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Item 1. Financial Statements

2021-10-28 compared with 2021-07-29 · 176 added, 107 removed, 408 unchanged (41% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

2 unchanged sentences

Sales of natural gas, natural gas liquids and oil $ 1,784,050 $ 598,992 $ 3,992,905 $ 1,812,965

(Loss) gain on derivatives not designated as hedges ( 1,345,532 ) 26,426 ( 1,534,345 ) 415,862

Loss on derivatives not designated as hedges ( 3,257,237 ) ( 427,182 ) ( 4,791,582 ) ( 11,320 )

Net marketing services and other 8,349 317 23,646 4,613

21 unchanged sentences

Net loss ( 1,979,516 ) ( 600,640 ) ( 2,957,067 ) ( 1,030,854 )

Net loss attributable to noncontrolling interest ( 62 ) — ( 576 ) —

Net income attributable to noncontrolling interest 601 — 25 —

Net loss attributable to EQT Corporation $ ( 1,980,117 ) $ ( 600,640 ) $ ( 2,957,092 ) $ ( 1,030,854 )

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

1 unchanged sentence

Other comprehensive income, net of tax:

Other post-retirement benefits liability adjustment, net of tax expense:

Other postretirement benefits liability adjustment, net of tax expense:

$ 70 , $ 23 , $ 124 and $ 71

37 72 198 156

Comprehensive loss ( 1,979,479 ) ( 600,568 ) ( 2,956,869 ) ( 1,030,698 )

Comprehensive loss attributable to noncontrolling interests ( 62 ) — ( 576 ) —

Comprehensive income attributable to noncontrolling interests 601 — 25 —

Comprehensive loss attributable to EQT Corporation $ ( 1,980,080 ) $ ( 600,568 ) $ ( 2,956,894 ) $ ( 1,030,698 )

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

27 unchanged sentences

640,000 , shares issued:

378,793 and 280,003

10,180,652 8,241,684

11 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

1 unchanged sentence

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

Deferred income tax (benefit) expense ( 362,299 ) 24,987

Deferred income tax benefit ( 1,024,699 ) ( 182,244 )

Depreciation and depletion 1,200,280 1,021,649

6 unchanged sentences

Amortization, accretion and other 32,095 25,236

Loss (gain) on derivatives not designated as hedges 1,534,345 ( 415,862 )

Loss on derivatives not designated as hedges 4,791,582 11,320

Cash settlements (paid) received on derivatives not designated as hedges ( 729,445 ) 813,218

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

Net premiums paid on derivative instruments ( 53,429 ) ( 53,473 )

Changes in other assets and liabilities:

7 unchanged sentences

Capital expenditures ( 706,938 ) ( 788,384 )

Cash paid for acquisitions ( 209,764 ) —

Cash paid for acquisitions, net of cash acquired ( 1,021,510 ) —

Proceeds from sale of assets — 113,236

7 unchanged sentences

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

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

Repayment and retirement of debt ( 146,005 ) ( 2,609,785 )

Premiums paid on debt extinguishment ( 9,599 ) ( 17,150 )

2 unchanged sentences

Cash paid for taxes related to net settlement of share-based incentive awards ( 3,805 ) ( 596 )

Other financing activities ( 690 ) —

Net cash provided by (used in) financing activities 1,227,938 ( 499,797 )

11 unchanged sentences

(Thousands, except per share amounts)

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

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

Comprehensive loss, net of tax:

2 unchanged sentences

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

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

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

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

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

Balance at July 1, 2021 278,858 $ 8,245,752 $ ( 20,084 ) $ 71,284 $ ( 5,194 ) $ 10,664 $ 8,302,422

Comprehensive loss, net of tax:

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

Net (loss) income ( 1,980,117 ) 601 ( 1,979,516 )

Other postretirement benefits liability adjustment, net of tax expense:

Share-based compensation plans 105 9,495 1,882 11,377

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

Alta Acquisition (See Note 10) 98,789 1,925,405 1,925,405

Balance at September 30, 2021 377,752 $ 10,180,652 $ ( 18,202 ) $ ( 1,908,833 ) $ ( 5,157 ) $ 11,265 $ 8,259,725

Common shares authorized:

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

Preferred shares authorized:

12 unchanged sentences

Net loss ( 1,030,854 ) ( 1,030,854 )

Other postretirement benefit liability adjustment, net of tax expense:

Other postretirement benefits liability adjustment, net of tax expense:

Dividends ($ 0.03 per share)

2 unchanged sentences

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

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

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

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

Comprehensive loss, net of tax:

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

Other postretirement benefit liability adjustment, net of tax expense:

Net (loss) income ( 2,957,092 ) 25 ( 2,957,067 )

Other postretirement benefits liability adjustment, net of tax expense:

Share-based compensation plans 618 13,563 11,146 24,709

Contributions from noncontrolling interests 3,750 3,750

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

Alta Acquisition (See Note 10) 98,789 1,925,405 1,925,405

Balance at September 30, 2021 377,752 $ 10,180,652 $ ( 18,202 ) $ ( 1,908,833 ) $ ( 5,157 ) $ 11,265 $ 8,259,725

Common shares authorized:

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

Preferred shares authorized:

7 unchanged sentences

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

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of June 30, 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.

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

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

18 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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,

Nine Months Ended September 30,

Cash paid (received) during the period for:

2 unchanged sentences

Non-cash activity during the period for:

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

Increase in right-of-use assets and lease liabilities $ 1,091 $ 3,130

Increase in asset retirement costs and obligations 2,709 9,674

Capitalization of non-cash equity share-based compensation 3,728 2,350

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Equity issued as consideration for the Alta Acquisition (See Note 10) 1,925,405 —

Revenue from Contracts with Customers

9 unchanged sentences

When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company 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 $ 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.

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 $ 851.2 million and $ 394.1 million in accounts receivable in the Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, respectively.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

5 unchanged sentences

Other sources of revenue:

(Loss) gain on derivatives not designated as hedges ( 1,345,532 ) 26,426 ( 1,534,345 ) 415,862

Loss on derivatives not designated as hedges ( 3,257,237 ) ( 427,182 ) ( 4,791,582 ) ( 11,320 )

Net marketing services and other 8,349 317 23,646 4,613

Total operating revenues $ ( 1,464,838 ) $ 172,127 $ ( 775,031 ) $ 1,806,258

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.

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

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

2021 (a) 2022 2023 Total

Natural gas sales $ 41,746 $ 8,158 $ 6,794 $ 56,698

(a) July 1 through December 31.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(a) October 1 through December 31.

Derivative Instruments

14 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

1 unchanged sentence

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

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 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.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of its expected sales of production and portions of its basis exposure covering approximately 2,554 Bcf of natural gas and 5,146 Mbbl of NGLs as of September 30, 2021 and 1,955 Bcf of natural gas and 3,462 Mbbl of NGLs as of December 31, 2020.

The open positions at September 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.

5 unchanged sentences

Anything below these ratings is considered non-investment grade.

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

As of September 30, 2021, the Company's senior notes were rated "Ba1" by Moody's and "BB+" by S&P.

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

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

As of June 30, 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)

As of September 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 $ 1,242.7 million and $ 137.7 million, respectively, for which the Company deposited and recorded current assets of $ 332.0 million and $ 21.1 million, respectively.

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

As of both September 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.

5 unchanged sentences

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

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.

As of September 30, 2021 and December 31, 2020, the Company recorded $ 381.4 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).

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

2 unchanged sentences

master netting agreements Margin requirements with counterparties Net derivative instruments

June 30, 2021

September 30, 2021

Asset derivative instruments, at fair value $ 1,428,073 $ ( 1,313,856 ) $ — $ 114,217

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.

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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

4 unchanged sentences

(Level 2) Significant unobservable inputs

June 30, 2021

September 30, 2021

Asset derivative instruments, at fair value $ 1,428,073 $ 216,702 $ 1,211,371 $ —

Liability derivative instruments, at fair value 5,715,608 460,180 5,255,428 —

2,160,253 315,372 1,844,881 —

December 31, 2020

1 unchanged sentence

Liability derivative instruments, at fair value 600,877 93,361 507,516 —

600,877 93,361 507,516 —

The carrying values of cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term maturities.

4 unchanged sentences

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

As of June 30, 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.

As of September 30, 2021 and December 31, 2020, the Company's senior notes had a fair value of approximately $ 6.4 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 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.

As of September 30, 2021 and December 31, 2020, the Company's note payable to EQM had a fair value of approximately $ 120 million and $ 130 million, respectively, and a carrying value of approximately $ 101 million and $ 105 million, respectively, inclusive of any current portion.

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

1 unchanged sentence

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

See Note 8 for a discussion of the fair value measurement of the Equitrans Share Exchange and Note 9 for a discussion of the fair value measurement of the 2020 Asset Exchange Transactions and 2020 Divestiture (each defined in Note 9).

See Note 8 for a discussion of the fair value measurement of the Equitrans Share Exchange (defined in Note 8), Note 9 for a discussion of the fair value measurement of the 2020 Asset Exchange Transactions and 2020 Divestiture (each defined in Note 9) and Note 10 for a discussion of the fair value measurement of the Alta Acquisition (defined in Note 10).

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 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.

For the nine months ended September 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 nine months ended September 30, 2021.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

The Company recorded income tax benefit at an effective tax rate of 25.7 % and 22.3 % for the nine months ended September 30, 2021 and 2020, respectively.

The Company's effective tax rate for the nine months ended September 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.

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

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

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

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

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 $ 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.

The Company had approximately $ 553 million and $ 791 million of letters of credit outstanding under its credit facility as of September 30, 2021 and December 31, 2020, respectively.

Under the Company's credit facility, for the three months ended September 30, 2021 and 2020, the maximum amounts of outstanding borrowings were $ 1,652 million and $ 399 million, respectively, the average daily balances were approximately $ 813 million and $ 149 million, respectively, and interest was incurred at weighted average annual interest rates of 1.9 % and 2.2 %, respectively.

Under the Company's credit facility, for the nine months ended September 30, 2021 and 2020, the maximum amounts of outstanding borrowings were $ 1,652 million and $ 399 million, respectively, the average daily balances were approximately $ 525 million and $ 90 million, respectively, and interest was incurred at weighted average annual interest rates of 2.0 % and 2.5 %, respectively.

Term loan facility.

1 unchanged sentence

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.

Under the Company's term loan facility, for the period beginning January 1, 2020 and ending 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 %.

3.125 % senior notes and 3.625 % senior notes .

2 unchanged sentences

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.

Similar to the Company's 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 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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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:

4 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.

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.

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.

2 unchanged sentences

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.

Upon conversion of the Convertible Notes, the Company may satisfy its conversion obligation by paying and/or delivering at the Company's election, in the manner and subject to the terms and conditions provided in the Convertible Notes indenture, cash, shares of EQT common stock or a combination thereof.

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 were permitted to 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.

During the three months ended September 30, 2021, holders of the Convertible Notes exercised their conversion right with respect to $ 9 thousand in aggregate principal amount of the Convertible Notes.

The Company elected to settle all such conversions by issuing to the converting holders of the Convertible Notes 599 shares of EQT common stock in the aggregate at an average conversion price of $ 19.64 .

The Sale Price Condition for conversion of the Convertible Notes was not satisfied as of September 30, 2021, and, accordingly, holders of the Convertible Notes cannot convert any of their Convertible Notes during the fourth quarter of 2021.

Therefore, as of September 30, 2021, the net carrying value of the liability portion of the Convertible Notes was included in senior notes on the Condensed Consolidated Balance Sheet.

Upon conversion of the remaining outstanding 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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company may not redeem the Convertible Notes prior to May 5, 2023.

A sinking fund is not provided for the Convertible Notes.

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.

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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

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.

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.

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The Capped Call Transactions were recorded in shareholders' equity and were not accounted for as derivatives.

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

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

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.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Principal $ 499,991 $ 500,000

2 unchanged sentences

Net carrying value of Convertible Notes $ 375,843 $ 359,634

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

3 unchanged sentences

Total Convertible Notes interest expense $ 7,705 $ 7,270 $ 22,779 $ 12,217

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.

Based on the closing stock price of EQT common stock of $ 20.46 on September 30, 2021 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 182 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 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 a result, for the three and nine months ended September 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 nine months ended September 30, 2021 were 7,506,075 and 7,642,451 , respectively, and such securities for the three and nine months ended September 30, 2020 were 6,671,532 and 6,715,083 , 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 and six

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

In addition, for all periods presented, the conversion premium of approximately 6.7 million shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

Equitrans Share Exchange

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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.

As of September 30, 2021 and December 31, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 109 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.

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Asset Exchange Transactions and Divestiture

2020 Asset Exchange Transactions.

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

As a result of the 2020 Asset Exchange Transactions, the Company recognized a loss of $ 6.7 million and $ 55.6 million in (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.

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

Wetzel and Marshall Counties, West Virginia;

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

Wetzel County, West Virginia;

and Belmont County, Ohio.

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

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

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

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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.

The Contingent Consideration had a fair value of approximately $ 12.9 million and $ 1.9 million as of September 30, 2021 and December 31, 2020, respectively.

During the nine months ended September 30, 2021, the Company received cash from the Contingent Consideration of $ 5.6 million.

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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

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

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

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

Reliance Asset Acquisition

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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.

The Reliance Asset Acquisition was accounted for as an asset acquisition 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.

The Alta Target Entities collectively held 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 EQT common stock, as adjusted pursuant to customary closing purchase price adjustments set forth in the Alta Purchase Agreement.

The Alta Purchase Agreement has an effective date of January 1, 2021.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

Certain of the acquired midstream gathering systems are not wholly-owned but are operated by the Company pursuant to a construction, ownership and operation agreement, through which the Company is entitled to its pro rata share of revenues, expenses, assets and liabilities.

Allocation of Purchase Price .

The Alta Acquisition has been accounted for as a business combination using the acquisition method.

The table below summarizes the preliminary purchase price and estimated fair values of assets acquired and liabilities assumed as of July 21, 2021.

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

The Company expects to complete the purchase price allocation once it has received all necessary information, at which time the value of the assets and liabilities assumed will be revised, if necessary.

Preliminary Purchase Price Allocation

Consideration:

Equity $ 1,925,405

Cash 1,000,000

Total consideration $ 2,925,405

Fair value of assets acquired:

Cash and cash equivalents $ 43,199

Accounts receivable, net 165,048

Property, plant and equipment 3,139,781

Other assets 6,309

Amount attributable to assets acquired $ 3,354,337

Fair value of liabilities assumed:

Accounts payable $ 131,214

Derivative instruments, at fair value 169,744

Other current liabilities 13,359

Other liabilities and credits 114,615

Amount attributable to liabilities assumed $ 428,932

The fair value of the acquired natural gas and oil properties was 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 acquired undeveloped properties were primarily 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 timing and amount of future development from a market participant perspective.

The fair value of the acquired midstream gathering systems was measured primarily using the cost approach based on inputs that are not observable in the market and, as such, are considered Level 3 fair value measurements.

Significant inputs include replacement costs for similar assets, relative age of the acquired assets and any potential economic or functional obsolescence associated with the acquired assets.

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Post-Acquisition Operating Results .

The Alta Target Entities contributed the following to the Company's consolidated results for the period from July 21, 2021 through September 30, 2021.

Sales of natural gas, NGLs and oil $ 251,129

Loss on derivatives not designated as hedges ( 293,840 )

Net marketing services and other 2,525

Total operating revenues $ ( 40,186 )

Net loss $ ( 129,779 )

Unaudited Pro Forma Information .

The table below summarizes the Company's results as though the Alta Acquisition had been completed on January 1, 2020.

Certain of Alta Resources' historical amounts were reclassified to conform to the Company's financial presentation of operations.

The following unaudited pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the Alta Acquisition occurred on January 1, 2020 nor are they necessarily indicative of future consolidated results of operations.

Nine Months Ended

September 30,

(Thousands, except per share amounts)

Pro forma sales of natural gas, NGLs and oil $ 4,437,755 $ 2,122,092

Pro forma loss on derivatives not designated as hedges ( 4,918,616 ) ( 20,762 )

Pro forma net marketing services and other 28,452 11,095

Pro forma total operating revenues $ ( 452,409 ) $ 2,112,425

Pro forma net loss $ ( 2,950,427 ) $ ( 1,090,841 )

Pro forma net income attributable to noncontrolling interests 25 —

Pro forma net loss attributable to EQT $ ( 2,950,452 ) $ ( 1,090,841 )

Pro forma loss per share (basic) $ ( 9.67 ) $ ( 4.27 )

Pro forma loss per share (diluted) $ ( 9.67 ) $ ( 4.27 )

EQT CORPORATION AND SUBSIDIARIES

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

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

What changed 10-Q

Item 1. Financial Statements