What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-10 compared with 2021-02-17 · 495 added, 622 removed, 1090 unchanged (51% of the section changed)

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Page Reference

Reports of Independent Registered Public Accounting Firm

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

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

Consolidated Balance Sheets as of December 31, 2020 and 2019

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

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

Notes to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm ( PCAOB ID :

Statements of Consolidated Operations

Statements of Consolidated Comprehensive Loss

Consolidated Balance Sheets

Statements of Consolidated Cash Flows

Statements of Consolidated Equity

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of EQT Corporation and subsidiaries (the Company) as of December 31, 2020 and 2019, the related statements of consolidated operations, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15 (a) (collectively referred to as the "consolidated financial statements").

We have audited the accompanying consolidated balance sheets of EQT Corporation and subsidiaries (the Company) as of December 31, 2021 and 2020, the related statements of consolidated operations, comprehensive loss, cash flows and equity for each of the three years in the period ended December 31, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

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

Accounting for the Equitrans gas gathering agreement

Description of the Matter As more fully described in Note 5 to the consolidated financial statements, on February 26, 2020, the Company entered into the Share Purchase Agreements and the Consolidated Gas Gathering Agreement (the Consolidated GGA) pursuant to which, among other things, the Company sold to Equitrans Midstream 50% of its ownership of Equitrans Midstream's common stock in exchange for approximately $52 million in cash and rate relief under certain of the Company's gathering contracts with EQM, an affiliate of Equitrans Midstream.

The Consolidated GGA provides for additional cash bonus payments (the Henry Hub Cash Bonus) payable by the Company to EQM conditioned upon the quarterly average of the NYMEX Henry Hub natural gas settlement price exceeding certain price thresholds during a specified period.

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

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

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

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

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

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

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

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

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

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

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

Convertible Notes Issuance

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

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

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

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

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

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

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

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

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

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

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

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

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

Valuation of Acquired Proved Reserves

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

during the year ended December 31, 2020.

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

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

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

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

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

Valuation of Acquired Natural Gas and Oil Properties

Description of the Matter As described in Note 6 to the consolidated financial statements, on July 21, 2021, the Company completed the acquisition of Alta Marcellus Development, LLC and ARD Operating, LLC and subsidiaries.

The Company's accounting for the acquisition included determining the fair value of the acquired natural gas and oil properties.

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

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

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

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

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

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

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

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

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In our opinion, EQT Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

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

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

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

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related statements of consolidated operations, comprehensive loss, cash flows and equity for each of the three years in the period ended December 31, 2021 and the related notes and the financial statement schedule listed in the Index at Item 15(a) of the Company, and our report dated February 10, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Sales of natural gas, natural gas liquids and oil $ 6,804,020 $ 2,650,299 $ 3,791,414

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

(Loss) gain on derivatives not designated as hedges ( 3,775,042 ) 400,214 616,634

Net marketing services and other 35,685 8,330 8,436

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Amortization of intangible assets — 26,006 35,916

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

(Gain) loss/impairment on sale/exchange of long-lived assets ( 21,124 ) 100,729 1,138,287

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

Impairment of goodwill — — 530,811

Impairment and expiration of leases 311,835 306,688 556,424

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

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

(Income) loss from investments ( 71,841 ) 314,468 336,993

Dividend and other income ( 19,105 ) ( 35,512 ) ( 91,483 )

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Interest expense 308,903 271,200 199,851

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

Loss before income taxes ( 1,588,688 ) ( 1,266,034 ) ( 1,597,471 )

Income tax benefit ( 434,175 ) ( 298,858 ) ( 375,776 )

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

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

Net loss ( 1,154,513 ) ( 967,176 ) ( 1,221,695 )

Net loss attributable to noncontrolling interest ( 10 ) — —

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

Net income (loss) attributable to noncontrolling interest 1,246 ( 10 ) —

Net loss attributable to EQT Corporation $ ( 1,155,759 ) $ ( 967,166 ) $ ( 1,221,695 )

Amounts attributable to EQT Corporation:

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

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

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

Loss per share of common stock attributable to EQT Corporation:

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Weighted average common stock outstanding 323,196 260,613 255,141

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

Income from discontinued operations — — 0.52

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

Net loss attributable to EQT Corporation $ ( 3.58 ) $ ( 3.71 ) $ ( 4.79 )

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

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

STATEMENTS OF CONSOLIDATED COMPREHENSIVE LOSS

YEARS ENDED DECEMBER 31,

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Net loss $ ( 1,154,513 ) $ ( 967,176 ) $ ( 1,221,695 )

Other comprehensive (loss) income, net of tax:

Net change in cash flow hedges:

Natural gas, net of tax expense:

Other comprehensive income (loss), net of tax:

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

$ 210 in 2019

— — ( 4,625 )

Interest rate, net of tax expense:

$ 210 in 2019 and $ 80 in 2018

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

Other postretirement benefits liability adjustment, net of tax:

$ 254 , $( 36 ) and $ 150

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Change in accounting principle — — ( 496 )

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

Other comprehensive income (loss) 744 ( 156 ) 207

Comprehensive loss ( 1,153,769 ) ( 967,332 ) ( 1,221,488 )

Comprehensive loss attributable to noncontrolling interest ( 10 ) — —

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

Comprehensive income (loss) attributable to noncontrolling interest 1,246 ( 10 ) —

Comprehensive loss attributable to EQT Corporation $ ( 1,155,015 ) $ ( 967,322 ) $ ( 1,221,488 )

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Derivative instruments, at fair value 543,337 527,073

Income tax receivable — 298,854

Prepaid expenses and other 191,435 103,615

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Contract asset 410,000 410,000

Investment in Equitrans Midstream Corporation 203,380 676,009

Other assets 491,702 433,754

Total assets $ 21,607,388 $ 18,113,469

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES AND EQUITY

Current liabilities:

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Credit facility borrowings — 300,000

Term Loan Facility borrowings — 999,353

Senior notes 4,435,782 4,371,467

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Total liabilities 11,561,625 8,850,739

Shareholders' equity:

Common stock, no par value,

shares authorized:

640,000 and 320,000 , shares issued:

640,000 , shares issued:

377,432 and 280,003

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( 18,046 ) ( 29,348 )

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

(Accumulated deficit) retained earnings ( 115,779 ) 1,048,259

Accumulated other comprehensive loss ( 4,611 ) ( 5,355 )

Total common shareholders' equity 10,029,527 9,255,240

Noncontrolling interests in consolidated subsidiaries 7,490 —

Noncontrolling interest in consolidated subsidiaries 16,236 7,490

Total equity 10,045,763 9,262,730

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

Total liabilities and equity $ 21,607,388 $ 18,113,469

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

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

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

Deferred income tax benefit ( 433,608 ) ( 155,840 ) ( 275,063 )

Depreciation and depletion 1,676,702 1,393,465 1,538,745

Amortization of intangible assets — 26,006 35,916

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

Gain/loss/impairment on sale/exchange of long-lived assets and impairment and expiration of leases 290,711 442,111 1,710,122

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

Impairment of goodwill — — 798,689

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

(Income) loss from investments ( 71,841 ) 314,468 336,993

Loss on debt extinguishment 9,756 25,435 —

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Amortization, accretion and other 66,236 37,414 23,296

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

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

Loss (gain) on derivatives not designated as hedges 3,775,042 ( 400,214 ) ( 616,634 )

Cash settlements (paid) received paid on derivatives not designated as hedges ( 2,091,003 ) 897,190 246,639

Net premiums (paid) received on derivative instruments ( 66,495 ) ( 46,665 ) 22,616

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Capital expenditures ( 1,055,128 ) ( 1,042,231 ) ( 1,602,454 )

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

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

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

Cash paid for acquisitions, net of cash acquired (see Note 6) ( 1,030,239 ) ( 691,942 ) —

Proceeds from sale of assets 2,452 126,080 —

Cash received for Equitrans Share Exchange 52,323 — —

Proceeds from sale/exchange of investment shares 24,369 52,323 —

Other investing activities ( 14,196 ) ( 30 ) 1,312

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

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

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

Proceeds from credit facility borrowings 8,086,000 3,118,250 2,978,750

Repayment of credit facility borrowings ( 8,386,000 ) ( 3,112,250 ) ( 3,484,750 )

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

Debt issuance costs and Capped Call Transactions (see Note 10) ( 19,713 ) ( 71,056 ) ( 913 )

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

Repayment and retirement of debt ( 154,336 ) ( 2,822,262 ) ( 704,661 )

Premiums paid on debt extinguishment ( 9,599 ) ( 21,132 ) —

Contributions from noncontrolling interest 7,500 7,500 —

Dividends paid — ( 7,664 ) ( 30,655 )

Proceeds and excess tax benefits from awards under employee compensation plans — — 1,946

Cash paid for taxes related to net settlement of share-based incentive awards ( 3,845 ) ( 596 ) ( 7,224 )

Repurchase and retirement of common stock ( 12,922 ) — —

Repurchase of common stock — — ( 27 )

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

Acquisition of 25 % of Strike Force Midstream LLC

— — ( 175,000 )

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

Other financing activities ( 1,038 ) — —

Net cash provided by (used in) financing activities 506,047 31,713 ( 249,453 )

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See Note 1 for supplemental cash flow information.

See Note 8 for discontinued operations cash flow information.

EQT CORPORATION AND SUBSIDIARIES

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Common Stock Accumulated Other

Comprehensive (Loss) Income Noncontrolling Interests in

Comprehensive Loss Noncontrolling Interest in

Consolidated Subsidiaries

Shares No Par Value Treasury Stock Retained Earnings Total Equity

(Thousands, except per share or unit amounts)

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

Comprehensive (loss) income, net of tax:

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

Net change in cash flow hedges:

Natural gas, net of tax:

( 4,625 ) ( 4,625 )

Interest rate, net of tax:

Other postretirement benefits liability adjustment, net of tax:

Dividends ($ 0.12 per share)

( 31,375 ) ( 31,375 )

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

Distributions to noncontrolling interests in discontinued operations (a) ( 380,651 ) ( 380,651 )

Change in accounting principle 4,113 4,113

Repurchase and retirement of common stock ( 10,646 ) ( 538,876 ) ( 538,876 )

Purchase of Strike Force Midstream LLC noncontrolling interests 1,818 ( 176,818 ) ( 175,000 )

Changes in ownership of consolidated subsidiaries ( 158,560 ) 214,930 56,370

Distribution of Equitrans Midstream Corporation ( 857,755 ) 1,459,330 903 ( 4,990,819 ) ( 4,388,341 )

Shares No Par Value Treasury Stock Retained Earnings

(Accumulated Deficit) Total Equity

(Thousands, except per share amounts)

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

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

Contributions from noncontrolling interests 7,500 7,500

Contributions from noncontrolling interest 7,500 7,500

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

Comprehensive loss (income), net of tax:

Net (loss) income ( 1,155,759 ) 1,246 ( 1,154,513 )

Other postretirement benefits liability adjustment, net of tax:

Share-based compensation plans 627 21,980 11,302 33,282

Repurchase and retirement of common stock ( 1,362 ) ( 21,106 ) ( 8,279 ) ( 29,385 )

Alta Acquisition (see Note 6) 98,789 1,925,405 1,925,405

Contributions from noncontrolling interest 7,500 7,500

Balance at December 31, 2021 376,399 $ 10,167,963 $ ( 18,046 ) $ ( 115,779 ) $ ( 4,611 ) $ 16,236 $ 10,045,763

Common shares authorized:

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

320,000 at December 31, 2019 and 640,000 at December 31, 2020 and 2021.

Preferred shares authorized:

There were no preferred shares issued or outstanding.

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

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

EQT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021

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Intercompany accounts and transactions have been eliminated in consolidation.

Management evaluates whether an entity or interest is a variable interest entity and whether the Company is the primary beneficiary;

consolidation is required if both criteria are met.

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

Investment in Consolidated Partnership.

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

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

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

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

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

Certain of the Company's midstream gathering systems are not wholly-owned but are operated by the Company pursuant to a construction, ownership and operation agreement.

The Company records the pro rata share of revenues, expenses, assets and liabilities it is entitled under the agreement.

See "Investment in Equitrans Midstream" and "Equity Method Investments" for discussion of the Company's accounting of its investment in equity securities and equity method investments.

The Company's operations consist of one reportable segment.

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

Discontinued Operations.

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

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

Use of Estimates.

The preparation of financial statements in conformity with United States generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.

Actual results could differ from those estimates.

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Derivative Instruments.

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

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

Prepaid Expenses and Other.

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The following table summarizes the Company's property, plant and equipment.

Oil and gas producing properties, successful efforts method $ 21,771,025 $ 21,316,834

Oil and gas producing properties $ 25,523,854 $ 21,771,025

Accumulated depreciation and depletion 7,508,178 5,866,418

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Net property, plant and equipment $ 18,418,920 $ 16,054,265

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

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

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

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The Company also capitalized interest expense related to well development of approximately $ 18 million, $ 17 million and $ 24 million in 2021, 2020 and 2019, respectively.

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

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

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

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

There were no indicators of impairment identified in 2020.

There were no indicators of impairment identified in 2021 and 2020.

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

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(vi) inflation and (vii) a market-based weighted average cost of capital.

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

As a result of

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

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

Impairment and Expiration of Leases.

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The likelihood of an impairment of unproved oil and gas properties increases as the expiration of a lease term approaches and drilling activity has not commenced.

If the Company does not intend to drill on the property prior to expiration of the lease or does not have the intent and ability to extend, renew, trade or sell the lease prior to expiration, impairment expense is recorded.

Expense for lease expirations where the lease was not previously impaired is recorded as the lease expires.

For the years ended December 31, 2020, 2019 and 2018, the Company recorded $ 306.7 million, $ 556.4 million and $ 279.7 million, respectively, for lease impairments and expirations.

The Company recognizes impairment if the Company does not have the intent to drill on the leased property prior to expiration of the lease or does not have the intent and ability to extend, renew, trade or sell the lease prior to expiration.

The Company recognizes expense for lease expirations as the lease expires if the lease was not previously impaired.

For the years ended December 31, 2021, 2020 and 2019, the Company recorded $ 311.8 million, $ 306.7 million and $ 556.4 million, respectively, for impairment and expiration of leases.

The Company's unproved properties had a net book value of approximately $ 2,406 million and $ 2,292 million at December 31, 2021 and 2020, respectively.

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

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

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

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

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

The Company used its market capitalization plus a control premium to estimate fair value for its single reporting unit.

Estimated market capitalization was calculated by multiplying the Company's 30-day weighted average stock price and the number of outstanding common stock of the Company (EQT common stock) as of November 30, 2018.

The reporting unit's estimated fair value was significantly less than its carrying value and, as such, all of the goodwill was impaired.

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

Contract Asset.

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

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

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

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

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

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

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

There were no additional indicators of impairment identified in 2021.

Investment in Equitrans Midstream Corporation.

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

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

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

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

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

Changes in fair value are recorded in (income) loss on investments in the Statements of Consolidated Operations.

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

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

See Note 5 and Note 8.

Equity Method Investments.

The Company applies the equity method of accounting to its investments over which it does not have the power to direct the activities that most significantly impact the investment's economic performance.

The carrying value of the Company's equity method investments is recorded in other assets in the Consolidated Balance Sheets.

The Company's pro-rata share of earnings in equity method investments is recorded in (income) loss from investments in the Statements of Consolidated Operations.

Intangible Assets.

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

(Rice Energy).

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

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

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

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

The following table summarizes the Company's intangible assets.

Non-compete agreements $ 108,689 $ 124,100

Accumulated amortization 108,689 82,683

Impairment of intangible assets (a) — 15,411

Intangible assets, net $ — $ 26,006

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

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

executives, were fully amortized as of December 31, 2020.

In 2019 the Company recognized impairment of its intangible assets associated with non-compete agreements with former Rice Energy Inc.

executives who are now employees of the Company.

Other Current Liabilities.

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Accrued interest payable $ 88,614 $ 91,953

Accrued taxes other than income 86,755 44,619

Current portion of long-term capacity contracts 57,440 50,504

Taxes other than income 44,619 57,850

Incentive compensation 33,601 18,573

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

Accrued incentive compensation 51,224 33,601

Current portion of lease liabilities 27,972 25,004

Accrued severance 3,815 2,536

Income tax payable — 23,909

Severance accrual 2,536 11,769

Other accrued liabilities 56,592 29,785

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

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

Any refinements to prior year taxes made in the current year due to new information are reflected as adjustments in the current period.

Separate income taxes are calculated for income from continuing operations, income from discontinued operations and items charged or credited directly to shareholders' equity.

Deferred income tax assets and liabilities arise from temporary differences between the financial reporting and tax bases of the Company's assets and liabilities and are recognized using enacted tax rates for the effect of such temporary differences.

Separate income taxes are calculated for items charged or credited directly to shareholders' equity.

Deferred tax assets and liabilities arise from temporary differences between the financial reporting and tax bases of the Company's assets and liabilities and are recognized using enacted tax rates for the effect of such temporary differences.

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that a portion or all of the deferred tax asset will not be realized.

When evaluating whether or not a valuation allowance should be established, the Company exercises judgment on whether it is more likely than not (a likelihood of more than 50%) that a portion or all of the deferred tax assets will not be realized.

To determine whether a valuation allowance is needed, the Company considers all available evidence, both positive and negative, including carrybacks, tax planning strategies, reversals of deferred tax assets and liabilities and forecasted future taxable income.

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

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

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

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

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

To determine the amount of financial statement benefit recorded for uncertain tax positions, the Company considers the amounts and probabilities of outcomes that could be realized upon ultimate settlement of an uncertain tax position using facts, circumstances and information available at the reporting date.

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

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

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

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

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

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

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

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

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

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

Asset Retirement Obligations.

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Liabilities assumed in acquisitions 113,590 45,825

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

Change in estimates 41,978 160,402

Liabilities removed in divestitures ( 3,315 ) ( 54,836 )

Change in estimates (a) 5,223 41,978

Balance at December 31 $ 661,334 $ 523,557

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

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

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

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

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2021 2020 2019

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

Transactions $ 57,430 $ 11,739 $ —

Reorganization, including severance and contract terminations 7,458 5,448 97,702

Changes in legal reserves, including settlements 5,175 11,350 82,395

Proxy — — 19,343

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Other Postretirement Benefits Plan.

The Company sponsors a plan for postretirement benefits plan.

The Company sponsors a postretirement benefits plan.

The Company recognized expense related to its defined contribution plan of $ 7.0 million, $ 6.5 million and $ 8.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Earnings Per Share (EPS).

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

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

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

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

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

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

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

As discussed in Note 10, the Company issued the Convertible Notes during the second quarter of 2020 and, upon conversion of the Convertible Notes, intends to use a combined settlement approach to satisfy its settlement obligation under the Convertible Notes.

As a result, for the years ended December 31, 2021, 2020 and 2019, all such securities, totaling 8,237,352 , 6,778,383 and 3,035,247 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS.

As discussed further in Note 10, the Company issued the Convertible Notes (defined in Note 10) 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.

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

In addition, for the years ended December 31, 2021 and 2020, the conversion premium of approximately 6.7 million shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

Supplemental Cash Flow Information.

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

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

Years Ended December 31,

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Non-cash activity during the period for:

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

Increase in right-of-use assets and lease liabilities, net 20,834 18,877 113,350

Increase in asset retirement costs and obligations 15,961 52,271 169,387

Capitalization of non-cash equity share-based compensation 4,994 3,142 —

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

Equity issued as consideration for the Alta Acquisition (see Note 6) 1,925,405 — —

Recently Issued Accounting Standards

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

Measurement of Credit Losses on Financial Instruments .

This ASU amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities.

For assets held at amortized cost basis, this ASU eliminates the probable initial recognition threshold and requires entities to reflect their current estimate of all expected credit losses.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes:

Simplifying the Accounting for Income Taxes .

This ASU simplifies accounting for income taxes by eliminating certain exceptions to ASC 740, 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 plans to adopt this ASU in the first quarter of 2021 and does not expect this adoption to have a material impact on its financial statements and related disclosures.

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:

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

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

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

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

The Company has determined the impact that this standard will have on its financial statements and will include the applicable adoption disclosures in its Quarterly Report on Form 10-Q for the period ending March 31, 2022.

The amounts presented below represent the increase (decrease) to each financial statement line item as a result of the adoption of ASU 2020-06.

Years Ended December 31,

Interest expense $ ( 19,150 ) $ ( 11,932 )

Income tax benefit 6,138 3,565

Net loss ( 13,012 ) ( 8,367 )

Net income (loss) attributable to noncontrolling interest — —

Net loss attributable to EQT Corporation $ ( 13,012 ) $ ( 8,367 )

Basic and diluted:

Weighted average common stock outstanding (a) — —

Net loss per share of common stock attributable to EQT Corporation $ 0.04 $ 0.03

(a) For the years ended December 31, 2021 and 2020, diluted weighted average common stock outstanding will not change because the potentially dilutive securities have an anti-dilutive effect on loss per share.

Current portion of debt $ 106,072 $ —

Senior notes — 125,222

Deferred income taxes ( 31,306 ) ( 37,444 )

Common stock, no par value ( 96,145 ) ( 96,145 )

(Accumulated deficit) retained earnings 21,379 8,367

Subsequent Events.

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Revenue from Contracts with Customers

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

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

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

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

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

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 $ 1,093.9 million and $ 394.1 million in accounts receivable in the Consolidated Balance Sheets as of December 31, 2021 and 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 .

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

Certain other revenue contracts are outside the scope of ASU 2014-09, Revenue from Contracts with Customers.

These contracts are reported in net marketing services and other in the Statements of Consolidated Operations.

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

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Oil sales 92,334 20,574 33,620

Net marketing services and other — — 13,865

Total revenues from contracts with customers $ 6,804,020 $ 2,650,299 $ 3,791,414

Other sources of revenue:

(Loss) gain on derivatives not designated as hedges ( 3,775,042 ) 400,214 616,634

Net marketing services and other 35,685 8,330 8,436

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

Total operating revenues $ 3,064,663 $ 3,058,843 $ 4,416,484

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

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 1,955 billion cubic feet (Bcf) of natural gas and 3,462 thousand barrels (Mbbl) of NGLs as of December 31, 2020 and 1,644 Bcf of natural gas as of December 31, 2019.

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

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 2,184 billion cubic feet (Bcf) of natural gas and 3,055 thousand barrels (Mbbl) of NGLs as of December 31, 2021 and 1,955 Bcf of natural gas and 3,462 Mbbl of NGLs as of December 31, 2020.

The open positions at December 31, 2021 and 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.

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

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

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

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

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

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

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

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.

Anything below these ratings is considered non-investment grade.

As of December 31, 2020, the Company's senior notes were rated "Ba3" by Moody's and "BB" by S&P.

As of December 31, 2021, the Company's senior notes were rated "Ba1" by Moody's, "BB+" by S&P and "BB+" by Fitch.

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

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

As of December 31, 2020, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 137.7 million, for which the Company deposited and recorded $ 21.1 million as a current asset.

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

As of December 31, 2021 and 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 $ 594.9 million and $ 137.7 million, respectively, for which, the Company deposited and recorded current assets of $ 0.1 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 Consolidated Balance Sheets.

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

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

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

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

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

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

As of December 31, 2021 and 2020, the Company recorded $ 147.7 million and $ 61.5 million, respectively, of such deposits as current assets in the Consolidated Balance Sheets.

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

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.

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Liability derivative instruments at fair value 600,877 ( 328,809 ) ( 82,552 ) 189,516

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

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

Fair Value Measurements

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

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

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

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

The carrying value of borrowings under the Company's credit facility approximates fair value as the interest rate is based on prevailing market rates.

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

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

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

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

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

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

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

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

The Equitrans Share Exchange

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

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

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

On February 26, 2020, the Company entered into a gas gathering and compression agreement (the Consolidated GGA) with an affiliate of EQM, pursuant to which, among other things, EQM agreed to provide to the Company gas gathering services in the

Marcellus and Utica Shales of Pennsylvania and West Virginia, and the Company committed to an initial annual minimum volume commitment of 3.0 Bcf per day and an acreage dedication in Pennsylvania and West Virginia.

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

See Note 5 for a discussion of the fair value measurement of the Equitrans Share Exchange (defined therein).

See Notes 6, 7 and 8 for a discussion of the fair value measurement of the Company's acquisitions, asset exchange transactions and divestiture, respectively.

