What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-29 compared with 2021-05-06 · 156 added, 107 removed, 359 unchanged (42% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(Thousands, except per share amounts)

15 unchanged sentences

Total operating expenses 957,525 913,986 1,898,603 1,897,685

Operating income 8,845 123,358

Operating loss ( 1,217,641 ) ( 386,912 ) ( 1,208,796 ) ( 263,554 )

Gain on Equitrans Share Exchange (see Note 8)

5 unchanged sentences

Loss before income taxes ( 1,284,365 ) ( 366,078 ) ( 1,339,891 ) ( 500,395 )

Income tax (benefit) expense ( 14,494 ) 32,822

Income tax benefit ( 347,846 ) ( 103,003 ) ( 362,340 ) ( 70,181 )

Net loss ( 936,519 ) ( 263,075 ) ( 977,551 ) ( 430,214 )

8 unchanged sentences

EQT CORPORATION AND SUBSIDIARIES

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

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE LOSS (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net loss $ ( 936,519 ) $ ( 263,075 ) $ ( 977,551 ) $ ( 430,214 )

8 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets:

40 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of intangible assets — 14,955

Loss on sale/exchange of long-lived assets and impairment and expiration of leases 15,550 102,620

Gain/loss on sale/exchange of long-lived assets and impairment and expiration of leases 24,368 193,106

Gain on Equitrans Share Exchange — ( 187,223 )

5 unchanged sentences

Cash settlements (paid) received on derivatives not designated as hedges ( 109,581 ) 561,129

Net premiums (paid) on derivative instruments ( 3,147 ) —

Net premiums received (paid) on derivative instruments 3,654 ( 53,473 )

Changes in other assets and liabilities:

2 unchanged sentences

Income tax receivable and payable ( 23,909 ) 96,920

Other current assets ( 422,618 ) ( 2,597 )

Other items, net ( 13,737 ) ( 923 )

2 unchanged sentences

Capital expenditures ( 470,259 ) ( 512,095 )

Cash paid for acquisitions ( 209,764 ) —

Proceeds from sale of assets — 110,937

Cash received for Equitrans Share Exchange — 52,323

5 unchanged sentences

Proceeds from issuance of debt 1,000,000 2,250,000

Debt issuance costs — ( 15,662 )

Debt issuance costs and Capped Call Transactions (See Note 6) ( 19,713 ) ( 65,102 )

Repayments and retirements of debt ( 127,691 ) ( 2,507,074 )

3 unchanged sentences

Cash paid for taxes related to net settlement of share-based incentive awards ( 2,683 ) ( 304 )

Net cash used in financing activities ( 129,545 ) ( 282,514 )

Net cash provided by (used in) financing activities 544,064 ( 599,779 )

Net change in cash and cash equivalents 312,560 ( 1,628 )

1 unchanged sentence

Cash and cash equivalents at end of period $ 330,770 $ 2,968

Cash paid (received) during the period for:

Interest, net of amount capitalized $ 85,211 $ 29,628

Income taxes, net 22,751 ( 1,950 )

Non-cash activity during the period for:

Increase in right-of-use lease assets and liabilities $ 783 $ 303

Increase in asset retirement costs and obligations 907 3,761

Capitalization of non-cash equity share-based compensation 1,228 —

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

See Note 1 for supplemental cash flow information.

EQT CORPORATION AND SUBSIDIARIES

5 unchanged sentences

(Thousands, except per share amounts)

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

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

Comprehensive loss, net of tax:

1 unchanged sentence

Other postretirement benefits liability adjustment, net of tax expense:

Share-based compensation plans 28 3,796 511 4,307

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

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

Balance at April 1, 2021 278,781 $ 8,238,643 $ ( 21,469 ) $ 1,007,741 $ ( 5,275 ) $ 10,726 $ 9,230,366

Comprehensive loss, net of tax:

Net loss ( 936,457 ) ( 62 ) ( 936,519 )

Other postretirement benefits liability adjustment, net of tax expense:

Share-based compensation plans 77 7,109 1,385 8,494

Balance at June 30, 2021 278,858 $ 8,245,752 $ ( 20,084 ) $ 71,284 $ ( 5,194 ) $ 10,664 $ 8,302,422

Common shares authorized:

320,000 and 640,000 at June 30, 2020 and 2021, respectively.

Preferred shares authorized:

There were no preferred shares issued or outstanding.

(a) Amounts included in accumulated other comprehensive loss are related to other postretirement benefits liability adjustments, net of tax, which are attributable to net actuarial losses and net prior service costs.

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

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)

Common Stock Accumulated Other

Comprehensive Loss (a) Noncontrolling Interests in Consolidated Subsidiaries

Shares No Par

Value Treasury Stock Retained Earnings Total Equity

(Thousands, except per share amounts)

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

Comprehensive loss, net of tax:

Net loss ( 430,214 ) ( 430,214 )

Other postretirement benefit liability adjustment, net of tax expense:

Dividends ($ 0.03 per share)

1 unchanged sentence

Share-based compensation plans 119 7,222 2,166 9,388

Balance at March 31, 2020 255,262 $ 7,821,631 $ ( 30,852 ) $ 1,848,286 $ ( 5,187 ) $ — $ 9,633,878

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

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

Balance at January 1, 2021 278,345 $ 8,241,684 $ ( 29,348 ) $ 1,048,259 $ ( 5,355 ) $ 7,490 $ 9,262,730

1 unchanged sentence

Net loss ( 976,975 ) ( 576 ) ( 977,551 )

Other postretirement benefits liability adjustment, net of tax expense:

Other postretirement benefit liability adjustment, net of tax expense:

Share-based compensation plans 513 4,068 9,264 13,332

Contributions from noncontrolling interests 3,750 3,750

Balance at March 31, 2021 278,781 $ 8,238,643 $ ( 21,469 ) $ 1,007,741 $ ( 5,275 ) $ 10,726 $ 9,230,366

Balance at June 30, 2021 278,858 $ 8,245,752 $ ( 20,084 ) $ 71,284 $ ( 5,194 ) $ 10,664 $ 8,302,422

Common shares authorized:

320,000 and 640,000 at March 31, 2020 and 2021, respectively.

320,000 and 640,000 at June 30, 2020 and 2021, respectively.

Preferred shares authorized:

There were no preferred shares issued or outstanding.

(a) Amounts included in accumulated other comprehensive loss are related to other postretirement benefits liability adjustments, net of tax.

Losses (gains), net of tax, are attributable to net actuarial losses and net prior service costs.

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

4 unchanged sentences

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

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of March 31, 2021 and December 31, 2020, and the results of its operations, cash flows and equity for the three month periods ended March 31, 2021 and 2020.

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of June 30, 2021 and December 31, 2020, the results of its operations and equity for the three and six month periods ended June 30, 2021 and 2020 and its cash flows for the six month periods ended June 30, 2021 and 2020.

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

5 unchanged sentences

Simplifying the Accounting for Income Taxes .

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.

This ASU simplifies accounting for income taxes by eliminating certain exceptions to Accounting Standards Codification (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 adopted this ASU in the first quarter of 2021 with no material impact on its financial statements and related disclosures.

The Company adopted this ASU in the first quarter of 2021 with no material changes to its financial statements or disclosures.

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

6 unchanged sentences

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.

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

Supplemental Cash Flow Information .

The following table summarizes net cash paid (received) for interest and income taxes and non-cash activity included in the Statements of Condensed Consolidated Cash Flows.

Six Months Ended June 30,

Cash paid (received) during the period for:

Interest, net of amount capitalized $ 127,082 $ 74,596

Income taxes, net 21,768 ( 191,598 )

Non-cash activity during the period for:

Increase in right-of-use lease assets and liabilities $ 1,091 $ 1,697

Increase in asset retirement costs and obligations 1,943 6,596

Capitalization of non-cash equity share-based compensation 2,499 1,611

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Revenue from Contracts with Customers

6 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 is delivered to the designated sales point.

1 unchanged sentence

When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company acts 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 $ 467.8 million and $ 394.1 million in accounts receivable in the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively.

For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $ 471.5 million and $ 394.1 million in accounts receivable in the Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020, respectively.

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

Certain contracts that provide for the release of capacity that is not used to transport the Company's produced volumes are outside the scope of ASU 2014-09, Revenue from Contracts with Customers .

Certain contracts that provide for the release of capacity that is not used to transport the Company's produced volume are outside the scope of ASU 2014-09, Revenue from Contracts with Customers .

The costs of, and recoveries on, such capacity are reported in net marketing services and other in the Statements of Condensed Consolidated Operations.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Revenues from contracts with customers:

7 unchanged sentences

Total operating revenues $ ( 260,116 ) $ 527,074 $ 689,807 $ 1,634,131

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of March 31, 2021.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of March 31, 2021.

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of June 30, 2021.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of June 30, 2021.

2021 (a) 2022 2023 Total

Natural gas sales $ 87,901 $ 8,158 $ 6,794 $ 102,853

(a) April 1 through December 31.

(a) July 1 through December 31.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Derivative Instruments

6 unchanged sentences

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

The Company typically enters into over the counter

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(OTC) derivative commodity instruments with financial institutions, and the creditworthiness of all counterparties is regularly monitored.

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

The Company does not designate any of its derivative instruments as cash flow hedges;

8 unchanged sentences

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

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 1,954 Bcf of natural gas and 9,984 Mbbl of NGLs as of March 31, 2021 and 1,955 Bcf of natural gas and 3,462 Mbbl of NGLs as of December 31, 2020.

The open positions at both March 31, 2021 and December 31, 2020 had maturities extending through December 2024.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 2,773 Bcf of natural gas and 7,687 Mbbl of NGLs as of June 30, 2021 and 1,955 Bcf of natural gas and 3,462 Mbbl of NGLs as of December 31, 2020.

The open positions at June 30, 2021 and December 31, 2020 had maturities extending through December 2027 and December 2024, respectively.

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

3 unchanged sentences

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).

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 Ratings Service (Fitch).

Anything below these ratings is considered non-investment grade.

As of March 31, 2021, the Company's senior notes were rated "Ba2" by Moody's and "BB" by S&P.

As of June 30, 2021, the Company's senior notes were rated "Ba2" by Moody's and "BB" by S&P.

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

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

As of March 31, 2021 and 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 $ 176.6 million and $ 137.7 million, respectively, for which the Company deposited and recorded current assets of zero and $ 21.1 million, respectively.

As of June 30, 2021 and 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 $ 1,166.3 million and $ 137.7 million, respectively, for which the Company deposited and recorded current assets of $ 284.4 million and $ 21.1 million, respectively.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 Condensed Consolidated Balance Sheets.

As of March 31, 2021 and December 31, 2020, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

As of both June 30, 2021 and December 31, 2020, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

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

3 unchanged sentences

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

The initial margin

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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.

As of March 31, 2021 and December 31, 2020, the Company recorded $ 111.7 million and $ 61.5 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

As of June 30, 2021 and December 31, 2020, the Company recorded $ 205.7 million and $ 61.5 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

Refer to Note 8 for a discussion of the derivative liability recorded in connection with the Equitrans Share Exchange (defined in Note 8).

3 unchanged sentences

master netting agreements Margin requirements with counterparties Net derivative instruments

March 31, 2021

June 30, 2021

Asset derivative instruments, at fair value $ 648,855 $ ( 576,429 ) $ — $ 72,426

12 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Exchange traded commodity swaps have Level 1 inputs.

2 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

4 unchanged sentences

(Level 2) Significant unobservable inputs

March 31, 2021

June 30, 2021

Asset derivative instruments, at fair value $ 648,855 $ 134,691 $ 514,164 $ —

11 unchanged sentences

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

As of March 31, 2021 and December 31, 2020, the Company's senior notes had a fair value of approximately $ 5.2 billion and a carrying value of approximately $ 4.4 billion and $ 4.5 billion, respectively, inclusive of any current portion.

As of June 30, 2021 and December 31, 2020, the Company's senior notes had a fair value of approximately $ 6.5 billion and $ 5.2 billion, respectively, and a carrying value of approximately $ 5.4 billion and $ 4.5 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 March 31, 2021 and December 31, 2020, the Company's note payable to EQM had a fair value of approximately $ 122 million and $ 130 million, respectively, and a carrying value of approximately $ 104 million and $ 105 million, respectively, inclusive of any current portion.

As of June 30, 2021 and December 31, 2020, the Company's note payable to EQM had a fair value of approximately $ 123 million and $ 130 million, respectively, and a carrying value of approximately $ 102 million and $ 105 million, respectively, inclusive of any current portion.

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

3 unchanged sentences

See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of the fair value of assets related to the impairment and expiration of leases.

For the three months ended March 31, 2021 and 2020, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the three months ended March 31, 2021.

The Company recorded income tax (benefit) expense at an effective tax rate of 26.1 % and ( 24.4 )% for the three months ended March 31, 2021 and 2020, respectively.

The Company's effective tax rate for the three months ended March 31, 2021 was higher compared to the U.S.

federal statutory rate due primarily to state taxes, including valuation allowances limiting certain state tax benefits, partially offset by tax expense relating to deduction limitations for executive compensation.

The Company's effective tax rate for the three months ended March 31, 2020 was lower than the U.S.

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

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

For the six months ended June 30, 2021 and 2020, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the six months ended June 30, 2021.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

On April 13, 2021, West Virginia enacted corporate income tax legislation that primarily impacts the way that taxable income is apportioned to West Virginia for tax years beginning on or after January 1, 2022.

The Company is evaluating the impact of this change in law on the consolidated financial statements.

The Company recorded income tax benefit at an effective tax rate of 27.0 % and 14.0 % for the six months ended June 30, 2021 and 2020, respectively.

The Company's effective tax rate for the six months ended June 30, 2021 was higher compared to the U.S.

federal statutory rate due primarily to state taxes, including valuation allowances limiting certain state tax benefits and West Virginia tax legislation enacted on April 13, 2021 that changed the way taxable income is apportioned to West Virginia for tax years beginning on or after January 1, 2022.

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

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

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

Credit facility .

2 unchanged sentences

The Extension Agreement and First Amendment, among other things, (i) extends the maturity date of the commitments and loans under the Credit Agreement from July 31, 2022 to July 31, 2023, (ii) adds customary provisions to provide for the eventual replacement of LIBOR as a benchmark interest rate and (iii) adds an additional pricing level for the Applicable Rate (as defined in the Credit Agreement).

The Company had approximately $ 770 million and $ 791 million of letters of credit outstanding under its credit facility as of March 31, 2021 and December 31, 2020, respectively.

Under the Company's credit facility, for the three months ended March 31, 2021 and 2020, the maximum amounts of outstanding borrowings were $ 890 million and $ 356 million, respectively, the average daily balances were approximately $ 525 million and $ 86 million, respectively, and interest was incurred at weighted average annual interest rates of 2.1 % and 3.2 %, respectively.

The Company had approximately $ 670 million and $ 791 million of letters of credit outstanding under its credit facility as of June 30, 2021 and December 31, 2020, respectively.

Under the Company's credit facility, for the three months ended June 30, 2021 and 2020, the maximum amounts of outstanding borrowings were $ 578 million and $ 173 million, respectively, the average daily balances were approximately $ 236 million and $ 35 million, respectively, and interest was incurred at weighted average annual interest rates of 2.1 % and 2.4 %, respectively.

Under the Company's credit facility, for the six months ended June 30, 2021 and 2020, the maximum amounts of outstanding borrowings were $ 890 million and $ 356 million, respectively, the average daily balances were approximately $ 188 million and $ 60 million, respectively, and interest was incurred at weighted average annual interest rates of 2.1 % and 2.9 %, respectively.

Term loan facility.

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

During the second quarter 2020, the Company used proceeds from the offering of its Convertible Notes (see below), income tax refunds received by the Company and proceeds from the 2020 Divestiture (see Note 9) to fully repay its term loan facility on June 30, 2020.

Under the Company's term loan facility, from January 1, 2020 through March 31, 2020, the average daily balance was approximately $ 949 million and interest was incurred at a weighted average annual interest rate of 2.8 %.

On June 30, 2020, the Company used proceeds from the offering of its Convertible Notes (see below), cash from its income tax refunds and proceeds from the 2020 Divestiture (see Note 9) to fully repay its term loan facility.

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

3.125 % senior notes and 3.625 % senior notes .

On May 17, 2021, the Company issued $ 500 million aggregate principal amount of 3.125 % senior notes due May 15, 2026 and $ 500 million aggregate principal amount of 3.625 % senior notes due May 15, 2031.

After deducting offering costs of $ 15.6 million, net proceeds from the sale of the notes of $ 984.4 million were used to partly fund the Alta Acquisition (defined and described in Note 10).

The covenants of the 3.125 % senior notes and 3.625 % senior notes are consistent with the Company's existing senior unsecured notes.

Similar to the 5.00 % senior notes due January 2029 issued in November 2020, the 3.125 % senior notes and 3.625 % senior notes include an offer to repurchase provision applicable upon the occurrence of certain change of control events specified in the applicable indentures.

4.875 % senior notes .

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.

On February 1, 2021, the Company redeemed the remaining $ 125.1 million aggregate principal amount of its 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.

Convertible Notes .

2 unchanged sentences

After deducting offering costs of $ 16.9 million and Capped Call Transactions (defined and described 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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 any quarter 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 (the Sale Price Condition);

• 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;

2 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Pursuant to the terms of the Convertible Notes indenture, the Sale Price Condition for conversion of the Convertible Notes was satisfied as of June 30, 2021, and, accordingly, holders of Convertible Notes may convert any of their Convertible Notes, at their option, at any time during the quarter beginning on July 1, 2021 and ending on September 30, 2021, subject to all terms and conditions set forth in the Convertible Notes indenture.

Therefore, as of June 30, 2021, the net carrying value of the liability portion of the Convertible Notes was included in current portion of debt on the Condensed Consolidated Balance Sheet.

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

13 unchanged sentences

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.

At inception, the Company

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

4 unchanged sentences

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

During the second quarter of 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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the second quarter of 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.

The table below summarizes the net carrying amount of the Convertible Notes, including the unamortized debt discount and debt issuance costs.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Principal $ 500,000 $ 500,000

4 unchanged sentences

Three Months Ended

March 31, 2021

June 30, Six Months Ended

2021 2020 2021 2020

Contractual interest expense $ 2,187 $ 1,507 $ 4,375 $ 1,507

2 unchanged sentences

Total Convertible Notes interest expense $ 7,591 $ 4,947 $ 15,074 $ 4,947

Based on the closing stock price of EQT common stock of $ 18.58 on March 31, 2021, the if-converted value of the Convertible Notes exceeded the principal amount by $ 119 million.

The Convertible Notes were not convertible at March 31, 2021.

Based on the closing stock price of EQT common stock of $ 22.26 on June 30, 2021 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 242 million.

Earnings Per Share

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

As a result, for the three months ended March 31, 2021 and 2020, all securities, totaling 7,745,522 and 6,753,915 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

As a result, for the three and six months ended June 30, 2021 and 2020, all such securities were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

Such securities for the three and six months ended June 30, 2021 were 7,679,584 and 7,712,354 , respectively, and such securities for the three and six months ended June 30, 2020 were 6,769,822 and 6,739,305 , respectively.

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

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

In addition, for the three months ended March 31, 2021, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

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 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 (MVP) 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

In addition, for the three and six

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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

The resulting gain of approximately $ 187 million was recorded in the Statement of Condensed Consolidated Operations during the first quarter of 2020.

Beginning with the MVP 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 March 31, 2021, the current portion of the contract asset was approximately $ 20 million.

As of March 31, 2021, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 113 million.

months ended June 30, 2021 and for the period of April 28, 2020 through June 30, 2020, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

Equitrans Share Exchange

During the first quarter of 2020, the Company sold to Equitrans Midstream a total of 25,299,752 shares 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 rate relief was effected through the execution of a consolidated gas gathering and compression agreement entered into between the Company and an affiliate of EQM (the Consolidated GGA).

The Company recorded in the Condensed Consolidated Balance Sheet a contract asset representing the estimated fair value of the rate relief and, beginning on the Mountain Valley Pipeline (MVP) in-service date, 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.

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 MVP 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.

As of June 30, 2021 and December 31, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 97 million and $ 107 million, respectively.

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

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.

