets in exchange for new lease liabilities.

The operating lease right-of-use assets were recorded in other assets and the current and noncurrent portions of the operating lease liabilities were recorded in other current liabilities and other liabilities and credits, respectively, on the Consolidated Balance Sheet.

As of December 31, 2019 , the operating right-of-use assets were $ 52.2 million and operating lease liabilities were $ 59.0 million , of which $ 29.0 million was classified as current.

As of December 31, 2019 , the weighted average remaining lease term was 3.3 years and the weighted average discount rate was 3.3 % .

The following table summarizes undiscounted future cash flows owed by the Company to lessors pursuant to lease contracts in effect as of December 31, 2019 .

(a) Includes short-term lease costs.

(b) For the years ended December 31, 2020 and 2019, includes drilling rig lease costs capitalized to property, plant and equipment of $ 29.9 million and $ 58.5 million, respectively, of which $ 19.9 million and $ 48.1 million, respectively, were operating lease costs.

During the fourth quarter of 2020, the Company recognized $ 22.8 million of right-of-use asset impairment in impairment of intangible and other assets in the Statement of Consolidated Operations as a result of the Company's assessment that the fair values of certain of the Company's right-of-use assets were less than their carrying values.

For the years ended December 31, 2020 and 2019, cash paid for lease liabilities and reported in cash flows provided by operating activities in the Statements of Consolidated Cash Flows was $ 10.4 million and $ 10.8 million, respectively.

During the years ended December 31, 2020 and 2019, the Company recorded $ 18.9 million and $ 24.3 million, respectively, of right-of-use assets in exchange for new lease liabilities.

The Company records its right-of-use assets in other assets and the current and noncurrent portions of its lease liabilities in other current liabilities and other liabilities and credits, respectively, in the Consolidated Balance Sheets.

As of December 31, 2020 and 2019, right-of-use assets were $ 21.6 million and $ 52.2 million, respectively, and lease liabilities were $ 49.9 million and $ 59.0 million, respectively, of which $ 25.0 million and $ 29.0 million, respectively, were classified as current.

As of December 31, 2020 and 2019, the weighted average remaining lease term was 2.8 years and 3.3 years, respectively.

As of both December 31, 2020 and 2019, the weighted average discount rate was 3.3 %.

The following table summarizes the Company's lease payment obligations as of December 31, 2020.

December 31, 2020

Total lease payments

2021 $ 26,197

Total lease payment obligations 52,408

Interest 2,495

Present value of lease liabilities $ 49,913

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The Company also has commitments to purchase equipment, materials, frac sand for use as a proppant in its hydraulic fracturing operations and minimum volume commitments associated with certain water agreements.

As of December 31, 2019 , future commitments under these contracts were $ 104.3 million in 2020 , $ 36.8 million in 2021 and $ 2.0 million in 2022 .

As of December 31, 2020, future commitments under these contracts were $ 96.5 million in 2021 and $ 14.3 million in 2022.

See Note 15 for a summary of undiscounted future cash flows owed by the Company as lessee to lessors pursuant to contractual agreements in effect as of December 31, 2020.

Conditioned upon the credit ratings assigned by Moody's, S&P and Fitch to the Company's senior notes, counterparties to the Company's derivative and midstream services contracts may request additional assurances of the Company, including collateral.

In January 2020, Moody's downgraded the Company's senior notes credit rating to "Ba1," and, in February 2020, S&P and Fitch

downgraded the Company's senior notes rating to "BB+" and "BB," respectively.

See Note 10 for a discussion of the effects of the downgrades on the Company's financial statements subsequent to December 31, 2019 , including collateral posted as of February 26, 2020 .

See Note 4 for a discussion of what is deemed investment grade and other factors affecting margin deposit requirements on the Company's derivative contracts.

See Note 3 for a discussion of what is deemed investment grade and other factors affecting margin deposit requirements on the

Company's derivative contracts as well as collateral posted as of December 31, 2020.

See Note 10 for a discussion of letters of credit outstanding and surety bonds posted as of December 31, 2020.

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

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As such, the Company has not recorded any liabilities related to this guarantee in its Consolidated Balance Sheets.

The Equitrans Share Exchange

On February 26, 2020, the Company entered into share purchase agreements with Equitrans Midstream to sell approximately 50 % of the Company's equity interest in Equitrans Midstream to Equitrans Midstream (the Equitrans Share Exchange) in exchange for a combination of cash and fee relief under the Company's gathering agreements with EQM.

The Company currently owns approximately 19.9 % of the outstanding shares of Equitrans Midstream's common stock;

following the closing of the Equitrans Share Exchange, the Company will own approximately 9.95 % of the outstanding shares of Equitrans Midstream's common stock.

Interim Financial Information (Unaudited)

The following summary of quarterly operating results reflects variations from various factors, including the volatility of natural gas commodity prices, impairments, the Separation and Distribution and the 2018 Divestitures.

Quarterly operating results for the year ended December 31, 2018 have been recast to reflect the presentation of discontinued operations described in Note 2 .

Three Months Ended

(Thousands, except per share amounts)

Total operating revenues

Operating income (loss)

Net income (loss) attributable to EQT Corporation (a)

Earnings per share of common stock attributable to EQT Corporation:

Basic and diluted net income (loss) (b)

Total operating revenues

Operating loss

Amounts attributable to EQT Corporation:

Loss from continuing operations

(Loss) income from discontinued operations, net of tax

Net (loss) income attributable to EQT Corporation

Earnings per share of common stock attributable to EQT Corporation:

Basic and diluted:

Loss from continuing operations

(Loss) income from discontinued operations

Net (loss) income

Includes impairment of long-lived assets of $ 1,124.4 million recognized for the three months ended December 31, 2019.

Quarterly net income (loss) per share amounts are standalone calculations and may not be additive to full-year amounts due to rounding and changes in outstanding shares.

Natural Gas Producing Activities (Unaudited)

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Years Ended December 31,

2020 2019 2018

Capitalized costs

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Years Ended December 31,

2020 2019 2018

Costs incurred (a)

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Unproved properties (c) 78,404 154,128 198,854

Exploration (d)

Amounts exclude capital expenditures for facilities and information technology.

Amounts in 2018 include $ 5.2 million and $ 9.2 million for the purchase of Marcellus and Utica wells, respectively, including the impact of measurement period adjustments for the 2017 acquisitions discussed in Note 8 .

Amounts in 2017 include $ 2,530.4 million and $ 1,192.0 million for the purchase of Marcellus wells and leases, respectively, acquired in the 2017 acquisitions discussed in Note 8 , including the impact of measurement period adjustments for 2016 acquisitions.

Amounts in 2017 also include $ 1,228.6 million and $ 0.3 million for the purchase of Utica wells and leases, respectively, acquired in the 2017 acquisitions discussed in Note 8 .

Amounts in 2017 include $ 2,625.1 million and $ 0.5 million for the purchase of Marcellus leases and Utica leases, respectively, acquired in the 2017 acquisitions discussed in Note 8 .

Amounts include capitalizable exploratory costs and exploration expense, excluding impairments.

Exploration 5,484 7,223 1,708

Development 947,233 1,560,346 2,443,980

(a) Amounts exclude capital expenditures for facilities, information technology and other corporate items.

(b) Amounts in 2020 include $ 674.0 million and $ 6.5 million for the purchase of Marcellus and Utica wells, respectively, associated with the Chevron Acquisition.

Amounts in 2018 include $ 5.2 million and $ 9.2 million for the purchase of Marcellus and Utica wells, respectively, including the impact of measurement period adjustments for 2017 acquisitions.

(c) Amounts in 2020 include $ 38.9 million for the purchase of unproved properties associated with the Chevron Acquisition.

Results of Operations for Producing Activities

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Years Ended December 31,

2020 2019 2018

Sales of natural gas, NGLs and oil $ 2,650,299 $ 3,791,414 $ 4,695,519

Transportation and processing 1,710,734 1,752,752 1,697,001

Production 155,403 153,785 195,775

Exploration 5,484 7,223 6,765

Depreciation and depletion 1,393,465 1,538,745 1,569,038

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Impairment and expiration of leases 306,688 556,424 279,708

Income tax (benefit) expense

Income tax benefit ( 254,671 ) ( 340,843 ) ( 454,009 )

Results of operations from producing activities, excluding corporate overhead $ ( 767,533 ) $ ( 1,014,959 ) $ ( 1,308,735 )

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the reserves reconciliation between prior year reserves and current year reserves is reviewed by senior management;

and the estimates of proved natural gas, NGLs and crude oil reserves are audited by Ryder Scott Company, L.P.

(Ryder Scott), an independent consulting firm hired by management.

Since 1937, Ryder Scott has evaluated oil and gas properties and independently certified petroleum reserves quantities in the United States and internationally.

There were no differences between the internally prepared and externally audited estimates.

In the course of its audit, Ryder Scott reviewed 100 % of the total net natural gas, NGLs and oil proved reserves attributable to the Company's interests as of December 31, 2019 .

Ryder Scott conducted a detailed, well-by-well, audit of the Company's largest properties.

For undeveloped locations, the Company determined, and Ryder Scott reviewed and approved, the areas within its acreage that the Company considered proven.

Reserves were assigned and projected by the Company's reserve engineers for locations within these proven areas and approved by Ryder Scott based on offset production information and analogous type curves.

In cases where historical production and pressure data was available and considered definitive, performance methods, including decline curve analysis, were used.

Approximately 94 % of the proved developed reserves attributable to producing wells or reserves that Ryder Scott reviewed were estimated using performance methods.

The remaining 6 % of those proved developed reserves were estimated by analogy, which calculates reserves based on correlation to comparable surrounding wells.

and the estimates of proved natural gas, NGLs and crude oil reserves are audited by Netherland, Sewell & Associates, Inc.

(NSAI), an independent consulting firm hired by management.

Since 1961, NSAI has evaluated oil and gas properties and independently certified petroleum reserves quantities in the United States and internationally.

In the course of its audit, NSAI conducted a detailed review of 100 % of the total net natural gas, NGLs and oil proved reserves attributable to the Company's interests as of December 31, 2020.

NSAI conducted a detailed, well-by-well audit of all the

Company's properties.

The estimates prepared by the Company and audited by NSAI were within the recommended 10% tolerance threshold set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers (SPE Standards).

Standard engineering and geoscience methods, or a combination of methods, including performance analysis, volumetric analysis, analogy and material balance were utilized in the evaluation of reserves.

All of the Company's proved reserves are located in the United States.

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Years Ended December 31,

2020 2019 2018

Natural gas, NGLs and oil

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Extensions, discoveries and other additions 3,445,802 2,067,753 4,739,233

Production ( 1,497,792 ) ( 1,507,896 ) ( 1,494,663 )

Balance at December 31 19,802,092 17,469,394 21,816,776

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Years Ended December 31,

2020 2019 2018

Proved developed and undeveloped reserves:

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Extensions, discoveries and other additions 3,433,857 2,029,683 4,659,835

Production ( 1,418,774 ) ( 1,435,134 ) ( 1,392,943 )

Balance at December 31 18,865,013 16,677,202 20,805,452

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Years Ended December 31,

2020 2019 2018

Proved developed and undeveloped reserves:

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Extensions, discoveries and other additions 1,757 6,177 12,895

Production ( 12,365 ) ( 11,305 ) ( 16,274 )

Balance at December 31 148,762 126,955 162,395

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Years Ended December 31,

2020 2019 2018

Proved developed and undeveloped reserves:

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Extensions, discoveries and other additions 234 168 338

Production ( 804 ) ( 822 ) ( 680 )

Balance at December 31 7,417 5,077 6,159

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The change in reserves during the year ended December 31, 2020 resulted from the following:

Conversions into 2,646 Bcfe of proved undeveloped reserves to proved developed reserves.

• Conversions of 2,102 Bcfe of proved undeveloped reserves to proved developed reserves.

• Extensions, discoveries and other additions of 3,446 Bcfe, which exceeded 2020 production of 1,498 Bcfe.

Extensions, discoveries and other additions included an increase of 2,096 Bcfe of proved undeveloped additions associated with acreage that was previously unproved but became proved using reliable technologies which expanded the number of our technically proven locations, 1,295 Bcfe due to additions associated with directly offsetting development, 31 Bcfe from extension of proved undeveloped reserves lateral lengths and 24 Bcfe from converting unproved reserves to proved developed reserves.

• Negative revisions of 510 Bcfe from proved undeveloped locations that are no longer expected to be developed within five years of initial booking as proved reserves as a result of revisions to the Company’s five-year drilling plan allowing for continued alignment with the Company’s combo-development strategy.

This includes 245 Bcfe from lower pricing that impacted well economics, shifting capital from the Ohio Utica, to Pennsylvania and West Virginia Marcellus, and 265 Bcfe as a result of continued implementation of the Company’s combo-development strategy.

• Negative revisions of 384 Bcfe primarily from proved developed locations as a result of negative curve revisions in Ohio Utica.

• Positive revisions to proved undeveloped locations of 155 Bcfe due primarily to changes in working interests and net revenue interests as well as type curve updates.

• Purchase of hydrocarbons in place of 1,381 Bcfe due to the Chevron Acquisition described in Note 6 .

• Sale of hydrocarbons in place of 257 Bcfe due to the 2020 Divestitures described in Note 7.

The change in reserves during the year ended December 31, 2019 resulted from the following:

• Conversions of 2,646 Bcfe of proved undeveloped reserves to proved developed reserves.

• Extensions, discoveries and other additions of 2,068 Bcfe, which exceeded 2019 production of 1,508 Bcfe.

Extensions, discoveries and other additions included an increase of 1,796 Bcfe from proved undeveloped additions associated with acreage that was previously unproved, but became proved due to 2019 reserve development that expanded the number of the Company's technically proven locations, implementation of, and alignment with, the Company's combo-development strategy and revisions to the Company's five-year drilling plan;

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• Negative revisions of 4,508 Bcfe from proved undeveloped locations that are no longer expected to be developed within five years of initial booking as proved reserves as a result of implementation of the Company's combo-development strategy, which has refocused operations in the Company's core assets and driven execution of new development sequencing processes that emphasize productivity.

While these efforts are expected to result in decreased well costs, they negatively impact proved undeveloped reserves as a result of (i) derecognizing previously-recorded proved undeveloped

reserves that are now outside the Company's substantially revised five-year capital allocation program for purposes of the Company's reserves calculations and (ii) executing new development sequencing processes that will result in increased probable-to-proved developed conversion.

While these efforts are expected to result in decreased well costs, they negatively impact proved undeveloped reserves as a result of (i) derecognizing previously-recorded proved undeveloped reserves that are now outside the Company's substantially revised five-year capital allocation program for purposes of the Company's reserves calculations and (ii) executing new development sequencing processes that will result in increased probable-to-proved developed conversion.

The change in reserves during the year ended December 31, 2018 resulted from the following:

Conversions into 2,722 Bcfe of proved undeveloped reserves to proved developed reserves.

• Conversions of 2,722 Bcfe of proved undeveloped reserves to proved developed reserves.

• Extensions, discoveries and other additions of 4,739 Bcfe, which exceeded 2018 production of 1,495 Bcfe.

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• Sale of hydrocarbons in place of 1,749 Bcfe due to the 2018 Divestitures described in Note 7.

The change in reserves during the year ended December 31, 2017 resulted from the following:

Conversions into 987 Bcfe of proved undeveloped reserves to proved developed reserves.

Increase of 3,330 Bcfe and 6,060 Bcfe associated with the acquisition of proved developed reserves and proved undeveloped reserves, respectively, in the Marcellus, Upper Devonian and Utica plays.

Extensions, discoveries and other additions of 2,225 Bcfe, which exceeded the 2017 production of 908 Bcfe.

Extensions, discoveries and other additions included an increase of 300 Bcfe from proved developed reserves extensions from reservoirs underlying acreage not previously booked as proved in the Company's Ohio, Pennsylvania and West Virginia Marcellus fields;

893 Bcfe from proved undeveloped reserves extensions from acreage proved by drilling activity in the Company's Ohio, Pennsylvania and West Virginia Marcellus fields;

and 1,032 Bcfe from other proved undeveloped additions associated with acreage that was excluded from prior year proved reserves bookings, but subsequently became proved due to inclusion within the Company's five-year drilling plan.

Negative revisions of 3,522 Bcfe from proved undeveloped locations, of which 3,074 Bcfe was from proved undeveloped locations that are no longer expected to be developed within five years of initial booking as proved reserves as a result of the Company's acquisition of new acreage.

Upward revisions of 477 Bcfe from proved developed locations, due primarily to increased reserves from producing wells.

Upward revisions of 278 Bcfe associated with previously booked locations whose economic lives had been extended due to improved commodity prices.

Standard Measure of Discounted Future Cash Flow

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The following table summarizes estimated future net cash flows from natural gas and crude oil reserves.

2020 2019 2018

Future cash inflows (a) $ 27,976,557 $ 42,499,686 $ 60,603,624

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Standardized measure of discounted future net cash flows $ 3,366,458 $ 8,492,673 $ 11,611,898

The majority of the Company's production is sold through liquid trading points on interstate pipelines.

(a) The majority of the Company's production is sold through liquid trading points on interstate pipelines.

For 2020, reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 39.54 per Bbl for West Texas Intermediate (WTI) less regional adjustments of $ 18.60 per Bbl, or $ 20.94 per Bbl, and $ 1.985 per MMBtu for NYMEX less regional adjustments of $ 0.68 per MMBtu, or $ 1.38 per Mcf.

Regional adjustments were calculated using historical average realized prices received by the Company in the Appalachian Basin.

For 2020, NGL pricing using average first-day-of-the-month closing prices for the prior twelve months for NGL components, adjusted using the regional component makeup of proved NGLs, resulted in a price of $ 11.97 per Bbl.

For 2019, reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 55.69 per Bbl for WTI less regional adjustments of $ 14.26 per Bbl, or $ 41.43 per Bbl, and $ 2.58 per MMBtu for NYMEX less regional adjustments of $ 0.29 per MMBtu, or $ 2.41 per Mcf.

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For 2018, NGL pricing using average first-day-of-the-month closing prices for the prior twelve months for NGL components, adjusted using the regional component makeup of produced NGLs, resulted in prices of $ 21.93 per Bbl from certain West Virginia Marcellus reserves and $ 33.89 per Bbl from Ohio Utica reserves.

For 2017 , reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 51.34 per Bbl for WTI less regional adjustments, $ 2.801 per Dth for Columbia Gas Transmission Corp., $ 2.100 per Dth for Dominion Transmission, Inc., $ 2.914 per Dth for the East Tennessee Natural Gas Pipeline, $ 2.058 per Dth for Texas Eastern Transmission Corp., $ 1.995 per Dth for the Tennessee, zone 4-300 Leg of Tennessee Gas Pipeline Company, $ 2.321 per Dth for the Tennessee LA 500 Leg of Tennessee Gas Pipeline Company, $ 2.665 per Dth for Waha and $ 2.840 per Dth for the Rockies Express Pipeline Zone 3.

For 2017 , NGL pricing using average first-day-of-the-month closing prices for the prior twelve months for NGL components, adjusted using the regional component makeup of produced NGLs, resulted in prices of $ 23.07 per Bbl from certain West Virginia Marcellus reserves, $ 31.11 per Bbl from certain Kentucky reserves, $ 29.47 per Bbl from Ohio Utica reserves and $ 27.93 per Bbl from Permian reserves.

Includes approximately $ 1,186 million , $ 883 million and $ 1,400 million for future plugging and abandonment costs as of December 31, 2019 , 2018 and 2017 , respectively.

Holding production and development costs constant, a change in price of $ 0.10 per Dth for natural gas, $ 10 per barrel for NGLs and $ 10 per barrel for oil would result in a change in the December 31, 2019 discounted future net cash flows before income taxes of the Company's proved reserves of approximately $ 809 million , $ 163 million and $ 24 million , respectively.

(b) Includes approximately $ 1,554 million, $ 1,186 million and $ 883 million for future plugging and abandonment costs as of December 31, 2020, 2019 and 2018, respectively.

Holding production and development costs constant, an increase in price of $ 0.10 per Dth for natural gas, $ 10 per barrel for NGLs and $ 10 per barrel for oil would result in a change in the December 31, 2020 discounted future net cash flows before income taxes of the Company's proved reserves of approximately $ 929 million, $ 241 million and $ 630 million, respectively.

The following table summarizes the changes in the standardized measure of discounted future net cash flows.

Years Ended December 31,

2020 2019 2018

Net sales and transfers of natural gas and oil produced $ ( 784,163 ) $ ( 1,884,877 ) $ ( 2,802,742 )

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Net change in income taxes 152,978 1,444,368 ( 289,549 )

Timing and other (a)

Timing and other 105,383 130,861 332,202

Net (decrease) increase ( 5,126,215 ) ( 3,119,225 ) 2,609,964

1 unchanged sentence

Balance at December 31 $ 3,366,458 $ 8,492,673 $ 11,611,898

Timing and other for the year ended December 31, 2017 was primarily driven by timing changes to the Company's development plan as a result of the Rice Merger described in Note 8 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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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 8. Financial Statements and Supplementary Data