See Note 1 for a discussion of the fair value measurement and any subsequent impairments of the Company's proved and unproved oil and gas properties and other long-lived assets.

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 Consolidated Balance Sheet a contract asset representing the estimated fair value of the rate relief and, beginning on the Mountain Valley Pipeline 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 Mountain Valley Pipeline is placed in service and ending on the earlier of 36 months thereafter or December 31, 2024.

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

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

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

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

Beginning with the Mountain Valley Pipeline in-service date, the Company expects to recognize amortization of the contract asset over a period of approximately four years in a manner consistent with the expected timing of the Company's realization of the economic benefits of the rate relief provided by the Consolidated GGA.

As of December 31, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 107 million.

As of December 31, 2021 and 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $ 111 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 lieu of receiving the rate relief under the Consolidated GGA, beginning January 1, 2022 and ending on the earlier of the Mountain Valley Pipeline in-service date or December 31, 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.

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

Acquisition and Exchange Transactions

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, as such, its proceeds were allocated to property, plant and equipment.

Alta Acquisition.

On July 21, 2021, the Company completed its 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 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.

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.

Allocation of Purchase Price .

The Alta Acquisition was 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 acquired 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 159,539

Property, plant and equipment 3,143,767

Other assets 6,309

Amount attributable to assets acquired $ 3,352,814

Fair value of liabilities assumed:

Accounts payable $ 131,214

Derivative instruments, at fair value 169,744

Other current liabilities 7,851

Other liabilities and credits 118,600

Amount attributable to liabilities assumed $ 427,409

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 was 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.

Post-Acquisition Operating Results .

The Alta Target Entities contributed the following to the Company's consolidated results.

July 21, 2021 through December 31, 2021

Sales of natural gas, NGLs and oil $ 725,807

Loss on derivatives not designated as hedges ( 168,017 )

Net marketing services and other 7,284

Total operating revenues $ 565,074

Net income $ 233,254

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.

Years Ended December 31,

(Thousands, except per share amounts)

Pro forma sales of natural gas, NGLs and oil $ 7,248,870 $ 3,092,762

Pro forma (loss) gain on derivatives not designated as hedges ( 3,902,076 ) 501,910

Pro forma net marketing services and other 40,491 17,737

Pro forma total operating revenues $ 3,387,285 $ 3,612,409

Pro forma net loss $ ( 1,132,181 ) $ ( 957,377 )

Pro forma net income (loss) attributable to noncontrolling interest 1,246 ( 10 )

Pro forma net loss attributable to EQT Corporation $ ( 1,133,427 ) $ ( 957,367 )

Pro forma loss per share (basic) $ ( 3.51 ) $ ( 3.67 )

Pro forma loss per share (diluted) $ ( 3.51 ) $ ( 3.67 )

Chevron Acquisition.

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

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

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

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

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

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

The Company's pro-rata share of earnings in LMM is recorded in (income) loss from investments on the Statements of Consolidated Operations.

Allocation of Purchase Price .

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

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

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

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

Preliminary Purchase Price Allocation

Cash consideration (a) $ 691,942

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

The Company completed the purchase price allocation during the fourth quarter of 2021, at which time the value of the assets acquired and liabilities assumed were revised.

The purchase accounting adjustments recorded in 2021 were not material.

Purchase Price Allocation

Consideration:

Cash (a) $ 701,985

Settlement of pre-existing relationships 6,645

Total consideration $ 708,630

Fair value of assets acquired:

Prepaid expenses and other $ 10,583

Net property, plant and equipment 725,319

Other assets 97,247

Amount attributable to assets acquired $ 833,149

Fair value of liabilities assumed:

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Other current liabilities 18,410

Deferred tax liability 939

Deferred income taxes 951

Other liabilities and credits (b) 101,811

Amount attributable to liabilities assumed $ 124,519

Fair value of assets acquired:

Other current assets $ 5,609

Net property, plant and equipment 720,315

Other assets 96,746

Amount attributable to assets acquired $ 822,670

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

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

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

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

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

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

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Significant inputs include projected revenues, expenses and capital expenditures.

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

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

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

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

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

Asset Exchange Transactions

2020 Asset Exchange Transactions.

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

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and Belmont County, Ohio.

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

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

2019 Asset Exchange Transaction.

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

As consideration for the third party's assumption of the Tyler County gas gathering agreement, the Company agreed to reimburse the third party for certain firm gathering costs under the gas

gathering agreement through December 2022 and assign the third party an additional approximately 3,000 net revenue interest acres in Tyler and Wetzel Counties, West Virginia.

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

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

As a result of the 2019 Asset Exchange Transaction, the Company recognized a net loss of $ 13.9 million in (gain) loss/impairment on sale/exchange of long-lived assets in the Statement of Consolidated Operations for the year ended December 31, 2019.

As of December 31, 2021 and 2020, the liability for the reimbursement of those certain firm gathering costs was $ 12.6 million and $ 25.8 million, respectively, and was recorded in other current and noncurrent liabilities in the Consolidated Balance Sheets.

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

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

2020 Divestitures.

Key assumptions used in the fair value calculations included market-based prices for comparable acreage and, for the 2019 Asset Exchange Transaction, the net present value of expected payments due for reimbursement.

2020 Divestiture

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

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

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

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

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

The Contingent Consideration had a fair value of approximately $ 8.2 million and $ 1.9 million as of December 31, 2021 and 2020, respectively .

During the years ended December 31, 2021 and 2020 , the Company received cash from the Contingent Consideration of $ 10.6 million and $ 0.9 million, respectively.

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

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

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

As a result of the 2020 Divestiture, the Company recognized a net loss of $ 39.1 million, including the impact of the change in fair value of the Contingent Consideration, in impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations during the year ended December 31, 2020 .

2018 Divestiture.

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

For the year ended December 31, 2018, as a result of the 2018 Divestitures, the Company recorded an impairment/loss on sale of long-lived assets of $ 2.4 billion due to the carrying value of the properties and related pipeline assets exceeding the amounts received for the 2018 Divestitures.

The fair value of the impaired assets was based on significant inputs that are not observable in the market and, as such, are considered to be Level 3 fair value measurements.

See Note 4 for a description of the fair value hierarchy and Note 1 for the Company's policy on impairment of proved and unproved properties.

Key assumptions included in the calculation of the fair value of the impaired assets included the following:

reserves, including risk adjustments for probable and possible reserves;

future commodity prices;

to the extent available, market-based indicators of fair value including estimated proceeds that could be realized upon a potential disposition;

production rates based on the Company's experience with similar properties it operates;

estimated future operating and development costs;

and a market-based weighted average cost of capital.

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

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

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

The key unobservable input in the

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

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

Separation and Distribution and Discontinued Operations

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

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

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

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

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

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

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

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

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

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

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

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

The results of operations of Equitrans Midstream are summarized below.

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

(the Rice Merger) to discontinued operations.

January 1, 2018 to November 12, 2018

Operating revenues $ 388,854

Transportation and processing ( 803,858 )

Operation and maintenance 99,671

Selling, general and administrative 62,702

Depreciation 160,701

Impairment of goodwill (a) 267,878

Transaction costs 93,062

Amortization of intangible assets 36,007

Other income 51,014

Interest expense 88,300

Income from discontinued operations before income taxes 435,405

Income tax expense 61,643

Income from discontinued operations after income taxes 373,762

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

Net income from discontinued operations $ 136,352

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

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

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

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

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

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

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

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

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

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

January 1, 2018 to November 12, 2018

Cash flows from operating activities:

Deferred income tax benefit $ ( 373,405 )

Depreciation 160,701

Amortization of intangibles 36,007

Impairment of goodwill 267,878

Other income ( 51,450 )

Share-based compensation expense 1,841

Cash flows from investing activities:

Capital expenditures $ ( 732,727 )

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

Cash flows from financing activities:

Proceeds from issuance of debt $ 2,500,000

Proceeds in borrowings on credit facility 3,378,500

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

Debt issuance costs ( 40,966 )

Distributions to noncontrolling interests ( 380,651 )

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

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

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

As a result of the 2020 Divestiture, the Company recognized a net loss of $ 39.1 million, including the impact of the change in fair value of the Contingent Consideration, in (gain) loss/impairment on sale/exchange of long-lived assets in the Statement of Consolidated Operations during the year ended December 31, 2020.

The following table summarizes income tax (benefit) expense.

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Total income tax benefit $ ( 434,175 ) $ ( 298,858 ) $ ( 375,776 )

For the year ended December 31, 2021, the current federal and state income tax benefit related primarily to the sale of state research and development credits.

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

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

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

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

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

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

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

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

On December 22, 2017, the U.S.

Congress enacted the Tax Cuts and Jobs Act, which made significant changes to U.S.

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

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

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

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

The Tax Cuts and Jobs Act also repealed the AMT for tax years beginning January 1, 2018 and provided that existing AMT credit carryforwards can be used to offset current federal taxes owed with 50% of any remaining balance being refunded in tax years 2018 through 2020.

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

In connection with repealing the AMT, the Tax Cuts and Jobs Act also provided that existing AMT credit carryforwards can be used to offset current federal taxes owed with 50% of any remaining balance being refunded in tax years 2018 through 2020.

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

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

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

The Company has federal net operating loss (NOLs) carryforwards related to its 2017 acquisition of Rice Energy Inc.

and NOLs generated in 2017 in excess of amounts carried back to prior years.

The Company also has NOLs acquired in the Company's 2016 acquisition of Trans Energy, Inc., of which a nominal amount is available for use annually over the next 15 years.

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Federal and state tax credits ( 3,079 ) ( 11,628 ) ( 7,908 )

Goodwill impairment — — 111,470

Other 3,552 ( 19,492 ) 5,738

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

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

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

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

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

The Company's effective tax rate for the year ended December 31, 2018 was higher compared to the U.S.

federal statutory rate due primarily to state income taxes.

The Company recognized additional state tax benefit as a result of the 2018 Divestitures and the resulting shift in the Company's state apportionment in state taxing jurisdictions for natural gas and liquids sales as these sales shifted more heavily to lower taxed jurisdictions.

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

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

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At December 31, 2021, 2020 and 2019, positive evidence considered included the reversals of financial-to-tax temporary differences, the implementation of and/or ability to employ various tax planning strategies and the estimation of future taxable income.

Negative evidence considered included historical pre-tax book losses of the Company's former EQT Production business segment.

Negative evidence considered included historical pre-tax book losses of the Company.

A review of positive and negative evidence regarding these tax benefits resulted in the conclusion that valuation allowances for certain NOLs were warranted as it was more likely than not that the Company would not use them prior to expiration.

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

During 2021, the Company released some of the valuation allowance previously recorded due to unrealized gains recognized during the year and the partial sale of its investment in Equitrans Midstream that resulted in a capital loss that will be carried back to offset capital gains recognized in an earlier year.

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

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

The Company provided a valuation allowance on the portion in excess of the carryback.

Management will continue to assess the potential for realizing deferred tax assets based on the feasibility of future tax planning strategies and may record adjustments to the related valuation allowances in future periods that could materially impact net income.

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Balance at December 31 $ 182,032 $ 175,213 $ 259,588

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

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

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

Included in the reserve for uncertain tax positions are unrecognized tax benefits of $ 97.8 million, $ 91.0 million and $ 150.9 million that, if recognized, would affect the effective tax rates as of December 31, 2021, 2020 and 2019, respectively.

Also included in the reserve are uncertain tax positions of $ 97.2 million, $ 90.3 million and $ 113.7 million for the years ended December 31, 2021, 2020 and 2019, respectively, that were recorded in the Consolidated Balance Sheets as a reduction of the related deferred tax asset for general business credit carryforwards and NOLs.

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

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

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

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

Any disallowance of the shorter deductibility period would accelerate the payment of cash taxes to an earlier period but would not affect the Company's annual effective tax rate.

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

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

The Company recorded interest and penalties expense (income) of approximately $ 4.2 million, $( 3.8 ) million and $ 3.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Interest and penalties of $ 15.5 million and $ 11.4 million were included in the Consolidated Balance Sheets at December 31, 2021 and 2020, respectively.

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

As of December 31, 2021, the Company believed that, as a result of potential settlements with, or legal or administrative guidance by, relevant taxing authorities or the lapse of applicable statutes of limitation, it is reasonably possible that a decrease of $ 125.9 million in unrecognized tax benefits related to federal tax positions may be necessary within twelve months.

The Company's consolidated U.S.

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

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

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

As of December 31, 2021, with few exceptions, the Company is no longer subject to state examinations by tax authorities for years before 2015.

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The following table summarizes the source and tax effects of temporary differences between financial reporting and tax bases of assets and liabilities.

Deferred income taxes:

Total deferred income tax assets $ ( 610,821 ) $ ( 643,227 )

Total deferred income tax liabilities 1,982,788 2,129,041

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

Total deferred income tax liabilities (assets):

Drilling and development costs expensed for income tax reporting 918,120 1,100,061

Tax depreciation in excess of book depreciation 1,027,179 974,520

Investment in Equitrans Midstream ( 94,689 ) ( 109,883 )

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

Deferred tax assets:

NOL carryforwards $ 948,707 $ 789,544

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

Net unrealized losses 456,751 43,475

Federal tax credits 83,244 79,846

State capital loss carryforward ( 28,317 ) —

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

Interest disallowance limitation ( 160 ) ( 46,776 )

Convertible debt 37,489 —

Alternative minimum tax credit carryforward 81,237 81,237

Investment in Equitrans Midstream 69,159 94,689

Federal and state capital loss carryforward 32,706 28,317

Incentive compensation and deferred compensation plans 20,409 22,419

Other 2,544 1,286

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

Total deferred tax assets 1,694,757 1,140,813

Valuation allowances ( 550,967 ) ( 529,992 )

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

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

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

Net deferred tax asset 1,143,790 610,821

Deferred tax liabilities:

Property, plant and equipment ( 2,051,051 ) ( 1,945,299 )

Convertible debt ( 31,351 ) ( 37,489 )

Total deferred tax liabilities ( 2,082,402 ) ( 1,982,788 )

Net deferred tax liability $ ( 938,612 ) $ ( 1,371,967 )

During 2021, net deferred tax liability decreased by $ 433.4 million compared to 2020 due primarily to unrealized mark to market losses and net operating losses for federal and state, partly offset by increased tax depreciation in excess of book depreciation and the Company's investment in Equitrans Midstream.

As of December 31, 2021, the Company had a deferred tax asset of $ 244.0 million, subject to a valuation allowance of $ 22.8 million, related to tax benefits from federal NOL carryforwards generated prior to 2018 and expiring between 2035 and 2037.

Federal NOLs generated in 2018 and thereafter are represented by a deferred tax asset of $ 190.0 million and will carryforward indefinitely but will be limited to offset 80% of taxable income in each year.

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

As of December 31, 2021, the Company had a deferred tax asset of $ 514.7 million, subject to a valuation allowance of $ 426.2 million, related to tax benefits from state NOL carryforwards with expiration dates ranging from 2021 to 2041 with some being carried forward indefinitely.

Due to a decrease in state apportionment rates and impairment of assets, the Company will have less realizable NOLs in future years on a separate company basis and, as such, as of December 31, 2021 the Company had a valuation allowance recorded on its property, plant and equipment state deferred tax asset of $ 0.3 million.

In 2021, the Company incurred an unrealized gain and sold a portion of its investment in Equitrans Midstream, which generated a capital loss that will be carried back to offset capital gains recognized in an earlier year.

This investment is a capital asset for tax purposes, and capital losses can only be utilized to offset a capital gain and are limited to being carried back 3 years and forward 5 years for potential utilization.

Due to these limitations, the Company also recorded a valuation allowance for the portion of the capital loss recognized in excess of the carryback and any net unrealized losses against the deferred tax asset for its retained equity stake of Equitrans Midstream of $ 57.5 million for separate company state income tax reporting purposes and $ 44.0 million for federal income tax reporting purposes.

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

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

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

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

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

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

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

Federal NOLs generated in 2018 and forward will carryforward indefinitely but will be limited to offset 80% of taxable income in each year.

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

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

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

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

Equitrans Midstream.

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

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

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

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Credit Facility expires July 31, 2023 $ — $ — $ — $ 300,000 $ 300,000 $ 300,000

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

Senior notes:

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

2.50 % notes due October 1, 2020

— — — 500,000 499,228 500,950

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

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499,991 381,473 854,985 500,000 359,635 587,385

3.125 % notes due May 15, 2026

500,000 493,157 516,265 — — —

7.75 % debentures due July 15, 2026

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750,000 744,417 966,983 750,000 743,726 924,510

3.625 % notes due May 15, 2031

500,000 492,669 523,620 — — —

Note payable to EQM 99,838 99,838 117,837 105,056 105,056 130,464

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Long-term debt $ 4,569,320 $ 4,530,102 $ 5,133,441 $ 4,943,661 $ 4,771,305 $ 5,428,116

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

(a) For the Company's credit facility and note payable to EQM, the principal value represents the carrying value.

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

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

therefore, they are a Level 1 fair value measurement.

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

(b) The carrying value of borrowings under the Company's credit facility approximates fair value as the interest rate is based on prevailing market rates;

therefore, it is a Level 1 fair value measurement.

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

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

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

A s of December 31, 2020, aggregate maturities for the Company's senior notes were $ 149 million in 2021, $ 569 million in 2022, $ 10 million in 2023, $ 0 million in 2024, $ 1,000 million in 2025 and $ 2,965 million thereafter.

The indentures governing the Company's long-term indebtedness contain certain restrictive financial and operating covenants, including covenants that restrict, among other things, the Company's ability to incur, as applicable, indebtedness, incur liens, enter into sale and leaseback transactions, complete acquisitions, merge, sell assets and perform certain other corporate actions.

$ 2.5 Billion Credit Facility.

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

The Company may request two one-year extensions of the expiration date, the approval of which is subject to satisfaction of certain conditions.

Company may, on a one-time basis, request that the lenders' commitments be increased to an aggregate of up to $ 3.0 billion, subject to certain terms and conditions.

For the notes due February 1, 2025 and the notes due February 1, 2030, the interest rates were 7.875 % and 8.750 %, respectively, as of December 31, 2020.

Credit Facility.

The Company has a $ 2.5 billion credit facility.

On April 23, 2021, the Company entered into an Extension Agreement and First Amendment to Second Amended and Restated Credit Agreement (the Extension Agreement and First Amendment), amending the Second Amended and Restated Credit Agreement, dated as of July 31, 2017, among the Company, PNC Bank, National Association, as administrative agent, swing line lender and an L/C issuer, and the other lenders party thereto (the Credit Agreement).

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 Extension Agreement and First Amendment).

The Company is permitted to request one additional one-year extension of the expiration date, the approval of which is subject to satisfaction of certain conditions.

The Company may, on a one-time basis, request that the lenders' commitments be increased to an aggregate of up to $ 3.0 billion, subject to certain terms and conditions.

Each lender in the facility may decide if it will increase its commitment.

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Under the terms of the credit facility, the Company may obtain base rate loans or Eurodollar rate loans denominated in U.S.

Base rate loans bear interest at a base rate plus a margin based on the Company's credit ratings.

Eurodollar rate loans bear interest at a Eurodollar rate plus a margin based on the Company's credit ratings.

Based on the Company's senior notes credit rating as of December 31, 2020, the margin on base rate loans was 1.00 % and the margin on Eurodollar rate loans was 2.00 %.

Base rate loans bear interest at a Base Rate (as defined in the Extension Agreement and First Amendment) plus a margin based on the Company's then current credit ratings.

Eurodollar rate loans bear interest at a Eurodollar Rate (as defined in the Extension Agreement and First Amendment) plus a margin based on the Company's then current credit ratings.

The Company is not required to maintain compensating bank balances.

The Company's debt issuer credit ratings, as determined by Moody's, S&P or Fitch on its non-credit-enhanced, senior unsecured long-term debt, determine the level of fees associated with the credit facility in addition to the interest rate charged by the counterparties on any amounts borrowed against the credit facility;

The Company's debt issuer credit ratings, as determined by Moody's, S&P or Fitch on its non-credit-enhanced, senior unsecured long-term debt, determine the level of fees associated with the credit facility in addition to the interest rate charged by the lenders on any amounts borrowed against the credit facility;

the lower the Company's debt credit rating, the higher the level of fees and borrowing rate.

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The most significant covenants and events of default under the credit facility are the maintenance of a debt-to-total capitalization ratio and limitations on transactions with affiliates.

The credit facility contains financial covenants that require a total debt-to-total capitalization ratio no greater than 65 %, the calculation of which excludes the effects of accumulated OCI.

The credit facility contains financial covenants that require a total debt-to-total capitalization ratio of no greater than 65 %.

As of December 31, 2021, the Company was in compliance with all debt provisions and covenants.

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

For each of the years ended December 31, 2020, 2019 and 2018, the Company incurred commitment fees of approximately 28 , 20 and 20 basis points, respectively, on the undrawn portion of its credit facility to maintain credit availability.

The Company had approximately $ 440 million and $ 791 million of letters of credit outstanding under its credit facility as of December 31, 2021 and 2020, respectively.

Under the Company's credit facility, for the years ended December 31, 2021, 2020 and 2019, the maximum amounts of outstanding borrowings were $ 1.7 billion, $ 0.7 billion and $ 1.1 billion, respectively, the average daily balances were approximately $ 609 million, $ 148 million and $ 340 million, respectively, and interest was incurred at weighted average annual interest rates of 1.9 %, 2.3 % and 3.8 %, respectively.

For the years ended December 31, 2021, 2020 and 2019, the Company incurred commitment fees of approximately 28 , 28 and 20 basis points, respectively, on the undrawn portion of its credit facility to maintain credit availability.

Senior Notes .

Certain of the Company's senior notes also include an offer to repurchase provision applicable upon the occurrence of certain change of control events specified in the applicable indentures.

Interest rates on the Company's $ 1.0 billion aggregate principal amount of senior notes due February 1, 2025 and $ 750 million aggregate principal amount of senior notes due February 1, 2030 (together, the Adjustable Rate Notes) fluctuate based on changes to the credit ratings assigned to the Company's senior notes by Moody's, S&P and Fitch.

Interest rates on the Company's other outstanding senior notes do not fluctuate based on changes to the credit ratings assigned to its senior notes by Moody's, S&P and Fitch.

A s of December 31, 2021, aggregate maturities for the Company's senior notes were $ 569 million in 2022, $ 10 million in 2023, zero in 2024, $ 1,000 million in 2025, $ 1,115 million in 2026 and $ 2,850 million thereafter.

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 described in Note 6 .

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

provided, however, that 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.

Debt Repayments.

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

In January 2022, the Company redeemed $ 206.0 million aggregate principal amount of the its 3.00 % senior notes at a total cost of $ 210.4 million, inclusive of redemption premiums of $ 2.6 million and accrued but unpaid interest of $ 1.8 million.

Term Loan Facility .

The Company had a $ 1.0 billion unsecured term loan facility (the Term Loan Facility) that was scheduled to mature in May 2021.

In 2019, the Company used the proceeds from borrowings of $ 1.0 billion under the Term Loan Facility to repay $ 700 million aggregate principal amount of 8.125 % senior notes, repay outstanding borrowings under the Company's $ 2.5 billion credit facility and pay accrued interest and fees and expenses related to the term loan agreement.

Borrowings under the Term Loan Facility that are repaid may not be reborrowed.

The Company used proceeds from the offering of its Convertible Notes (see below), income tax refunds received during 2020 (see Note 9 ) and proceeds from the 2020 Divestiture (see Note 7 ) to fully repay its Term Loan Facility on June 30, 2020.

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

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

On June 30, 2020, the Company used proceeds from the offering of its Convertible Notes (see below), cash from its income tax refunds (see Note 9 ) and proceeds from the 2020 Divestiture (described in Note 8 ) to fully repay its term loan facility.

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 %.

For the period May 31, 2019 through December 31, 2019, the average daily balance was $ 1.0 billion and interest was incurred at a weighted average annual interest rate of 3.1 %.

Adjustable Rate Notes.

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

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

The covenants of the Adjustable Rate Notes are consistent with the Company's existing senior unsecured notes, with an additional interest rate adjustment provision that provides for adjustments to the interest rates on the Adjustable Rate Notes based on credit ratings assigned by Moody's, S&P and Fitch to the Company's senior notes.

As a result of changes to the Company's senior notes credit rating, the interest rate on the 6.125 % senior notes and the 7.000 % senior notes was 7.875 % and

8.750 %, respectively, as of December 31, 2020.

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

however, if the Company's credit ratings improve, the interest rate under the Adjustable Rate Notes could be reduced to as low as the original interest rate set forth on the face of the Adjustable Rate Notes.

Note Payable to EQM .

EQM owns a preferred interest in EQT Energy Supply, LLC, a subsidiary of the Company, that is accounted for as a note payable due to the terms of the operating agreement of EQT Energy Supply, LLC.

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

Principal amounts due for the note payable to EQM are $ 5.5 million in 2022, $ 5.8 million in 2023, $ 6.3 million in 2024, $ 6.5 million in 2025, $ 6.9 million in 2026 and $ 68.8 million thereafter.

Surety Bonds .

The Company had approximately $ 245 million and $ 93 million of surety bonds outstanding as of December 31, 2021 and 2020, respectively, in response to its credit downgrades by Moody's, S&P and Fitch.

Convertible Notes.

On April 28, 2020, the Company issued $ 500 million aggregate principal amount of 1.75 % convertible senior notes (the Convertible Notes) due May 1, 2026 unless earlier redeemed, repurchased or converted.

In April 2020, the Company issued $ 500 million aggregate principal amount of 1.75 % convertible senior notes (the Convertible Notes) due May 1, 2026 unless earlier redeemed, repurchased or converted.

The Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

After deducting offering costs of $ 16.9 million and Capped Call Transactions (defined and discussed below) costs of $ 32.5 million, the net proceeds from the offering of $ 450.6 million were used to repay $ 450 million of the Company's Term Loan Facility borrowings as well as for general corporate purposes.

Holders of the Convertible Notes may convert their Convertible Notes, at their option, at any time prior to the close of business on January 30, 2026 under the following circumstances:

• during any quarter commencing after the quarter ended June 30, 2020 as long as the last reported price of EQT common stock for at least 20 trading days (consecutive or otherwise) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding quarter is greater than or equal to 130 % of the conversion price on each such trading day;

• during 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;

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

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

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

On or after May 5, 2023 and prior to February 1, 2026, the Company may redeem for cash all or any portion of the Convertible Notes, at its option, at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest up to the redemption date as long as the last reported price per share of EQT common stock has been at least 130 % of the conversion price in effect for at least 20 trading days (consecutive or otherwise) during any 30 -consecutive-trading-day period ending on the trading day immediately preceding the date on which the Company delivers notice of redemption.

A sinking fund is not provided for the Convertible Notes.

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

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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 remaining outstanding 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 Convertible Notes were not permitted to convert any of their Convertible Notes during the three months ended December 31, 2021.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of December 31, 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 January 1, 2022 and ending on March 31, 2022, subject to all terms and conditions set forth in the Convertible Notes indenture.

Therefore, as of December 31, 2021, the net carrying value of the liability portion of the Convertible Notes was included in current portion of debt on the 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.

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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For accounting purposes, the Company separated the Convertible Notes into liability and equity components.

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

associated convertible features.

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

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

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For the year ended December 31, 2020, the Convertible Notes had a net shareholders' equity impact of $ 63.6 million, which consisted of the conversion option equity component of $ 100.9 million less the Capped Call Transactions costs of $ 32.5 million and issuance costs attributable to the equity component of $ 4.8 million.

As of December 31, 2020, the net carrying amount of the Convertible Notes liability component consisted of principal of $ 500 million less the unamortized debt discount of $ 129.1 million and unamortized issuance costs of $ 11.3 million.

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

Principal $ 499,991 $ 500,000

Unamortized debt discount 108,719 129,102

Unamortized debt issuance costs 9,799 11,263

Net carrying value of Convertible Notes $ 381,473 $ 359,635

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

Year Ended December 31, 2020

Years Ended December 31,

Contractual interest expense $ 8,750 $ 5,906

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Total Convertible Notes interest expense $ 30,596 $ 19,615

5.00 % Senior Notes.

On November 16, 2020, the Company issued $ 350 million aggregate principal amount of 5.00 % senior notes due January 15, 2029.

After deducting offering costs of $ 6.0 million, the net proceeds from the offering of $ 344.0 million were used to fund a portion of the purchase price of the Chevron Acquisition described in Note 6.

The covenants of the 5.00 % senior notes are consistent with the Company's existing senior unsecured notes;

provided, however, that the 5.00 % senior notes include an additional offer to repurchase provision applicable upon the occurrence of certain change of control events specified in the related indenture.

2020 Debt Repayments.

In February 2020, t he Company fully redeemed its floating rate notes and 2.50 % senior notes at a price of 100 % and 100.446 % (inclusive of a make whole premium), respectively, of each note's principal amount plus accrued but unpaid interest of $ 1.2 million and $ 4.2 million, respectively.

This resulted in the payment of make whole call premiums of $ 2.2 million related to the 2.50 % senior notes.

Throughout 2020, the Company repurchased $ 624.9 million aggregate principal amount of the Company's 4.875 % senior notes at a total cost of $ 647.3 million, inclusive of tender premiums of $ 13.7 million and accrued but unpaid interest of $ 8.7 million.

In November 2020, the Company repurchased $ 181.2 million aggregate principal amount of the Company's 3.00 % senior notes at a total cost of $ 182.8 million, inclusive of a tender premium of $ 0.9 million and accrued but unpaid interest of $ 0.7 million.

Note Payable to EQM .

EQM owns a preferred interest in EQT Energy Supply, LLC (EES), a subsidiary of the Company, that is accounted for as a note payable due to the terms of the operating agreement of EES.

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

Principal amounts due for the note payable to EQM are $ 5.2 million in 2021, $ 5.5 million in 2022, $ 5.8 million in 2023, $ 6.3 million in 2024, $ 6.5 million in 2025 and $ 75.8 million thereafter.

Surety Bonds .

During the year ended December 31, 2020, the Company issued approximately $ 93 million in surety bonds in response to its credit downgrades by Moody's, S&P and Fitch.

Subsequent Events.

On February 1, 2021, the Company redeemed the remaining $ 125.1 million aggregate principal amount of the Company's 4.875 % senior notes at a total cost of $ 130.7 million, inclusive of redemption premiums of $ 4.3 million and accrued but unpaid interest of $ 1.3 million.

As of December 31, 2020, the Company reserved 13.7 million shares of authorized and unissued EQT common stock for stock compensation plans and 40 million shares of authorized and unissued EQT common stock for settlement of the Convertible Notes.

In October 2020, the Company entered into an underwriting agreement under which the Company sold 20,000,000 shares of common stock at a price to the public of $ 15.50 per share.

Based on the closing stock price of EQT common stock of $ 21.81 on December 31, 2021 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 227 million.

As of December 31, 2021, the Company had reserved 5.5 million shares of authorized and unissued EQT common stock for stock compensation plans and approximately 40 million shares of authorized and unissued EQT common stock for settlement of the Convertible Notes.

In December 2021, the Company announced that the Board of Directors approved a share repurchase program to repurchase shares of its common stock for an aggregate purchase price up to $ 1 billion.

The share repurchase authority is valid through December 31, 2023.

In December 2021, the Company repurchased 1,361,668 shares of EQT common stock for an aggregate purchase price of $ 29.4 million at an average price of $ 21.56 per share, excluding fees and broker commissions, under this share repurchase program.

In July 2021, the Company issued 98,789,388 shares of EQT common stock as part of the consideration for the Alta Acquisition described in Note 6.

In October 2020, the Company entered into an underwriting agreement under which the Company sold 20,000,000 shares of EQT common stock at a price to the public of $ 15.50 per share.

In November 2020, the option to purchase 3,000,000 additional shares was exercised by the underwriters on the same terms.

After deducting offering costs of $ 15.6 million, the net proceeds of $ 340.9 million were used to fund a portion of the purchase price of the Chevron Acquisition described in Note 6 .

The Company made no share repurchases in 2020 or 2019.

During 2018, the Company repurchased 10,646,382 shares of EQT common stock at an average price of $ 50.62 , which included $ 0.02 for commission, pursuant to the Company's previously announced share repurchase programs.

This exhausted the Company's share repurchase authorization under such programs.

Changes in Accumulated OCI (Loss) by Component

The following table explains the changes in accumulated OCI (loss) by component.

Natural gas cash flow hedges,

net of tax Interest rate cash flow hedges,

Changes in Accumulated Other Comprehensive Loss by Component

The following table explains the changes in accumulated other comprehensive loss by component.

Interest rate cash flow hedges,

net of tax Other postretirement

benefits liability adjustment, net of tax Accumulated

OCI (loss), net of tax

December 31, 2017 $ 4,625 $ ( 555 ) $ ( 6,528 ) $ ( 2,458 )

(Gains) losses reclassified from accumulated OCI, net of tax ( 4,625 ) (a) 168 (b) 606 (c) ( 3,851 )

Distribution to Equitrans Midstream Corporation — — 903 903

other comprehensive loss, net of tax

December 31, 2018 $ ( 387 ) $ ( 5,019 ) $ ( 5,406 )

Losses reclassified from accumulated OCI, net of tax — 387 (b) 316 (c) 703

Losses reclassified from accumulated other comprehensive loss, net of tax 387 (a) 316 (b) 703

Change in accounting principle — ( 496 ) ( 496 )

December 31, 2019 — ( 5,199 ) ( 5,199 )

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

Gains reclassified from accumulated other comprehensive loss, net of tax — ( 156 ) (b) ( 156 )

December 31, 2020 — ( 5,355 ) ( 5,355 )

(a) Gains, net of tax, related to natural gas cash flow hedges were reclassified from accumulated OCI into operating revenues.

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

(c) Losses, net of tax, related to other postretirement benefits liability adjustments were attributable to net actuarial losses and net prior service costs.

Losses reclassified from accumulated other comprehensive loss, net of tax — 744 (b) 744

December 31, 2021 $ — $ ( 4,611 ) $ ( 4,611 )

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

(b) Losses (gains), net of tax, related to other postretirement benefits liability adjustments were attributable to net actuarial losses/gains and net prior service costs.

Share-Based Compensation Plans

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Other programs, including non-employee director awards 3,171 2,155 2,257

Discontinued operations — — ( 18,250 )

Total share-based compensation expense (a) $ 47,507 $ 27,549 $ 38,143

(a) For the years ended December 31, 2020 and 2019 , share-based compensation expense of $ 2.1 million and $ 28.6 million, respectively, was included in other operating expenses related primarily to reorganization costs.

(a) For the years ended December 31, 2021, 2020 and 2019, share-based compensation expense of $ 4.7 million, $ 2.1 million and $ 28.6 million, respectively, was included in other operating expenses related primarily to reorganization costs.

The Company typically uses treasury stock to fund awards paid in stock, but the Company can elect to fund such awards by stock acquired by the Company in the open market or from any other person, issued directly by the Company or any combination of the foregoing.

There was no cash received from exercises under all share-based payment arrangements for employees and directors for the years ended December 31, 2021, 2020 and 2019.

During the years ended December 31, 2021, 2020 and 2019, share-based payment arrangements paid in stock generated tax benefits of $ 1.3 million, $ 1.0 million and $ 2.4 million, respectively.

In connection with the Separation in 2018, the Company transferred obligations related to then-outstanding share-based compensation awards to Equitrans Midstream.

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These awards were adjusted in accordance with the basket method, which resulted in participants retaining one unit of the existing Company incentive award and receiving an additional 0.80 units of an Equitrans Midstream-based award.

The Company recognizes compensation cost related to unvested awards held by its employees, regardless of who settles the obligation.

Upon vesting the Company is obligated to settle all outstanding share-based compensation awards denominated in the Company's equity, regardless of whether the holders are employees of the Company or Equitrans Midstream.

Likewise, upon vesting, Equitrans Midstream is obligated to settle all of the outstanding share-based compensation awards denominated in its equity, regardless of whether the holders are employees of Equitrans Midstream or the Company.

All awards subject to this adjustment were vested as of December 31, 2021.

The Company recognized compensation cost related to unvested awards held by its employees, regardless of who settles the obligation.

Upon vesting the Company was obligated to settle all outstanding share-based compensation awards denominated in the Company's equity, regardless of whether the holders were employees of the Company or Equitrans Midstream.

Likewise, upon vesting, Equitrans Midstream was obligated to settle all of the outstanding share-based compensation awards denominated in its equity, regardless of whether the holders were employees of Equitrans Midstream or the Company.

Changes in performance and number of outstanding awards can impact the ultimate amount of these obligations.

Share counts for awards discussed herein represent outstanding shares to be remitted by the Company to its employees and employees of Equitrans Midstream.

Share counts for awards discussed herein represent outstanding shares to be remitted by the Company to its employees and those remitted to employees of Equitrans Midstream.

When an award has graduated vesting, the Company records expense equal to the vesting percentage on the vesting date.

There was no cash received from exercises under all share-based payment arrangements for employees and directors for the years ended December 31, 2020 and 2019.

Cash received from exercises under all share-based payment arrangements for employees and directors for the year ended December 31, 2018 was $ 1.9 million.

During the years ended December 31, 2020, 2019 and 2018, share-based payment arrangements paid in stock generated tax benefits of $ 1.0 million, $ 2.4 million and $ 13.4 million, respectively.

Incentive Performance Share Unit Programs – Equity & Liability

The Management Development and Compensation Committee of the Company's Board of Directors (the Compensation Committee) has adopted the:

The Management Development and Compensation Committee of the Company's Board of Directors (the Compensation Committee) has adopted the following programs:

• 2017 Incentive Performance Share Unit Program (2017 Incentive PSU Program) under the 2014 Long-Term Incentive Plan (LTIP);

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The performance period for each of the awards under the Incentive PSU Programs is 36 months, with vesting occurring upon payment following the expiration of the performance period.

Executive performance incentive program awards granted in years 2016 and 2017 were earned based on:

Executive performance incentive program awards granted in year 2017 were earned based on:

• the level of total shareholder return relative to a predefined peer group;

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• return on capital employed.

Beginning in 2020, executive performance incentive program awards granted are earned based on:

Executive performance incentive program awards granted in year 2020 are earned based on:

• adjusted well costs;

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• the level of total shareholder return relative to a predefined peer group.

Prior to 2020, the payout factor varies between zero and 300 % of the number of outstanding units contingent upon the performance metrics listed above.

The 2020 Incentive PSU Program has a payout factor that ranges from zero to 150 %.

The Company recorded the 2016 Incentive PSU Program, 2020 Incentive PSU Program and the portion of the 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program to be settled in stock as equity awards using a grant date fair value determined through a Monte Carlo simulation, which projected the share price for the Company and its peers at the end point of the performance period.

Executive performance incentive program awards granted in year 2021 are earned based on:

• the level of absolute total shareholder return and total shareholder return relative to a predefined peer group.

Prior to 2020, the payout factor varied between zero and 300 % of the number of outstanding units contingent upon the performance metrics listed above.

The 2020 Incentive PSU Program has a payout factor that ranges from zero to 150 % and the 2021 Incentive PSU Program has a payout factor that ranges from zero to 200 %.

The Company recorded the 2020 Incentive PSU Program, the 2021 Incentive PSU Program and the portion of the 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program to be settled in stock as equity awards using a grant date fair value determined through a Monte Carlo simulation, which projected the share price for the Company and its peers at the end point of the performance period.

The 2017 Incentive PSU Program, 2018 Incentive PSU Program and 2019 Incentive PSU Program also included awards to be settled in cash, which are recorded at fair value as of the measurement date determined through a Monte Carlo simulation, which projected the share price for the Company and its peers at the end point of the performance period.

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Fair Value Aggregate Fair Value

Outstanding at January 1, 2018

Outstanding at December 31, 2018

536,014 $ 94.36 $ 50,579,160

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Vested ( 384,101 ) 96.30 ( 36,988,926 )

Forfeited ( 162,551 ) 93.55 ( 15,206,691 )

Outstanding at December 31, 2019

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Vested ( 44,573 ) 120.60 ( 5,375,504 )

Forfeited ( 7,190 ) 13.28 ( 95,483 )

Outstanding at December 31, 2020 1,939,728 15.92 30,873,634

615,293 44.27 27,236,775

Granted 922,260 23.44 21,617,038

Vested ( 107,340 ) 76.53 ( 8,214,730 )

Forfeited ( 7,190 ) 13.28 ( 95,483 )

Outstanding at December 31, 2021

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The following table summarizes Incentive PSU Programs to be settled in cash and classified as liability awards.

Incentive PSU Programs - Cash Settled Nonvested Shares (b) Weighted Average

Incentive PSU Programs – Cash Settled Nonvested Shares (a) Weighted Average

Fair Value Aggregate Fair Value

Outstanding at January 1, 2018

Outstanding at December 31, 2018

229,838 $ 96.67 $ 22,217,645

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452,410 60.19 27,231,670

Granted 255,920 29.45 7,536,844

Vested ( 93,359 ) 120.60 ( 11,259,095 )

Forfeited ( 19,356 ) 61.43 ( 1,189,050 )

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233,580 $ 29.32 $ 6,848,039

(b) For the year ended December 31, 2020, the Company settled total shares paid in cash of 40,018 for Equitrans Midstream employees.

Total capitalized compensation costs related to the Incentive PSU Programs for the years ended December 31, 2020, 2019, and 2018 were $ 0.9 million, $( 0.8 ) million, and $ 3.7 million.

As of December 31, 2020, $ 0.1 million, $ 0.8 million and $ 6.2 million of unrecognized compensation cost (assuming no changes to the performance condition achievement level) related to the 2019 Incentive PSU Program – Equity, 2019 Incentive PSU Program – Liability and 2020 Incentive PSU Program, respectively, was expected to be recognized over the remainder of the performance periods.

(a) For the years ended December 31, 2021 and 2020, the Company settled total shares paid in cash of 84,697 and 40,018 , respectively, for Equitrans Midstream employees.

Total capitalized compensation costs related to the Incentive PSU Programs for the years ended December 31, 2021 , 2020 and 2019 were $ 0.8 million, $ 0.9 million and $( 0.8 ) million, respectively.

As of December 31, 2021, $ 3.2 million and $ 14.9 million of unrecognized compensation cost (assuming no changes to the performance condition achievement level) related to the 2020 Incentive PSU Program and 2021 Incentive PSU Program, respectively, was expected to be recognized over the remainder of the performance periods.

Fair value is estimated using a Monte Carlo simulation valuation method with the following weighted average assumptions at grant date:

Incentive PSU Programs Issued During the Years Ended December 31,

2020 (a) 2019 2018 2017 2016

2021 (a) 2020 (b) 2019 2018 2017

Risk-free rate 0.18 % 1.22 % 2.44 % 1.97 % 1.47 %

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Expected term 3 years 3 years 3 years 3 years 3 years

(a) There were two grant dates for the 2021 Incentive PSU Program.

Amounts shown represent weighted average.

(b) There were three grant dates for the 2020 Incentive PSU Program.

Amounts shown represent weighted average.

Dividends paid from the beginning of the performance period will be cumulatively added as additional shares of common stock;

therefore, dividend yield is not applicable.

(a) There were three grant dates for the 2020 Incentive PSU Program.

Amounts shown represent weighted average.

Value Driver Performance Share Unit Award Programs

Historically, the Compensation Committee adopted the following programs, collectively referred to as the VDPSU Programs:

Historically, the Compensation Committee adopted the following programs:

• 2017 Value Driver Performance Share Unit Award Program (2017 EQT VDPSU Program) under the 2014 LTIP;

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Due to the graded vesting of each award under the VDPSU Programs, the Company recognized compensation cost over the requisite service period for each separately vesting tranche of the award as though each award was, in substance, multiple awards.

The payments were contingent upon adjusted earnings before interest, income taxes, depreciation and amortization performance as compared to the Company's annual business plan and individual,

business unit and Company value driver performance over the respective one-year periods.

The payments were contingent upon adjusted earnings before interest, income taxes, depreciation and amortization performance as compared to the Company's annual business plan and individual, business unit and Company value driver performance over the respective one-year periods.

The following table provides additional detailed information on each historical award.

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$ 56.92 $ 1.2 N/A

2019 (b) Liability $ 18.89 $ 1.7 N/A

2019 Liability $ 18.89 $ 1.7 N/A

$ 18.89 $ 1.7 N/A

(a) The 2017 EQT VDPSU Program and 2018 EQT VDPSU Program included 95,452 and 130,355 awards, respectively, for Equitrans Midstream employees that were settled by the Company.

(b) The total liability recorded for the 2019 EQT VDPSU Program was $ 1.7 million as of December 31, 2020.

The second tranche of the 2019 EQT VDPSU Program will be paid during the first quarter of 2021.

Total capitalized compensation costs related to the VDPSU Programs for the years ended December 31, 2020, 2019 and 2018 were $ 0.4 million, $ 2.5 million and $ 3.4 million, respectively.

Total capitalized compensation costs related to the VDPSU Programs for the years ended December 31, 2020 and 2019 was $ 0.4 million and $ 2.5 million, respectively.

There were no compensation costs related to the VDPSU Programs for the year ended December 31, 2021.

Restricted Stock Unit Awards – Equity

The Company granted 1,767,960 , 613,440 and 145,540 restricted stock unit equity awards to key employees of the Company during the years ended December 31, 2020, 2019 and 2018, respectively.

Awards granted in 2019 and 2018 will fully vest at the end of the three -year period commencing with the date of grant, assuming continued service through such date, while the 2020 awards are subject to a three-year graded vesting schedule, also assuming continued service through such date.

For the years ended December 31, 2020, 2019 and 2018, the weighted average fair value of these restricted stock grants, based on the grant date fair value of EQT common stock, was approximately $ 10.02 , $ 17.42 and $ 54.33 , respectively.

The total fair value of restricted stock awards vested during the years ended December 31, 2020, 2019 and 2018 was $ 3.2 million, $ 11.9 million and $ 39.8 million, respectively.

Total capitalized compensation costs related to the restricted stock unit equity awards was $ 3.0 million for the year ended December 31, 2020.

As of December 31, 2020, $ 9.3 million of unrecognized compensation cost related to nonvested restricted stock equity awards was expected to be recognized over a remaining weighted average vesting term of approximately 1.1 years.

The following table summarizes restricted stock equity award activity as of December 31, 2020.

The Company granted 1,980,230 , 1,767,960 and 613,440 restricted stock unit equity awards to employees of the Company during the years ended December 31, 2021, 2020 and 2019, respectively.

Awards granted in 2019 will fully vest at the end of the three-year period commencing with the date of grant, assuming continued service through such date, while the 2021 and 2020 awards are subject to a three-year graded vesting schedule, also assuming continued service through such date.

For the years ended December 31, 2021, 2020 and 2019, the weighted average fair value of these restricted stock unit grants, based on the grant date fair value of EQT common stock, was approximately $ 13.92 , $ 10.02 and $ 17.42 , respectively.

The total fair value of restricted stock unit equity awards vested during the years ended December 31, 2021, 2020 and 2019 was $ 8.6 million, $ 3.2 million and $ 11.9 million, respectively.

Total capitalized compensation costs related to the restricted stock unit equity awards was $ 6.7 million and $ 3.0 million for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, $ 13.7 million of unrecognized compensation cost related to nonvested restricted stock unit equity awards was expected to be recognized over a remaining weighted average vesting term of approximately 0.9 years.

The following table summarizes restricted stock unit equity award activity as of December 31, 2021.

Restricted Stock – Equity Settled Nonvested Shares (a) Weighted Average

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3,104,281 $ 12.58 $ 39,056,435

(a) Nonvested shares outstanding at December 31, 2020 includes 59,340 shares for an Equitrans Midstream employee that will be settled by the Company.

(a) Shares vested during the year ended December 31, 2021 included 59,340 shares for an Equitrans Midstream employee that was settled by the Company.

Restricted Stock Unit Awards – Liability

During the years ended December 31, 2019 and 2018, the Company granted 686,350 and 373,750 restricted stock unit liability awards, respectively, to key employees of the Company that will be paid in cash.

The Company did not grant restricted stock unit awards to be paid in cash during 2020.

During the year ended December 31, 2019, the Company granted 686,350 restricted stock unit liability awards, respectively, to key employees of the Company that will be paid in cash.

The Company did not grant restricted stock unit awards to be paid in cash during the years ended December 31, 2021 and 2020.

Adjusted for forfeitures, there were 417,265 awards outstanding as of December 31, 2021.

Because these awards are liability awards, the Company records compensation expense based on the fair value of the awards as remeasured at the end of each reporting period.

The restricted units granted will be fully vested at the end of the three-year period commencing with the date

of grant, assuming continued service through such date.

The total liability recorded for these restricted units was $ 4.5 million, $ 4.4 million and $ 6.9 million as of December 31, 2020, 2019 and 2018, respectively.

The restricted stock units granted will be fully vested at the end of the three-year period commencing with the date of grant, assuming continued service through such date.

The total liability recorded for these restricted stock units was $ 8.1 million, $ 4.5 million and $ 4.4 million as of December 31, 2021, 2020 and 2019, respectively.

Non-Qualified Stock Options

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The expected term represents the period of time that options granted are expected to be outstanding based on historical option exercise experience.

There were no stock options granted in 2021.

Years Ended December 31,

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Volatility factor 60.00 % 27.97 %

Expected term 4 years 5 years 5 years

Expected term 4 years 5 years

Number of Options Granted 1,000,000 779,300

Weighted Average Grant Date Fair Value $ 1.61 $ 5.31

Total Intrinsic Value of Options Exercised (Millions) $ — $ — $ —

(a) There were two grant dates for the 2019 options.

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As of December 31, 2021, $ 0.2 million of unrecognized compensation cost related to outstanding nonvested stock options was expected to be recognized by December 31, 2023.

The total intrinsic value of options exercised during the year ended December 31, 2021 was $ 0.2 million.

There were no stock option exercises in 2020 and 2019.

The following table summarizes option activity as of December 31, 2021.

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3,554,729 $ 23.20

Granted 1,000,000 10.00

Exercised ( 88,100 ) 18.89

Outstanding at December 31, 2021

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Treasury yield curve in effect at the reporting date.

The dividend yield is based on the dividend yield of EQT common stock at the reporting date, which is set at zero for the stock appreciation rights as the Company suspended future dividends during 2020.

Expected volatilities are based on a 50-50 blend of the expected term-matched historical volatility as of the valuation date and the weighted-average implied volatility from thirty

days prior to the valuation date.

The dividend yield is based on the dividend yield of EQT common stock at the reporting date, which is set at zero for the stock appreciation rights as the Company declared no dividends during 2021.

Expected volatilities are based on a 50-50 blend of the expected term-matched historical volatility as of the valuation date and the weighted-average implied volatility from thirty days prior to the valuation date.

The expected term represents the period of time between the valuation date and the midpoint of the exercise window.

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Weighted Average Grant Date Fair Value $ 2.61

Total Intrinsic Value of Exercises (Millions) $ —

Total Intrinsic Value of Exercises $ —

As of December 31, 2021, $ 4.0 million of unrecognized compensation cost related to outstanding stock appreciation rights was expected to be recognized by December 31, 2022.

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Outstanding at January 1, 2021

Granted 1,240,000 10.00

1,240,000 $ 10.00

Outstanding at December 31, 2021

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The weighted average fair value of these grants, based on the closing EQT common stock price on the business day prior to the grant date, was $ 17.49 , $ 13.46 and $ 18.11 for the years ended December 31, 2021, 2020 and 2019, respectively.

Subsequent Events - 2021 Awards

Effective in 2022, the Compensation Committee adopted the 2022 Incentive Performance Share Unit Program (2022 Incentive PSU Program) under the 2020 LTIP.

The 2022 Incentive PSU Program was established to align the interests of executives and key employees with the interests of shareholders and the strategic objectives of the Company.

A total of 922,260 units were granted under the 2021 Incentive PSU Program.

The payout of the stock units will vary between zero and 200 % of the number of outstanding units contingent upon a combination of the Company's absolute total shareholder return and total shareholder return relative to a predefined peer group over the period January 1, 2021 through December 31, 2023.

Effective in 2021, the Compensation Committee granted 1,889,510 restricted stock equity awards that will follow a three-year graded vesting schedule commencing with the date of grant, assuming continued employment.

The share total includes the newly instituted "equity-for-all" program, which granted equity awards to all permanent full-time employees beginning in 2021.

A total of 575,120 share units were granted under the 2022 Incentive PSU Program.

The payout of the share units will vary between zero and 200 % of the number of outstanding units contingent upon a combination of the Company's absolute total shareholder return and total shareholder return relative to a predefined peer group over the period January 1, 2022 through December 31, 2024, modified based on the Company's performance in achieving its objective of net zero Scope 1 and Scope 2 greenhouse gas emissions by 2025.

Effective in 2022, the Compensation Committee granted 1,248,120 restricted stock unit equity awards that will follow a three-year graded vesting schedule commencing with the date of grant, assuming continued employment.

The share total includes the instituted "equity-for-all" program, which granted equity awards to all permanent full-time employees beginning in 2021.

Concentrations of Credit Risk

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The Company also contracts with certain processors to market a portion of NGLs on behalf of the Company.

We do not depend on any single customer and believe that the loss of any one customer would not have an adverse effect on our ability to sell our natural gas, NGLs and oil.

The Company does not depend on any single customer and believes that the loss of any one customer would not have an adverse effect on the Company's ability to sell its natural gas, NGLs and oil.

Approximately 90 % and 86 % of the Company's accounts receivable balances as of December 31, 2021 and 2020, respectively, represent amounts due from non-end users.

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The Company monitors market conditions that may impact the fair value of its derivative contracts.

The Company primarily leases drilling rigs, other drilling equipment and facilities.

The Company leases drilling rigs, facilities, vehicles and drilling and compression equipment.

On January 1, 2019, in connection with the Company's adoption of ASU 2016-02, Leases , the Company recorded in its Consolidated Balance Sheet $ 89.0 million of right-of-use assets and lease liabilities representing the present value of the Company's right to use its leased assets and obligation to make lease payments on those leased assets, respectively.

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In addition, the Company elected a practical expedient to account for lease and nonlease components together as a lease.

Certain of the Company's lease contracts include variable lease payments, such as property taxes, other operating and maintenance expenses and payments based on asset use, which are not included in operating lease cost or the present value of the right-of-use asset or lease liability.

Certain of the Company's lease contracts include variable lease payments, such as payments for property taxes and other operating and maintenance expenses and payments based on asset use, which are not included in the lease cost or the present value of the right-of-use asset or lease liability.

Certain of the Company's lease contracts provide renewal periods at the Company's option;

if a renewal period option is reasonably assured to be exercised, the associated lease payment obligations are included in the present value of the right-of-use asset and lease liability.

if a renewal period option is reasonably assured to be exercised, the associated lease payment obligation is included in the present value of the right-of-use asset and lease liability.

As of December 31, 2021 and 2020, the Company was not a lessor.

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Years Ended December 31,

Operating lease costs $ 28,286 $ 57,517

Variable lease costs (a) 15,922 17,143

Total lease costs (b) $ 44,208 $ 74,660

(a) Includes short-term lease costs.

(b) For the years ended December 31, 2020 and 2019, includes drilling rig lease costs capitalized to property, plant and equipment of $ 29.9 million and $ 58.5 million, respectively, of which $ 19.9 million and $ 48.1 million, respectively, were operating lease costs.

During the fourth quarter of 2020, the Company recognized $ 22.8 million of right-of-use asset impairment in impairment of intangible and other assets in the Statement of Consolidated Operations as a result of the Company's assessment that the fair values of certain of the Company's right-of-use assets were less than their carrying values.

For the years ended December 31, 2020 and 2019, cash paid for lease liabilities and reported in cash flows provided by operating activities in the Statements of Consolidated Cash Flows was $ 10.4 million and $ 10.8 million, respectively.

During the years ended December 31, 2020 and 2019, the Company recorded $ 18.9 million and $ 24.3 million, respectively, of right-of-use assets in exchange for new lease liabilities.

2021 2020 2019

Operating and finance lease costs $ 19,826 $ 28,286 $ 57,517

Variable and short-term lease costs 11,516 15,922 17,143

Total lease costs (a) $ 31,342 $ 44,208 $ 74,660

(a) Includes drilling rig lease costs capitalized to property, plant and equipment of $ 22.1 million, $ 29.9 million and $ 58.5 million, respectively, of which $ 16.5 million, $ 19.9 million and $ 48.1 million, respectively, were operating lease costs.

For the years ended December 31, 2021, 2020 and 2019, cash paid for lease liabilities and reported in cash flows provided by operating activities in the Statements of Consolidated Cash Flows was $ 9.7 million, $ 10.4 million and $ 10.8 million, respectively.

For the year ended December 31, 2021, cash paid for lease liabilities and reported in cash flows provided by financing activities in the Statements of Consolidated Cash Flows was $ 1.1 million.

During the years ended December 31, 2021, 2020 and 2019, the Company recorded $ 20.8 million, $ 18.9 million and $ 24.3 million, respectively, of right-of-use assets in exchange for new lease liabilities.

As of December 31, 2021, 2020 and 2019, the weighted average remaining lease term was 2.6 years, 2.8 years and 3.3 years, respectively.

For the years ended December 31, 2021, 2020 and 2019, the weighted average discount rate was 2.9 %, 3.3 % and 3.3 %, respectively.

The Company records its right-of-use assets in other assets and the current and noncurrent portions of its lease liabilities in other current liabilities and other liabilities and credits , respectively, in the Consolidated Balance Sheets.

As of December 31, 2020 and 2019, right-of-use assets were $ 21.6 million and $ 52.2 million, respectively, and lease liabilities were $ 49.9 million and $ 59.0 million, respectively, of which $ 25.0 million and $ 29.0 million, respectively, were classified as current.

As of December 31, 2020 and 2019, the weighted average remaining lease term was 2.8 years and 3.3 years, respectively.

As of both December 31, 2020 and 2019, the weighted average discount rate was 3.3 %.

As of December 31, 2021 and 2020, total right-of-use assets were $ 26.1 million and $ 21.6 million, respectively, and total lease liabilities were $ 52.7 million and $ 49.9 million, respectively, of which $ 28.0 million and $ 25.0 million, respectively, were classified as current.

The following table summarizes the Company's lease payment obligations as of December 31, 2021.

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2022 $ 29,075

Thereafter 1,715

Total lease payment obligations 54,996

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Aggregate future payments for these items as of December 31, 2021 were $ 23.8 billion, composed of $ 1.7 billion in 2022, $ 1.8 billion in 2023, $ 1.8 billion in 2024, $ 1.8 billion in 2025, $ 1.7 billion in 2026 and $ 15.0 billion thereafter.

The Company also has commitments to purchase equipment, materials, frac sand for use as a proppant in its hydraulic fracturing operations and minimum volume commitments associated with certain water agreements.

As of December 31, 2020, future commitments under these contracts were $ 96.5 million in 2021 and $ 14.3 million in 2022.

In addition, the Company has commitments to pay for services and materials related to its operations, which primarily include minimum volume commitments to obtain water services and electric hydraulic fracturing services and commitments to purchase equipment, materials and sand.

As of December 31, 2021, future commitments under these contracts were $ 135.6 million in 2022, $ 99.0 million in 2023, $ 47.5 million in 2024, $ 40.0 million in 2025, $ 40.0 million in 2026 and $ 178.3 million thereafter.

See Note 15 for a summary of undiscounted future cash flows owed by the Company as lessee to lessors pursuant to contractual agreements in effect as of December 31, 2021.

Conditioned upon the credit ratings assigned by Moody's, S&P and Fitch to the Company's senior notes, counterparties to the Company's derivative and midstream services contracts may request additional assurances of the Company, including collateral.

See Note 3 for a discussion of what is deemed investment grade and other factors affecting margin deposit requirements on the

Company's derivative contracts as well as collateral posted as of December 31, 2020.

See Note 3 for a description of what is deemed investment grade and a discussion of other factors, aside from credit ratings, that may affect margin deposit requirements on the Company's derivative contracts.

See Note 10 for a discussion of letters of credit outstanding and surety bonds posted as of December 31, 2021.

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The following tables present total aggregate capitalized costs and costs incurred related to natural gas, NGLs and oil production activities.

Years Ended December 31,

2020 2019 2018

Capitalized costs

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Development 950,531 947,233 1,560,346

(a) Amounts exclude capital expenditures for facilities, information technology and other corporate items.

(b) Amounts in 2020 include $ 674.0 million and $ 6.5 million for the purchase of Marcellus and Utica wells, respectively, associated with the Chevron Acquisition.

Amounts in 2018 include $ 5.2 million and $ 9.2 million for the purchase of Marcellus and Utica wells, respectively, including the impact of measurement period adjustments for 2017 acquisitions.

(c) Amounts in 2020 include $ 38.9 million for the purchase of unproved properties associated with the Chevron Acquisition.

(a) Amounts exclude capital expenditures for facilities, information technology and other corporate items as well as the acquired midstream assets described in Note 6.

(b) Amounts in 2021 include $ 1,754.7 million and $ 450.0 million for Marcellus wells and leases, respectively, acquired in the Alta Acquisition and Reliance Asset Acquisition described in Note 6.

Amounts in 2020 include $ 674.0 million and $ 6.5 million for Marcellus and Utica wells, respectively, acquired in the Chevron Acquisition.

Amounts in 2020 include $ 38.9 million for unproved properties acquired in the Chevron Acquisition.

Results of Operations for Producing Activities

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Depreciation and depletion 1,676,702 1,393,465 1,538,745

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

(Gain) loss/impairment on sale/exchange of long-lived assets ( 21,124 ) 100,729 1,138,287

Impairment and expiration of leases 311,835 306,688 556,424

Income tax benefit ( 254,671 ) ( 340,843 ) ( 454,009 )

Income tax expense (benefit) 667,435 ( 254,671 ) ( 340,843 )

Results of operations from producing activities, excluding corporate overhead $ 1,977,325 $ ( 767,533 ) $ ( 1,014,959 )

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the price, heat content conversion rate and cost assumptions used in the economic model to determine the reserves are reviewed by management;

division of interest and production volumes are reconciled between the system used to calculate the reserves and other accounting/measurement systems;

division of interest and production volume are reconciled between the system used to calculate the reserves and other accounting/measurement systems;

the reserves reconciliation between prior year reserves and current year reserves is reviewed by senior management;

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In the course of its audit, NSAI conducted a detailed review of 100 % of the total net natural gas, NGLs and oil proved reserves attributable to the Company's interests as of December 31, 2021.

NSAI conducted a detailed, well-by-well audit of all the

Company's properties.

NSAI conducted a detailed, well-by-well audit of all the Company's properties.

The estimates prepared by the Company and audited by NSAI were within the recommended 10% tolerance threshold set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers (SPE Standards).

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All of the Company's proved reserves are located in the United States.

During 2020, the Company conducted a study of its reserves areas to determine the reliability of the technology used in calculating the Company's reserves.

This study demonstrated that technologies used in the course of the Company's reserves determination are reliable, provide reasonable certainty of future performance and economics of the Company's wells, and conform to booking practices when using reliable technologies.

The technologies used in the estimation of the Company's proved reserves include, but are not limited to, empirical evidence through drilling results and well performance, production data, decline curve analysis, well logs, geologic maps, core data, seismic data, demonstrated relationship between geologic parameters and performance, and the implementation and application of statistical analysis.

For all tables presented, NGLs and oil were converted at a rate of one Mbbl to approximately six million cubic feet (MMcf).

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• Extensions, discoveries and other additions of 3,104 Bcfe, which exceeded 2021 production of 1,858 Bcfe.

Extensions, discoveries and other additions included an increase of 2,096 Bcfe of proved undeveloped additions associated with acreage that was previously unproved but became proved using reliable technologies which expanded the number of our technically proven locations, 1,295 Bcfe due to additions associated with directly offsetting development, 31 Bcfe from extension of proved undeveloped reserves lateral lengths and 24 Bcfe from converting unproved reserves to proved developed reserves.

Extensions, discoveries and other additions included an increase of 2,828 Bcfe of proved undeveloped additions associated with acreage that was previously unproved but became proved due to 2021 reserve development that expanded the number of the Company's proven locations, implementation of, and alignment with, the Company's combo-development strategy and additions to the Company's five-year drilling plan, 52 Bcfe from extension of proved undeveloped reserves lateral lengths and 224 Bcfe from converting unproved reserves to proved developed reserves.

• Negative revisions of 819 Bcfe from proved undeveloped locations that are no longer expected to be developed within five years of initial booking as proved reserves as a result of revisions to the Company’s five-year drilling plan allowing for continued alignment with the Company’s combo-development strategy.

• Negative revisions to proved undeveloped locations of 62 Bcfe due primarily to changes in working interests and net revenue interest.

• Negative revisions of 31 Bcfe primarily from proved developed locations as a result of negative curve revisions.

• Positive revisions of 638 Bcfe from higher pricing that impacted well economics.

• Purchase of hydrocarbons in place of 4,187 Bcfe from the Alta Acquisition and Reliance Asset Acquisition described in Note 6 .

The change in reserves during the year ended December 31, 2020 resulted from the following:

• Conversions of 2,102 Bcfe of proved undeveloped reserves to proved developed reserves.

• Extensions, discoveries and other additions of 3,446 Bcfe, which exceeded 2020 production of 1,498 Bcfe.

Extensions, discoveries and other additions included an increase of 2,096 Bcfe of proved undeveloped additions associated with acreage that was previously unproved but became proved using reliable technologies which expanded the number of the Company's technically proven locations, 1,295 Bcfe due to additions associated with directly offsetting development, 31 Bcfe from extension of proved undeveloped reserves lateral lengths and 24 Bcfe from converting unproved reserves to proved developed reserves.

• Negative revisions of 510 Bcfe from proved undeveloped locations that are no longer expected to be developed within five years of initial booking as proved reserves as a result of revisions to the Company’s five-year drilling plan allowing for continued alignment with the Company’s combo-development strategy.

This includes 245 Bcfe from lower pricing that impacted well economics, shifting capital from the Ohio Utica, to Pennsylvania and West Virginia Marcellus, and 265 Bcfe as a result of continued implementation of the Company's combo-development strategy.

• Negative revisions of 384 Bcfe primarily from proved developed locations as a result of negative curve revisions in Ohio Utica.

• Negative revisions of 384 Bcfe primarily from proved developed locations as a result of negative curve revisions in the Ohio Utica.

• Positive revisions to proved undeveloped locations of 155 Bcfe due primarily to changes in working interests and net revenue interests as well as type curve updates.

• Purchase of hydrocarbons in place of 1,381 Bcfe due to the Chevron Acquisition described in Note 6 .

• Sale of hydrocarbons in place of 257 Bcfe due to the 2020 Divestitures described in Note 7.

• Purchase of hydrocarbons in place of 1,381 Bcfe from the Chevron Acquisition described in Note 6 .

• Sale of hydrocarbons in place of 257 Bcfe due to the 2020 Divestiture described in Note 8.

The change in reserves during the year ended December 31, 2019 resulted from the following:

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While these efforts are expected to result in decreased well costs, they negatively impact proved undeveloped reserves as a result of (i) derecognizing previously-recorded proved undeveloped reserves that are now outside the Company's substantially revised five-year capital allocation program for purposes of the Company's reserves calculations and (ii) executing new development sequencing processes that will result in increased probable-to-proved developed conversion.

The change in reserves during the year ended December 31, 2018 resulted from the following:

• Conversions of 2,722 Bcfe of proved undeveloped reserves to proved developed reserves.

• Extensions, discoveries and other additions of 4,739 Bcfe, which exceeded 2018 production of 1,495 Bcfe.

Extensions, discoveries and other additions included an increase of 315 Bcfe from proved developed reserves extensions from reservoirs underlying acreage not previously booked as proved in the Company's Ohio, Pennsylvania and West Virginia Marcellus fields;

886 Bcfe from proved undeveloped reserves extensions from acreage proved by drilling activity in the Company's Ohio, Pennsylvania and West Virginia Marcellus fields;

and 3,538 Bcfe from other proved undeveloped additions associated with acreage that was excluded from prior year proved reserves bookings, but subsequently became proved due to inclusion within the Company's five-year drilling plan.

• Negative revisions of 1,273 Bcfe from proved undeveloped locations that are no longer expected to be developed within five years of initial booking as proved reserves as a result of changes in the Company's future development plans to focus more heavily on developing the Company's core Pennsylvania assets.

• Upward revisions of 148 Bcfe from proved developed locations, due primarily to increased reserves from producing wells and improved commodity prices.

• Sale of hydrocarbons in place of 1,749 Bcfe due to the 2018 Divestitures described in Note 7.

Standard Measure of Discounted Future Cash Flow

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For 2021, reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 66.55 per Bbl for West Texas Intermediate (WTI) less regional adjustments of $ 14.98 per Bbl, or $ 51.57 per Bbl, and $ 3.598 per MMBtu for NYMEX less regional adjustments of $ 1.04 per MMBtu, or $ 2.694 per Mcf.

Regional adjustments were calculated using historical average realized prices received in the Appalachian Basin.

For 2021, NGLs pricing using average first-day-of-the-month closing prices for the prior twelve months for NGLs components, adjusted using the regional component makeup of proved NGLs, resulted in a price of $ 29.95 per Bbl.

For 2020, reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 39.54 per Bbl for WTI less regional adjustments of $ 18.60 per Bbl, or $ 20.94 per Bbl, and $ 1.985 per MMBtu for NYMEX less regional adjustments of $ 0.68 per MMBtu, or $ 1.38 per Mcf.

Regional adjustments were calculated using historical average realized prices received by the Company in the Appalachian Basin.

For 2020, NGL pricing using average first-day-of-the-month closing prices for the prior twelve months for NGL components, adjusted using the regional component makeup of proved NGLs, resulted in a price of $ 11.97 per Bbl.

For 2020, NGLs pricing using average first-day-of-the-month closing prices for the prior twelve months for NGLs components, adjusted using the regional component makeup of proved NGLs, resulted in a price of $ 11.97 per Bbl.

For 2019, reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 55.69 per Bbl for WTI less regional adjustments of $ 14.26 per Bbl, or $ 41.43 per Bbl, and $ 2.58 per MMBtu for NYMEX less regional adjustments of $ 0.29 per MMBtu, or $ 2.41 per Mcf.

Regional adjustments were calculated using historical average realized prices received by the Company in the Appalachian Basin.

For 2019, NGL pricing using average first-day-of-the-month closing prices for the prior twelve months for NGL components, adjusted using the regional component makeup of proved NGLs, resulted in a price of $ 16.81 per Bbl.

For 2018, reserves were computed using average first-day-of-the-month closing prices for the prior twelve months of $ 65.56 per Bbl for WTI less regional adjustments, $ 2.888 per Dth for Columbia Gas Transmission Corp., $ 2.568 per Dth for Dominion Transmission, Inc., $ 2.587 per Dth for Texas Eastern Transmission Corp., $ 2.320 per Dth for the Tennessee, zone 4-300 Leg of Tennessee Gas Pipeline Company and $ 2.939 per Dth for the Rockies Express Pipeline Zone 3.

For 2018, NGL pricing using average first-day-of-the-month closing prices for the prior twelve months for NGL components, adjusted using the regional component makeup of produced NGLs, resulted in prices of $ 21.93 per Bbl from certain West Virginia Marcellus reserves and $ 33.89 per Bbl from Ohio Utica reserves.

For 2019, NGLs pricing using average first-day-of-the-month closing prices for the prior twelve months for NGLs components, adjusted using the regional component makeup of proved NGLs, resulted in a price of $ 16.81 per Bbl.

(b) Includes approximately $ 1,937 million, $ 1,554 million and $ 1,186 million for future plugging and abandonment costs as of December 31, 2021, 2020 and 2019, respectively.

Holding production and development costs constant, an increase in price of $ 0.10 per Dth for natural gas, $ 10 per barrel for NGLs and $ 10 per barrel for oil would result in a change in the December 31, 2020 discounted future net cash flows before income taxes of the Company's proved reserves of approximately $ 929 million, $ 241 million and $ 630 million, respectively.

Holding production and development costs constant, an increase in NYMEX price of $ 0.10 per Dth for natural gas, an increase in WTI of $ 10 per barrel for NGLs and an increase in WTI of $ 10 per barrel for oil would result in a change in the December 31, 2021 discounted future net cash flows before income taxes of the Company's proved reserves of approximately $ 1,125 million, $ 430 million and $ 76 million, respectively.

The following table summarizes the changes in the standardized measure of discounted future net cash flows.

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Timing and other 51,639 105,383 130,861

Net (decrease) increase ( 5,126,215 ) ( 3,119,225 ) 2,609,964

Net increase (decrease) 13,914,666 ( 5,126,215 ) ( 3,119,225 )

Balance at January 1 3,366,458 8,492,673 11,611,898

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data