4 unchanged sentences

2020 Asset Exchange Transactions.

During the first quarter of 2020, the Company closed on various acreage trade agreements (collectively, the 2020 Asset Exchange Transactions), pursuant to which the Company exchanged approximately 5,000 aggregate net revenue interest acres for approximately 5,000 aggregate net revenue interest acres, all of which are located primarily in Greene County, Pennsylvania.

As a result of the 2020 Asset Exchange Transactions, the Company recognized a loss of $ 48.9 million in (gain) loss on sale/exchange of long-lived assets in the Statement of Condensed Consolidated Operations for the three months ended March 31, 2020.

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

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

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

9 unchanged sentences

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 a fair value of $ 3.1 million and $ 1.9 million as of March 31, 2021 and December 31, 2020, respectively.

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

The Contingent Consideration had a fair value of $ 17.5 million and $ 1.9 million as of June 30, 2021 and December 31, 2020, respectively.

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

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

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

The fair value of the

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Subsequent Events

On May 5, 2021, the Company, through one of its wholly owned subsidiaries, entered into a membership interest purchase agreement (the Alta Purchase Agreement) with Alta Resources Development, LLC, a Delaware limited liability company (Alta), Alta Marcellus Development, LLC, a Delaware limited liability company (Alta Marcellus) and ARD Operating, LLC, a Delaware limited liability company (ARD), pursuant to which the Company agreed to acquire all of the issued and outstanding equity interests of Alta Marcellus and ARD, which collectively hold all of Alta’s upstream and midstream assets (the Alta Acquisition).

Pursuant to the terms of the Alta Purchase Agreement, the consideration to be paid by the Company for the Alta Acquisition consists of $ 1.0 billion in cash and 105,306,346 shares of EQT common stock (the Equity Consideration), subject to certain purchase price adjustments to be calculated as of the closing date (with all post effective date purchase price adjustments netted against the Equity Consideration).

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

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

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

Reliance Asset Acquisition .

On April 1, 2021, the Company closed on the acquisition of certain oil and gas assets (the Reliance Asset Acquisition) from Reliance Marcellus, LLC (Reliance), pursuant to the Company's exercise of a preferential purchase right that was triggered by Northern Oil and Gas, Inc.'s acquisition of Reliance's Marcellus assets.

The total purchase price for the acquisition was approximately $ 69 million, and the assets acquired consisted of approximately 40 MMcfe per day of current production and 4,100 net acres located in southwest Pennsylvania.

The Reliance Asset Acquisition was accounted for as an asset acquisition and not a business combination and, as such, its proceeds were allocated to property, plant and equipment.

Alta Acquisition .

On July 21, 2021, the Company completed its previously announced acquisition (the Alta Acquisition) of Alta Marcellus Development, LLC and ARD Operating, LLC and subsidiaries (together, the Alta Target Entities), pursuant to that certain Membership Interest Purchase Agreement, dated May 5, 2021 (the Alta Purchase Agreement), by and among the Company, EQT Acquisition HoldCo LLC (a wholly-owned indirect subsidiary of the Company), Alta Resources Development, LLC (Alta Resources) and the Alta Target Entities.

The Alta Target Entities collectively hold all of Alta Resources' upstream and midstream assets and liabilities.

The purchase price for the Alta Acquisition consisted of approximately $ 1.0 billion in cash and 98,789,388 shares of the Company's common stock, as adjusted pursuant to customary closing purchase price adjustments set forth in the Alta Purchase Agreement.

The Alta Purchase Agreement contains customary representations and warranties, covenants, indemnification and termination provisions and has an effective date of January 1, 2021.

As a result of the Alta Acquisition, the Company acquired approximately 300,000 net Northeast Marcellus acres, approximately 1.0 Bcfe per day of current net production, approximately 300 miles of midstream gathering systems, approximately 100 miles of a freshwater system and a firm transportation portfolio to premium demand markets.

In May 2021, upon execution of the Alta Purchase Agreement, the Company deposited $ 146.3 million in an escrow account, which was disbursed to Alta Resources at closing.

As of June 30, 2021, this deposit was reflected in other assets in the Condensed Consolidated Balance Sheet.

EQT CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements