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Item 2. Management’s Discussion and Analysis

2022-07-28 compared with 2022-04-28 · 186 added, 90 removed, 239 unchanged (54% of the section changed)

3 unchanged sentences

CAUTIONARY STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended.

Statements that do not relate strictly to historical or current facts are forward-looking and are usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe" and other words of similar meaning, or the negative thereof, in connection with any discussion of future operating or financial matters.

49 unchanged sentences

Consolidated Results of Operations

Net loss attributable to EQT Corporation for the three months ended March 31, 2022 was $1,516.0 million, $4.05 per diluted share, compared to net loss attributable to EQT Corporation for the same period in 2021 of $37.4 million, $0.13 per diluted share.

The change was attributable primarily to the loss on derivatives not designated as hedges and, to a lesser extent, the impairment of our contract asset (discussed in Note 8 to the Condensed Consolidated Financial Statements), increased transportation and processing expense, increased depreciation and depletion and a loss from investments, partly offset by increased sales of natural gas, NGLs and oil and higher income tax benefit.

Results of operations for 2022 include the results of our operation of assets acquired from Alta Resources Development, LLC (the Alta Acquisition), which closed in July 2021.

Net income attributable to EQT Corporation for the three months ended June 30, 2022 was $891.4 million, $2.19 per diluted share, compared to net loss attributable to EQT Corporation for the same period in 2021 of $933.3 million, $3.34 per diluted share.

The change was attributable primarily to increased sales of natural gas, NGLs and oil and a smaller loss on derivatives, partly offset by income tax expense, increased loss on debt extinguishment and increased transmission and processing, depreciation and depletion and production expenses.

Net loss attributable to EQT Corporation for the six months ended June 30, 2022 was $624.7 million, $1.68 per diluted share, compared to net loss attributable to EQT Corporation for the same period in 2021 of $970.7 million, $3.48 per diluted share.

The change was attributable primarily to increased sales of natural gas, NGLs and oil, partly offset by a greater loss on derivatives, decreased income tax benefit, the impairment of our contract asset (discussed in Note 8 to the Condensed Consolidated Financial Statements), increased transportation and processing expense, increased loss on debt extinguishment and increased depreciation and depletion expense.

Results of operations for 2022 include the results of our operation of assets acquired in the Alta Acquisition (defined and discussed in Note 9 to the Condensed Consolidated Financial Statements), which closed in July 2021.

See "Sales Volume and Revenues" and "Operating Expenses" for discussions of items affecting operating income and "Other Income Statement Items" for a discussion of other income statement items.

7 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(Thousands, unless otherwise noted)

4 unchanged sentences

Basis ($/Mcf) (a) $ (0.88) $ (0.57) $ (0.56) $ (0.41)

Cash settled basis swaps not designated as hedges ($/Mcf) (0.21) (0.09)

Cash settled basis swaps ($/Mcf) 0.01 (0.02) (0.10) (0.05)

Average differential, including cash settled basis swaps ($/Mcf) $ (0.87) $ (0.59) $ (0.66) $ (0.46)

Average adjusted price ($/Mcf) $ 6.67 $ 2.41 $ 5.70 $ 2.45

Cash settled derivatives not designated as hedges ($/Mcf) (1.73) (0.01)

Cash settled derivatives ($/Mcf) (3.66) (0.13) (2.71) (0.07)

Average natural gas price, including cash settled derivatives ($/Mcf) $ 3.01 $ 2.28 $ 2.99 $ 2.38

3 unchanged sentences

Sales volume (Mbbl) 2,428 2,693 4,867 5,126

Price ($/Bbl) $ 64.05 $ 37.28

Cash settled derivatives not designated as hedges ($/Bbl) (4.85) (2.99)

Average price, including cash settled derivatives ($/Bbl) $ 59.20 $ 34.29

NGLs price ($/Bbl) $ 58.48 $ 34.83 $ 61.27 $ 36.00

Cash settled derivatives ($/Bbl) (4.67) (9.31) (4.76) (6.31)

Average NGLs price, including cash settled derivatives ($/Bbl) $ 53.81 $ 25.52 $ 56.51 $ 29.69

NGLs sales $ 130,641 $ 68,737 $ 275,022 $ 152,180

1 unchanged sentence

Sales volume (Mbbl) 1,461 1,301 3,101 2,732

Price ($/Bbl) $ 10.54 $ 6.66

Ethane price ($/Bbl) $ 17.70 $ 6.58 $ 13.92 $ 6.62

Ethane sales $ 25,865 $ 8,560 $ 43,154 $ 18,094

1 unchanged sentence

Sales volume (Mbbl) 243 394 521 678

Price ($/Bbl) $ 85.55 $ 61.98

Oil price ($/Bbl) $ 91.38 $ 56.18 $ 88.27 $ 58.61

Oil sales $ 22,206 $ 22,158 $ 45,962 $ 39,772

18 unchanged sentences

We believe that adjusted operating revenues provides useful information to investors for evaluating period-to-period comparisons of earnings trends.

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(Thousands, unless otherwise noted)

1 unchanged sentence

Add (deduct):

Loss on derivatives not designated as hedges 3,077,637 188,813

Net cash settlements paid on derivatives not designated as hedges (885,539) (38,140)

Premiums paid for derivatives that settled during the period (32,463) (9,726)

Loss on derivatives 845,095 1,345,532 3,922,732 1,534,345

Net cash settlements paid on derivatives (1,753,732) (71,441) (2,639,271) (109,581)

Premiums received (paid) for derivatives that settled during the period 251 (9,579) (32,212) (19,305)

Net marketing services and other (7,392) (7,512) (19,295) (15,297)

3 unchanged sentences

Sales Volume and Revenues

Three Months Ended March 31,

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended June 30,

2022 2021 Change % Change

4 unchanged sentences

Other 2,333 1,445 888 61.5

Total sales volume (a) 492,275 415,190 77,085 18.6

Total sales volume 501,517 420,595 80,922 19.2

Average daily sales volume (MMcfe/d) 5,511 4,622 889 19.2

1 unchanged sentence

Sales of natural gas, NGLs and oil $ 3,365,211 $ 1,077,904 $ 2,287,307 212.2

Loss on derivatives not designated as hedges (3,077,637) (188,813) (2,888,824) 1,530.0

Loss on derivatives (845,095) (1,345,532) 500,437 (37.2)

Net marketing services and other 7,392 7,512 (120) (1.6)

Total operating revenues $ 2,527,508 $ (260,116) $ 2,787,624 (1,071.7)

(a) NGLs, ethane and oil were converted to Mcfe at a rate of six Mcfe per barrel.

EQT CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Sales of natural gas, NGLs and oil.

Sales of natural gas, NGLs and oil increased for the three months ended March 31, 2022 compared to the same period in 2021 due to a higher average realized price and increased sales volume.

Average realized price for the three months ended March 31, 2022 compared to the same period in 2021 increased due to higher NYMEX prices and higher liquids prices, partly offset by unfavorable cash settled derivatives and unfavorable differential.

For the three months ended March 31, 2022 and 2021, we paid $885.5 million and $38.1 million, respectively, of net cash settlements on derivatives not designated as hedges, which are included in average realized price but may not be included in operating revenues.

Sales of natural gas, NGLs and oil increased for the three months ended June 30, 2022 compared to the same period in 2021 due to a higher average realized price and increased sales volume.

Average realized price for the three months ended June 30, 2022 compared to the same period in 2021 increased due to higher NYMEX prices and higher liquids prices, partly offset by unfavorable cash settled derivatives and unfavorable differential.

For the three months ended June 30, 2022 and 2021, we paid $1,753.7 million and $71.4 million, respectively, of net cash settlements on derivatives, which are included in average realized price but may not be included in operating revenues.

Sales volume increased primarily as a result of sales volume increases from the assets acquired in the Alta Acquisition.

Loss on derivatives not designated as hedges.

For the three months ended March 31, 2022 and 2021, we recognized a loss on derivatives not designated as hedges of $3,077.6 million and $188.8 million, respectively.

The losses were related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices.

Loss on derivatives.

For the three months ended June 30, 2022 and 2021, we recognized a loss on derivatives of $845.1 million and $1,345.5 million, respectively.

The loss on derivatives for 2022 related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX prices.

The loss on derivatives for 2021 related primarily to increases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Six Months Ended June 30,

2022 2021 Change % Change

(Thousands, unless otherwise noted)

Sales volume by shale (MMcfe):

Marcellus 921,142 749,057 172,085 23.0

Ohio Utica 67,675 83,963 (16,288) (19.4)

Other 4,975 2,765 2,210 79.9

Total sales volume 993,792 835,785 158,007 18.9

Average daily sales volume (MMcfe/d) 5,491 4,618 873 18.9

Operating revenues:

Sales of natural gas, NGLs and oil $ 5,851,835 $ 2,208,855 $ 3,642,980 164.9

Loss on derivatives (3,922,732) (1,534,345) (2,388,387) 155.7

Net marketing services and other 19,295 15,297 3,998 26.1

Net marketing services and other increased for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to third-party gathering revenues recognized on the midstream assets acquired in the Alta Acquisition.

Total operating revenues $ 1,948,398 $ 689,807 $ 1,258,591 182.5

Sales of natural gas, NGLs and oil.

Sales of natural gas, NGLs and oil increased for the six months ended June 30, 2022 compared to the same period in 2021 due to a higher average realized price and increased sales volume.

Average realized price for the six months ended June 30, 2022 compared to the same period in 2021 increased due to higher NYMEX prices and higher liquids prices, partly offset by unfavorable cash settled derivatives and unfavorable differential.

For the six months ended June 30, 2022 and 2021, we paid $2,639.3 million and $109.6 million, respectively, of net cash settlements on derivatives, which are included in average realized price but may not be included in operating revenues.

Sales volume increased primarily as a result of sales volume increases from the assets acquired in the Alta Acquisition.

Loss on derivatives.

For the six months ended June 30, 2022 and 2021, we recognized a loss on derivatives of $3,922.7 million and $1,534.3 million, respectively.

The loss on derivatives for 2022 related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices.

The loss on derivatives for 2021 related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices.

EQT CORPORATION AND SUBSIDIARIES

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

Operating Expenses

The following table presents information on our production-related operating expenses.

Three Months Ended March 31,

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended June 30,

2022 2021 Change % Change

20 unchanged sentences

Production depletion 0.85 0.90 (0.05) (5.6)

Gathering expense increased on an absolute basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to increased sales volume from the assets acquired in the Alta Acquisition and higher gathering rates on certain contracts indexed to Appalachian Basin prices.

Gathering expense remained flat on a per Mcfe basis for the three months ended June 30, 2022 compared to the same period in 2021 due to a lower gathering rate structure on the assets acquired in the Alta Acquisition, offset primarily by increased gathering rates on contracts indexed to price.

Transmission.

Transmission expense increased on an absolute basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to additional capacity acquired as part of the Alta Acquisition, higher rates on the Texas Eastern Transmission Pipeline and additional capacity acquired on the Rockies Express Pipeline in the third quarter of 2021.

Transmission expense decreased on a per Mcfe basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to increased sales volume from the Alta Acquisition, which has a lower average transmission expense per Mcfe when compared to our historical transmission portfolio.

Processing expense increased on an absolute basis for the three months ended June 30, 2022 compared to the same period in 2021 due to increased liquid sales volume as a result of increased development of liquids-rich areas.

Processing expense decreased on a per Mcfe basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to increased sales volume.

LOE increased on an absolute basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to higher salt water disposal costs and additional lease operating costs as a result of the Alta Acquisition.

LOE increased on a per Mcfe basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to higher salt water disposal costs.

EQT CORPORATION AND SUBSIDIARIES

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

Gathering expense increased on an absolute basis for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to increased sales volume from the assets acquired in the Alta Acquisition and higher gathering rates on certain contracts indexed to price.

Gathering expense decreased on a per Mcfe basis for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to the lower gathering rate structure on the assets acquired in the Alta Acquisition.

Production taxes.

Production taxes increased on an absolute and per Mcfe basis for the three months ended June 30, 2022 compared to the same period in 2021 due to increased West Virginia severance taxes, which resulted primarily from higher prices, and increased Pennsylvania impact fees, which resulted from the additional wells acquired in the Alta Acquisition, higher prices and inflation.

Selling, general and administrative.

Selling, general and administrative expense increased on an absolute basis for the three months ended June 30, 2022 compared to the same period in 2021 due primarily to higher long-term incentive compensation costs as a result of changes in the fair value of awards.

Long-term incentive compensation may fluctuate with changes in our stock price and performance conditions.

Depreciation and depletion.

Production depletion expense increased on an absolute basis for the three months ended June 30, 2022 compared to the same period in 2021 due to increased sales volume, partly offset by a lower annual depletion rate.

Production depletion expense decreased on a per Mcfe basis for the three months ended June 30, 2022 compared to the same period in 2021 due to a lower annual depletion rate.

Gain on sale/exchange of long-lived assets.

During the three months ended June 30, 2021, we recognized a gain on sale of long-lived assets of $16.8 million related primarily to changes in the fair value of the Contingent Consideration from the 2020 Divestiture (defined and discussed in Note 3 to the Condensed Consolidated Financial Statements).

Impairment and expiration of leases.

During the three months ended June 30, 2022 and 2021, we recognized impairment and expiration of leases of $47.0 million and $25.6 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

EQT CORPORATION AND SUBSIDIARIES

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

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Six Months Ended June 30,

2022 2021 Change % Change

(Thousands, unless otherwise noted)

Operating expenses:

Gathering $ 659,629 $ 566,766 $ 92,863 16.4

Transmission 296,489 255,107 41,382 16.2

Transmission expense increased on an absolute basis for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to additional capacity acquired as part of the Alta Acquisition, lower credits received from and higher rates on the Texas Eastern Transmission Pipeline and additional capacity acquired on the Rockies Express Pipeline in the third quarter of 2021.

Processing expense increased on an absolute basis for the three months ended March 31, 2022 compared to the same period in 2021 due to increased liquid sales volume as a result of increased development of liquids-rich areas throughout 2021.

LOE increased on an absolute and per Mcfe basis for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to additional lease operating costs as a result of the Alta Acquisition.

Processing 99,690 87,927 11,763 13.4

LOE 82,643 52,566 30,077 57.2

Production taxes 70,925 42,210 28,715 68.0

Production taxes increased on an absolute and per Mcfe basis for the three months ended March 31, 2022 compared to the same period in 2021 due to increased West Virginia severance taxes, which resulted primarily from higher prices, and increased Pennsylvania impact fees, which resulted from the additional wells acquired in the Alta Acquisition, higher prices and inflation.

Exploration 2,513 2,728 (215) (7.9)

Selling, general and administrative 128,372 94,859 33,513 35.3

Selling, general and administrative expense increased on an absolute and per Mcfe basis for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to higher long-term incentive compensation costs as a result of changes in the fair value of awards and higher litigation expense.

Production depletion $ 840,860 $ 749,821 $ 91,039 12.1

Other depreciation and depletion 10,381 7,583 2,798 36.9

Total depreciation and depletion $ 851,241 $ 757,404 $ 93,837 12.4

Per Unit ($/Mcfe):

$ 0.66 $ 0.68 $ (0.02) (2.9)

0.30 0.31 (0.01) (3.2)

0.10 0.11 (0.01) (9.1)

LOE 0.08 0.06 0.02 33.3

Production taxes

0.07 0.05 0.02 40.0

Selling, general and administrative 0.13 0.11 0.02 18.2

Production depletion 0.85 0.90 (0.05) (5.6)

Gathering expense increased on an absolute basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to increased sales volume from the assets acquired in the Alta Acquisition and higher gathering rates on certain contracts indexed to Appalachian Basin prices.

Gathering expense decreased on a per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to the lower gathering rate structure on the assets acquired in the Alta Acquisition.

Transmission.

Transmission expense increased on an absolute basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to additional capacity acquired as part of the Alta Acquisition, higher rates on and lower credits received from the Texas Eastern Transmission Pipeline and additional capacity acquired on the Rockies Express Pipeline in the third quarter of 2021.

Transmission expense decreased on a per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to increased sales volume from the Alta Acquisition, which has a lower average transmission expense per Mcfe when compared to our historical transmission portfolio.

Processing expense increased on an absolute basis for the six months ended June 30, 2022 compared to the same period in 2021 due to increased liquid sales volume as a result of increased development of liquids-rich areas.

Processing expense decreased on a per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to increased sales volume.

LOE increased on an absolute basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to higher salt water disposal costs and additional lease operating costs as a result of the Alta Acquisition.

LOE increased on a per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to higher salt water disposal costs.

EQT CORPORATION AND SUBSIDIARIES

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

Production taxes.

Production taxes increased on an absolute and per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due to increased West Virginia severance taxes, which resulted primarily from higher prices, and increased Pennsylvania impact fees, which resulted from the additional wells acquired in the Alta Acquisition, higher prices and inflation.

Selling, general and administrative.

Selling, general and administrative expense increased on an absolute and per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due primarily to higher long-term incentive compensation costs as a result of changes in the fair value of awards and higher litigation expense.

Long-term incentive compensation may fluctuate with changes in our stock price and performance conditions.

Depreciation and depletion.

Production depletion expense increased on an absolute basis for the three months ended March 31, 2022 compared to the same period in 2021 due to increased sales volume, partly offset by a lower annual depletion rate.

Production depletion expense decreased on a per Mcfe basis for the three months ended March 31, 2022 compared to the same period in 2021 due to a lower annual depletion rate.

Production depletion expense increased on an absolute basis for the six months ended June 30, 2022 compared to the same period in 2021 due to increased sales volume, partly offset by a lower annual depletion rate.

Production depletion expense decreased on a per Mcfe basis for the six months ended June 30, 2022 compared to the same period in 2021 due to a lower annual depletion rate.

Gain on sale/exchange of long-lived assets.

During the six months ended June 30, 2021, we recognized a gain on sale of long-lived assets of $18.0 million related primarily to changes in the fair value of the Contingent Consideration from the 2020 Divestiture.

Impairment of contract asset.

During the three months ended March 31, 2022, we recognized impairment of our contract asset of $184.9 million.

During the six months ended June 30, 2022, we recognized impairment of our contract asset of $184.9 million.

See Note 8 to the Condensed Consolidated Financial Statements.

Impairment and expiration of leases.

During the three months ended March 31, 2022 and 2021, we recognized impairment and expiration of leases of $30.0 million and $16.8 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

During the six months ended June 30, 2022 and 2021, we recognized impairment and expiration of leases of $77.0 million and $42.4 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Other operating expenses.

Other operating expenses for the three months ended March 31, 2022 of $16.3 million were attributable primarily to changes in legal reserves, including settlements.

Other operating expenses for the three months ended March 31, 2021 of $9.4 million were attributable primarily to transaction costs associated with our acquisition of upstream assets from Chevron U.S.A.

and changes in legal reserves, including settlements.

Other operating expenses for the six months ended June 30, 2022 of $23.5 million were attributable primarily to changes in legal and environmental reserves.

Other operating expenses for the six months ended June 30, 2021 of $14.7 million were attributable primarily to transaction costs associated with our acquisition of upstream assets from Chevron U.S.A.

in November 2020 and the Alta Acquisition as well as changes in legal reserves.

Other Income Statement Items

Loss (income) from investments.

For the three months ended March 31, 2022, we recognized a loss from investments due primarily to a loss on our investment in Equitrans Midstream, which resulted from a decrease in Equitrans Midstream's stock price to $8.44 as of March 31, 2022 from $10.34 as of December 31, 2021, partly offset by a gain on our investment in the Investment Fund (defined in Note 4 to the Condensed Consolidated Financial Statements) and equity earnings on our investment in Laurel Mountain Midstream LLC.

For the three months ended March 31, 2021, we recognized gains on our investments in the Investment Fund and Equitrans Midstream.

(Income) loss from investments.

For the three months ended June 30, 2022, we recognized income from investments due primarily to equity earnings on our equity method investments.

For the six months ended June 30, 2022, we recognized a loss from investments due primarily to a loss on our sale of our investment in Equitrans Midstream, which resulted from a decrease in Equitrans Midstream's stock price to $8.65 as of April 20, 2022, the date of the final sale of our investment, from $10.34 as of December 31, 2021, partly offset by a gain on our investment in the Investment Fund (defined in Note 4 to the Condensed Consolidated Financial Statements) and equity earnings on our equity method investments.

For the three and six months ended June 30, 2021, we recognized income on our investments in Equitrans Midstream and the Investment Fund.

Dividend and other income .

Dividend and other income increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 due primarily to dividends received on the Investment Fund, partly offset by decreased dividends received on our investment in Equitrans Midstream, which was fully disposed of in April 2022.

Loss on debt extinguishment.

During the three months ended March 31, 2022, we recognized a loss on debt extinguishment of $6.9 million due to the repayment of our 3.00% senior notes.

During the three months ended March 31, 2021, we recognized a loss on debt extinguishment of $4.4 million due to the repayment of our 4.875% senior notes.

During the three and six months ended June 30, 2022, we recognized a loss on debt extinguishment of $104.3 million and $111.3 million, respectively, due primarily to the repayment and repurchases of our Convertible Notes (defined and discussed in Note 6 to the Condensed Consolidated Financial Statements).

During the three and six months ended June 30, 2021, we recognized a loss on debt extinguishment of $5.3 million and $9.8 million, respectively, due to fees incurred for a bridge-loan commitment related to the Alta Acquisition and the repayment of our 4.875% senior notes.

See Note 6 to the Condensed Consolidated Financial Statements.

EQT CORPORATION AND SUBSIDIARIES

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

Interest expense.

Interest expense decreased for the three months ended March 31, 2022 compared to the same period in 2021 due primarily to reduced interest expense on letters of credit and lower borrowings under our credit facility.

Interest expense decreased for the three and six months ended June 30, 2022 compared to the same periods in 2021 due primarily to reduced interest expense on letters of credit and our senior notes, partly offset by increased interest expense due primarily to higher borrowings under our credit facility.

See Note 6 to the Condensed Consolidated Financial Statements.

Income tax benefit.

Income tax expense (benefit).

See Note 5 to the Condensed Consolidated Financial Statements.

EQT CORPORATION AND SUBSIDIARIES

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

Capital Resources and Liquidity

1 unchanged sentence

Planned Capital Expenditures and Sales Volume .

In 2022, we expect to spend approximately $1.30 to $1.45 billion in total capital expenditures, excluding amounts attributable to noncontrolling interest.

In 2022, we expect to spend approximately $1.4 billion to $1.5 billion in total capital expenditures, excluding amounts attributable to noncontrolling interest.

We expect to fund our capital expenditures with cash generated from operations and, if required, borrowings under our credit facility.

6 unchanged sentences

Operating Activities.

Net cash provided by operating activities was $1,021 million for the three months ended March 31, 2022 compared to $400 million for the same period in 2021.

The increase was due primarily to higher cash operating revenues and favorable timing of working capital payments, partly offset by net cash settlements paid on derivatives not designated as hedges and higher cash operating expenses.

Net cash provided by operating activities was $1,252 million for the six months ended June 30, 2022 compared to $443 million for the same period in 2021.

The increase was due primarily to higher cash operating revenues, partly offset by net cash settlements paid on derivatives, higher cash operating expenses and unfavorable changes in working capital due to higher natural gas prices as well as unfavorable timing of working capital payments.

Our cash flows from operating activities are affected by movements in the market price for commodities.

We are unable to predict such movements outside of the current market view as reflected in forward strip pricing.

Refer to Item 1A., "Risk Factors – Natural gas, NGLs and oil price volatility, or a prolonged period of low natural gas, NGLs and oil prices, may have an adverse effect on our revenue, profitability, future rate of growth, liquidity and financial position" in our Annual Report on For m 10-K for the year ended December 31, 2021.

Investing Activities.

Net cash used in investing activities was $291 million for the three months ended March 31, 2022 compared to $248 million for the same period in 2021.

The increase was due to increased capital expenditures.

Net cash used in investing activities was $508 million for the six months ended June 30, 2022 compared to $675 million for the same period in 2021.

The decrease was due to cash paid for acquisitions in 2021 and proceeds from the sale of our remaining investment in Equitrans Midstream common stock, partly offset by increased capital expenditures.

The following table summarizes our capital expenditures.

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Reserve development $ 297 $ 178 $ 526 $ 367

3 unchanged sentences

Other production infrastructure 19 19 32 24

Other 2 — 3 4

Total capital expenditures 376 246 686 484

(Deduct) add:

Add (deduct):

Non-cash items (b) 17 (27) (1) (14)

Total cash capital expenditures $ 393 $ 219 $ 685 $ 470

(a) Capital expenditures attributable to noncontrolling interest were $1.9 million and $1.3 million for the three months ended March 31, 2022 and 2021, respectively.

EQT CORPORATION AND SUBSIDIARIES

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

(a) Capital expenditures attributable to noncontrolling interest were $2.5 million and $3.8 million for the three months ended June 30, 2022 and 2021, respectively, and $4.4 million and $5.1 million for the six months ended June 30, 2022 and 2021, respectively.

(b) Represents the net impact of non-cash capital expenditures, including the effect of timing of receivables from working interest partners, accrued capital expenditures and capitalized share-based compensation costs.

The impact of accrued capital expenditures includes the current period estimate, net of the reversal of the prior period accrual.

EQT CORPORATION AND SUBSIDIARIES

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

Financing Activities.

Net cash used in financing activities was $827 million for the three months ended March 31, 2022 compared to $130 million for the same period in 2021.

For the three months ended March 31, 2022, the primary use of financing cash flows was repayment and retirement of debt, repurchase and retirement of EQT common stock and payment of dividends, and the primary source of financing cash flows was net proceeds from credit facility borrowings.

For the three months ended March 31, 2021, the primary use of financing cash flows was net repayments of debt.

Net cash used in financing activities was $814 million for the six months ended June 30, 2022 compared to net cash provided by financing activities of $544 million for the same period in 2021.

For the six months ended June 30, 2022, the primary uses of financing cash flows were repayment and retirement of debt, repurchase and retirement of EQT common stock and payment of dividends, and the primary source of financing cash flows was net proceeds from credit facility borrowings.

For the six months ended June 30, 2021, the primary source of financing cash flows was net proceeds from the issuance of debt, and the primary uses of financing cash flows were net repayments of credit facility borrowings and debt.

See Note 6 to the Condensed Consolidated Financial Statements for further discussion of our debt and borrowings under our credit facility.

On April 20, 2022, our Board of Directors declared a quarterly cash dividend of $0.125 per share of EQT common stock, payable on June 1, 2022, to shareholders of record at the close of business on May 11, 2022.

During April 2022, we sold the remaining balance of our Equitrans Midstream common stock for net proceeds of approximately $189 million.

Depending on our actual and anticipated sources and uses of liquidity, prevailing market conditions and other factors, we may from time to time seek to redeem or repurchase our outstanding debt or equity securities through cash purchases in the open market or privately negotiated transactions.

On July 20, 2022, our Board of Directors declared a quarterly cash dividend of $0.15 per share of EQT common stock, payable on September 1, 2022, to shareholders of record at the close of business on August 9, 2022.

On July 8, 2022, we delivered notice to Equitrans Midstream that we have elected to exercise the Cash Payment Option (defined and discussed in Note 8 to the Condensed Consolidated Financial Statements).

Depending on our actual and anticipated sources and uses of liquidity, prevailing market conditions and other factors, we may from time to time seek to redeem or repurchase our outstanding debt or equity securities through tender offers or other cash purchases in the open market or privately negotiated transactions.

The amounts involved in any such transactions may be material.

See Note 6 to the Condensed Consolidated Financial Statements for discussion of redemptions and repurchases of debt.

Security Ratings and Financing Triggers

The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as of April 22, 2022.

The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as of July 22, 2022.

Our credit ratings and rating outlooks are subject to revision or withdrawal at any time by the assigning rating agency, and each rating should be evaluated independent from any other rating.

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Rating agency Senior notes Outlook

Moody's Investors Service (Moody's) Ba1 Stable

Moody's Investors Service (Moody's) Ba1 Positive

Standard & Poor's Ratings Service (S&P) BBB– Stable

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

As of April 22, 2022, we had sufficient unused borrowing capacity, net of letters of credit, under our credit facility to satisfy any requests for margin deposit or other collateral that our counterparties are permitted to request of us pursuant to our OTC derivative instruments, midstream services contracts and other contracts.

As of April 22, 2022, such assurances could be up to approximately $1.0 billion, inclusive of letters of credit, OTC derivative instrument margin deposits and other collateral posted of approximately $0.8 billion in the aggregate.

As of July 22, 2022, we had sufficient unused borrowing capacity, net of letters of credit, under our credit facility to satisfy any requests for margin deposit or other collateral that our counterparties are permitted to request of us pursuant to our OTC derivative instruments, midstream services contracts and other contracts.

As of July 22, 2022, such assurances could be up to approximately $0.9 billion, inclusive of letters of credit, OTC derivative instrument margin deposits and other collateral posted of approximately $0.5 billion in the aggregate.

See Notes 3 and 6 to the Condensed Consolidated Financial Statements for further information.

EQT CORPORATION AND SUBSIDIARIES

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

Our debt agreements and other financial obligations contain various provisions that, if not complied with, could result in default or event of default under our credit facility, mandatory partial or full repayment of amounts outstanding, reduced loan capacity or other similar actions.

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Our credit facility contains financial covenants that require us to have a total debt to total capitalization ratio no greater than 65%.

The calculation of this ratio excludes the effects of accumulated other comprehensive loss.

As of March 31, 2022, we were in compliance with all debt provisions and covenants under our debt agreements.

As of June 30, 2022, we were in compliance with all debt provisions and covenants under our debt agreements.

EQT CORPORATION AND SUBSIDIARIES

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

See Note 6 to the Condensed Consolidated Financial Statements for a discussion of borrowings under our credit facility.

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The derivative commodity instruments that we use are primarily swap, collar and option agreements.

The following table summarizes the approximate volume and prices of our NYMEX hedge positions as of April 22, 2022.

The following table summarizes the approximate volume and prices of our NYMEX hedge positions as of July 22, 2022.

The difference between the fixed price and NYMEX price is included in average differential presented in our price reconciliation in "Average Realized Price Reconciliation." The fixed price natural gas sales agreements can be physically or financially settled.

Q2 2022 (a) Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2024

Q3 2022 (a) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2024

Hedged Volume (MMDth) 272 284 216 258 261 225 17

Hedged Volume (MMDth/d) 3.0 3.1 2.4 2.8 2.8 2.4 —

Swaps, including Futures

Volume (MMDth) 125 157 41 41 42 14 —

Price ($/Dth) $ 4.86 $ 5.59 $ 6.05 $ 4.77 $ 4.77 $ 4.77 $ —

Calls – Net Short

Swaps – Short

Volume (MMDth) 362 332 41 41 42 42 2

Short Strike ($/Dth) $ 3.00 $ 3.05 $ 3.02 $ 8.07 $ 4.16 $ 4.16 $ 4.18 $ 3.11

Puts – Net Long

Price ($/Dth) $ 2.93 $ 2.88 $ 2.53 $ 2.53 $ 2.53 $ 2.53 $ 2.67

Volume (MMDth) 42 36 40 40 40 40 51

Long Strike ($/Dth) $ 2.78 $ 2.68 $ 2.68 $ 3.77 $ 2.73 $ 2.73 $ 2.85 $ 2.45

Strike ($/Dth) $ 3.79 $ 2.79 $ 2.72 $ 2.72 $ 2.72 $ 2.72 $ 3.20

Calls – Short

Volume (MMDth) 145 195 202 274 277 182 66

Strike ($/Dth) $ 3.33 $ 5.39 $ 8.07 $ 4.48 $ 4.48 $ 4.34 $ 3.11

Volume (MMDth) 71 119 215 257 260 197 15

Strike ($/Dth) $ 3.11 $ 4.82 $ 4.04 $ 3.06 $ 3.06 $ 3.08 $ 2.45

Volume (MMDth) 37 11 — — — — —

Strike ($/Dth) $ 3.12 $ 2.35 $ — $ — $ — $ — $ —

Fixed Price Sales

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Price ($/Dth) $ 2.38 $ 3.47 $ 4.09 $ 2.38 $ 2.38 $ — $ —

(a) April 1 through June 30 .

For 2022 (April 1 through December 31), 2023 and 2024, we have natural gas sales agreements for approximately 14 MMDth, 88 MMDth and 11 MMDth, respectively, that include average NYMEX ceiling prices of $3.17, $2.84 and $3.21, respectively.

We entered into 455 MMDth per day of NYMEX swaps at a weighted average price of $6.05 that offset existing NYMEX swaps related to the first quarter of 2023 with a weighted average price of $2.53.

These positions have been excluded from the table above.

We have also entered into derivative instruments to hedge basis.

We may use other contractual agreements to implement our commodity hedging strategy from time to time.

Option Premiums

Cash Settlement of Deferred Premiums (millions) $ — $ — $ (61) $ (42) $ (42) $ (45) $ —

(a) July 1 through September 30 .

EQT CORPORATION AND SUBSIDIARIES

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

For 2022 (July 1 through December 31), 2023 and 2024, we have natural gas sales agreements for approximately 9 MMDth, 88 MMDth and 11 MMDth, respectively, that include average NYMEX ceiling prices of $3.17, $2.84 and $3.21, respectively.

We have also entered into derivative instruments to hedge basis.

We may use other contractual agreements to implement our commodity hedging strategy from time to time.

See Item 3., "Quantitative and Qualitative Disclosures About Market Risk" and Note 3 to the Condensed Consolidated Financial Statements for further discussion of our hedging program.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis