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Item 1. Financial Statements

2023-04-27 compared with 2022-10-27 · 131 added, 306 removed, 349 unchanged (56% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(Thousands, except per share amounts)

1 unchanged sentence

Sales of natural gas, natural gas liquids and oil $ 1,830,358 $ 2,486,624

Loss on derivatives ( 1,627,296 ) ( 3,257,237 ) ( 5,550,028 ) ( 4,791,582 )

Gain (loss) on derivatives 824,852 ( 3,077,637 )

Net marketing services and other 5,861 11,903

6 unchanged sentences

Depreciation and depletion 387,685 422,098

Gain on sale/exchange of long-lived assets ( 265 ) ( 391 ) ( 2,455 ) ( 18,414 )

Loss (gain) on sale/exchange of long-lived assets 16,528 ( 1,209 )

Impairment of contract asset — 184,945

5 unchanged sentences

Dividend and other income ( 175 ) ( 3,596 )

Loss on debt extinguishment 27,814 — 139,085 9,756

Interest expense 60,138 75,509 194,025 218,236

(Gain) loss on debt extinguishment ( 6,606 ) 6,923

Interest expense, net 46,546 67,902

Income (loss) before income taxes 1,575,879 ( 1,980,280 )

5 unchanged sentences

Weighted average common stock outstanding 361,462 374,142

Net income (loss) $ 1.85 $ ( 5.54 ) $ 0.16 $ ( 9.67 )

Net income (loss) attributable to EQT Corporation $ 3.37 $ ( 4.05 )

Diluted (Note 7):

Weighted average common stock outstanding 393,883 374,142

Net income (loss) $ 1.69 $ ( 5.54 ) $ 0.16 $ ( 9.67 )

Net income (loss) attributable to EQT Corporation $ 3.10 $ ( 4.05 )

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

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income (loss) $ 1,219,233 $ ( 1,514,583 )

2 unchanged sentences

$ 15 and $ 20

63 37 190 198

Comprehensive income (loss) 1,219,397 ( 1,514,520 )

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets:

9 unchanged sentences

Net property, plant and equipment 18,233,700 18,167,333

Contract asset 29,250 410,000

Other assets 507,200 488,152

17 unchanged sentences

9,776,392 9,891,890

Treasury stock, shares at cost:

( 579 ) ( 18,046 )

Accumulated deficit ( 299,577 ) ( 94,400 )

Retained earnings 2,338,572 1,283,578

Accumulated other comprehensive loss ( 2,830 ) ( 2,994 )

6 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

1 unchanged sentence

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

Deferred income tax benefit ( 14,229 ) ( 1,020,094 )

Deferred income tax expense (benefit) 356,618 ( 473,557 )

Depreciation and depletion 387,685 422,098

Impairments of long-lived assets and gain on sale/exchange of long-lived assets 280,026 65,086

Loss (income) from investments 14,331 ( 66,861 )

Loss on debt extinguishment 139,085 9,756

Impairments of long-lived assets and loss (gain) on sale/exchange of long-lived assets 27,074 213,727

(Income) loss from investments ( 4,764 ) 20,785

(Gain) loss on debt extinguishment ( 6,606 ) 6,923

Share-based compensation expense 11,276 7,470

Distribution of earnings from equity method investments 5,456 2,790

Amortization, accretion and other 3,888 10,389

Loss on derivatives 5,550,028 4,791,582

Net cash settlements paid on derivatives ( 4,672,998 ) ( 729,445 )

Net premiums received (paid) on derivative instruments 13,809 ( 53,429 )

(Gain) loss on derivatives ( 824,852 ) 3,077,637

Net cash settlements received (paid) on derivatives 157,000 ( 885,539 )

Net premiums (paid) received on derivative instruments ( 94,916 ) 372

Changes in other assets and liabilities:

6 unchanged sentences

Capital expenditures ( 494,784 ) ( 292,281 )

Deposit on acquisition ( 150,000 ) —

Cash paid for acquisitions — ( 1,021,510 )

Proceeds from sale/exchange of assets 5,394 —

Proceeds from sale of investment shares 189,249 —

Other investing activities ( 3,542 ) 1,109

3 unchanged sentences

Repayment of credit facility borrowings — ( 2,695,000 )

Proceeds from issuance of debt — 1,000,000

Debt issuance costs ( 17,852 ) ( 19,713 )

Repayment and retirement of debt ( 211,429 ) ( 570,174 )

Premiums paid on debt extinguishment ( 135,248 ) ( 9,599 )

Discounts received (premiums paid) on debt extinguishment 7,981 ( 6,240 )

Dividends paid ( 54,070 ) ( 47,063 )

Cash paid for taxes related to net settlement of share-based incentive awards ( 24,193 ) ( 3,805 )

Proceeds from exercises under employee compensation plans 15,505 —

Repurchase and retirement of common stock ( 201,029 ) ( 216,491 )

Net contribution from noncontrolling interest 4,050 3,750

Distribution to noncontrolling interest, net of contributions ( 85 ) ( 341 )

Other financing activities ( 37,192 ) ( 12,788 )

Net cash (used in) provided by financing activities ( 1,411,042 ) 1,227,938

Net cash used in financing activities ( 495,824 ) ( 827,097 )

Net change in cash and cash equivalents 668,618 ( 97,050 )

5 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)

Shares No Par Value Treasury Stock Retained Earnings

(Accumulated Deficit) Accumulated Other

Shares No Par Value Treasury Stock (Accumulated Deficit) Retained Earnings Accumulated Other

Comprehensive Loss (a) Noncontrolling Interest in

1 unchanged sentence

(Thousands, except per share amounts)

Balance at July 1, 2021 278,858 $ 8,149,607 $ ( 20,084 ) $ 85,939 $ ( 5,194 ) $ 10,664 $ 8,220,932

Balance at January 1, 2022 376,399 $ 10,071,820 $ ( 18,046 ) $ ( 94,400 ) $ ( 4,611 ) $ 16,236 $ 9,970,999

Comprehensive loss, net of tax:

1 unchanged sentence

Other postretirement benefits liability adjustment, net of tax expense:

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

Alta Acquisition (Note 9) 98,789 1,925,405 1,925,405

Balance at September 30, 2021 377,752 $ 10,084,507 $ ( 18,202 ) $ ( 1,890,873 ) $ ( 5,157 ) $ 11,265 $ 8,181,540

Balance at July 1, 2022 369,720 $ 9,948,646 $ ( 2,848 ) $ ( 880,127 ) $ ( 4,484 ) $ 28,903 $ 9,090,090

Comprehensive income, net of tax:

Net income 683,670 3,792 687,462

Other postretirement benefits liability adjustment, net of tax expense:

Dividends ($ 0.125 per share)

1 unchanged sentence

Share-based compensation plans 1,207 ( 18,220 ) 15,198 ( 3,022 )

Convertible Notes settlements (Note 6) 1 10 10

Convertible Notes settlements 1 8 8

Repurchase and retirement of common stock ( 8,533 ) ( 132,260 ) ( 67,768 ) ( 200,028 )

Distribution to noncontrolling interest ( 341 ) ( 341 )

Contribution from noncontrolling interest 11,250 11,250

Balance at September 30, 2022 368,162 $ 9,923,539 $ ( 579 ) $ ( 299,577 ) $ ( 4,421 ) $ 39,639 $ 9,658,601

Common shares authorized:

Preferred shares authorized:

There were no preferred shares issued or outstanding.

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

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

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)

Shares No Par Value Treasury Stock Retained Earnings

(Accumulated Deficit) Accumulated Other

Comprehensive Loss (a) Noncontrolling Interest in

Consolidated Subsidiaries Total Equity

(Thousands, except per share amounts)

Balance at January 1, 2021 278,345 $ 8,145,539 $ ( 29,348 ) $ 1,056,626 $ ( 5,355 ) $ 7,490 $ 9,174,952

Comprehensive loss, net of tax:

Net (loss) income ( 2,947,499 ) 25 ( 2,947,474 )

Other postretirement benefits liability adjustment, net of tax expense:

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

Contribution from noncontrolling interest 3,750 3,750

Alta Acquisition (Note 9) 98,789 1,925,405 1,925,405

Balance at September 30, 2021 377,752 $ 10,084,507 $ ( 18,202 ) $ ( 1,890,873 ) $ ( 5,157 ) $ 11,265 $ 8,181,540

Balance at March 31, 2022 369,074 $ 9,921,348 $ ( 2,848 ) $ ( 1,725,279 ) $ ( 4,548 ) $ 17,360 $ 8,206,033

Balance at January 1, 2023 365,363 $ 9,891,890 $ — $ 1,283,578 $ ( 2,994 ) $ 40,854 $ 11,213,328

5 unchanged sentences

Share-based compensation plans 2,127 ( 24,023 ) ( 24,023 )

Convertible Notes settlements (Note 6) 3 48 48

Convertible Notes settlements 2 70 70

Repurchase and retirement of common stock ( 5,906 ) ( 91,545 ) ( 109,484 ) ( 201,029 )

1 unchanged sentence

Contribution from noncontrolling interest 3,750 3,750

Other 11,233 11,233

Balance at September 30, 2022 368,162 $ 9,923,539 $ ( 579 ) $ ( 299,577 ) $ ( 4,421 ) $ 39,639 $ 9,658,601

Balance at March 31, 2023 361,586 $ 9,776,392 $ — $ 2,338,572 $ ( 2,830 ) $ 41,454 $ 12,153,588

Common shares authorized:

8 unchanged sentences

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

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of September 30, 2022 and December 31, 2021, the results of its operations and equity for the three and nine month periods ended September 30, 2022 and 2021 and its cash flows for the nine month periods ended September 30, 2022 and 2021.

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of March 31, 2023 and December 31, 2022, the results of its operations, its equity and its cash flows for the three month periods ended March 31, 2023 and 2022.

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

In this Quarterly Report on Form 10-Q, references to "EQT," "EQT Corporation" and "the Company" refer collectively to EQT Corporation and its consolidated subsidiaries.

These financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Issued Accounting Standards

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging:

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity .

This ASU simplifies accounting for convertible instruments by removing certain separation models for convertible instruments.

For convertible instruments with conversion features that are not accounted for as derivatives under Accounting Standards Codification 815 or that do not result in substantial premiums accounted for as paid-in capital, the convertible instrument's embedded conversion features are no longer separated from the host contract.

Consequently, and as long as no other feature requires bifurcation and recognition as a derivative, the convertible instrument is accounted for as a single liability measured at its amortized cost.

Under ASU 2020-06, entities are required to use the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS).

The if-converted method assumes share settlement of the instrument, which increases the number of potentially dilutive securities used to calculate diluted EPS.

This ASU also adds several new disclosure requirements.

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

The following tables present the impact of the adoption of ASU 2020-06 on the Company's previously reported historical results.

See Note 6 for discussion of the Convertible Notes (defined in Note 6).

Three Months Ended September 30, 2021

As Reported ASU 2020-06 Adoption Adjustment As Adjusted

(Thousands, except per share amounts)

Interest expense $ 80,349 $ ( 4,840 ) $ 75,509

Income tax benefit ( 662,915 ) 1,535 ( 661,380 )

Net loss ( 1,979,516 ) 3,305 ( 1,976,211 )

Net income attributable to noncontrolling interest 601 — 601

Net loss attributable to EQT Corporation $ ( 1,980,117 ) $ 3,305 $ ( 1,976,812 )

Basic and diluted:

Weighted average common stock outstanding (a) 356,792 — 356,792

Loss per share of common stock attributable to EQT Corporation $ ( 5.55 ) $ 0.01 $ ( 5.54 )

(a) For the three months ended September 30, 2021, diluted weighted average common stock outstanding did not change because the potentially dilutive securities had an anti-dilutive effect on loss per share.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Nine Months Ended September 30, 2021

As Reported ASU 2020-06 Adoption Adjustment As Adjusted

(Thousands, except per share amounts)

Interest expense $ 232,434 $ ( 14,198 ) $ 218,236

Income tax benefit ( 1,025,255 ) 4,605 ( 1,020,650 )

Net loss ( 2,957,067 ) 9,593 ( 2,947,474 )

Net income attributable to noncontrolling interest 25 — 25

Net loss attributable to EQT Corporation $ ( 2,957,092 ) $ 9,593 $ ( 2,947,499 )

Basic and diluted:

Weighted average common stock outstanding (a) 304,961 — 304,961

Loss per share of common stock attributable to EQT Corporation $ ( 9.70 ) $ 0.03 $ ( 9.67 )

(a) For the nine months ended September 30, 2021, diluted weighted average common stock outstanding did not change because the potentially dilutive securities had an anti-dilutive effect on loss per share.

December 31, 2021

As Reported ASU 2020-06 Adoption Adjustment As Adjusted

Current portion of debt (a) $ 954,900 $ 106,070 $ 1,060,970

Deferred income taxes 938,612 ( 31,306 ) 907,306

Common stock, no par value 10,167,963 ( 96,143 ) 10,071,820

Accumulated deficit ( 115,779 ) 21,379 ( 94,400 )

(a) Pursuant to the terms of the Convertible Notes indenture, a sale price condition for conversion of the Convertible Notes was satisfied as of December 31, 2021, and, accordingly, holders of the Convertible Notes were permitted to convert any of their Convertible Notes at their option at any time during the three months ended 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 Convertible Notes was included in current portion of debt in the Consolidated Balance Sheet.

Certain line items in the Statement of Condensed Consolidated Cash Flows for the nine months ended September 30, 2021 were adjusted to reflect the impact of the adoption of ASU 2020-06;

however, the adoption did not impact cash and did not change net cash provided by operating, investing or financing activities.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

In this Quarterly Report on Form 10-Q, references to "EQT" and "the Company" refer collectively to EQT Corporation and its consolidated subsidiaries.

The Condensed Consolidated Balance Sheet at December 31, 2022 has been derived from the audited financial statements at that date.

For further information, refer to the Consolidated Financial Statements and accompanying notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Supplemental Cash Flow Information .

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

Nine Months Ended September 30,

Three Months Ended March 31,

Cash paid during the period for:

4 unchanged sentences

Capitalization of non-cash equity share-based compensation 1,362 1,033

Increase in right-of-use assets and lease liabilities, net 1,651 1,091

Issuance of common stock for Convertible Notes settlements (Note 6) 48 —

Equity issued as consideration for acquisition (Note 9) — 1,925,405

Issuance of common stock for Convertible Notes settlement (Note 6) 70 8

Revenue from Contracts with Customers

9 unchanged sentences

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

For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $ 1,486.8 million and $ 1,093.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

$ 448.2 million and $ 1,171.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively.

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

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

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

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

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Revenues from contracts with customers:

4 unchanged sentences

Other sources of revenue:

Loss on derivatives ( 1,627,296 ) ( 3,257,237 ) ( 5,550,028 ) ( 4,791,582 )

Gain (loss) on derivatives 824,852 ( 3,077,637 )

Net marketing services and other 5,861 11,903

Total operating revenues $ 2,661,071 $ ( 579,110 )

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of September 30, 2022.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of September 30, 2022.

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of March 31, 2023.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of March 31, 2023.

2023 (a) 2024 Total

Natural gas sales $ 10,268 $ 469 $ 10,737

(a) October 1 through December 31.

(a) April 1 through December 31.

Derivative Instruments

8 unchanged sentences

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

therefore, all changes in fair value of the Company's derivative instruments are recognized in operating revenues in loss on derivatives in the Statements of Condensed Consolidated Operations.

therefore, all changes in fair value of the Company's derivative instruments are recognized in operating revenues in gain (loss) on derivatives in the Statements of Condensed Consolidated Operations.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on a gross basis.

1 unchanged sentence

The Company can net settle its derivative instruments at any time.

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

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

1 unchanged sentence

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

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of its expected sales of production and portions of its basis exposure covering approximately 1,587 billion cubic feet (Bcf) of natural gas and 1,517 thousand barrels (Mbbl) of NGLs as of September 30, 2022 and 2,184 Bcf of natural gas and 3,055 Mbbl of NGLs as of December 31, 2021.

The open positions at both September 30, 2022 and December 31, 2021 had maturities extending through December 2027.

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 1,556 billion cubic feet (Bcf) of natural gas and 2,079 thousand barrels (Mbbl) of NGLs as of March 31, 2023 and 1,424 Bcf of natural gas and 1,483 Mbbl of NGLs as of December 31, 2022.

The open positions at both March 31, 2023 and December 31, 2022 had maturities extending through December 2027.

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

5 unchanged sentences

Anything below these ratings is considered non-investment grade.

As of September 30, 2022, the Company's senior notes were rated "Ba1" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

As of March 31, 2023, the Company's senior notes were rated "Ba1" by Moody's, "BBB–" by S&P and "BBB–" 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 Condensed Consolidated Balance Sheets.

As of September 30, 2022 and December 31, 2021, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 679.5 million and $ 594.9 million, respectively, for which the Company deposited and recorded current assets of $ 142.7 million and $ 0.1 million, respectively.

As of March 31, 2023 and December 31, 2022, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 90.8 million and $ 347.6 million, respectively, for which the Company deposited and recorded current assets of zero for both periods.

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

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

As of both September 30, 2022 and December 31, 2021, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

As of both March 31, 2023 and December 31, 2022, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

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

5 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the Company recorded $ 45.2 million and $ 147.7 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

As of March 31, 2023 and December 31, 2022, the Company recorded $ 181.8 million and $ 100.6 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

EQT CORPORATION AND SUBSIDIARIES

4 unchanged sentences

master netting agreements Margin requirements with counterparties Net derivative instruments

September 30, 2022

March 31, 2023

Asset derivative instruments, at fair value $ 978,351 $ ( 505,796 ) $ — $ 472,555

3 unchanged sentences

Liability derivative instruments, at fair value 1,393,487 ( 756,495 ) ( 100,623 ) 536,369

The Consolidated GGA (defined in Note 8) executed in connection with the Equitrans Share Exchange (defined in Note 8) provides for additional cash bonus payments (the Henry Hub Cash Bonus) payable by the Company 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.

As of September 30, 2022 and December 31, 2021, the derivative liability related to the Henry Hub Cash Bonus had a fair value of approximately $ 53 million and $ 111 million, respectively.

The fair value of the derivative liability related to the Henry Hub Cash Bonus 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.

During the second quarter of 2020, the Company closed a transaction to sell certain non-strategic assets located in Pennsylvania and West Virginia (the 2020 Divestiture), the purchase and sale agreement for which, among other things, provides for additional cash bonus payments (the Contingent Consideration) payable to the Company of up to $ 20 million, conditioned upon the three-month average of the NYMEX Henry Hub natural gas settlement price relative to stated floor and target price thresholds beginning on August 31, 2020 and ending on November 30, 2022.

As of September 30, 2022 and December 31, 2021, the derivative asset related to the Contingent Consideration had a fair value of approximately $ 2.0 million and $ 8.2 million, respectively.

During the nine months ended September 30, 2022 and 2021, the Company received cash from the Contingent Consideration of $ 6.5 million and $ 5.6 million, respectively.

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

The fair value of the derivative asset related to 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.

Fair Value Measurements

7 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Exchange traded commodity swaps have Level 1 inputs.

2 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

4 unchanged sentences

(Level 2) Significant unobservable inputs

September 30, 2022

March 31, 2023

Asset derivative instruments, at fair value $ 978,351 $ 40,259 $ 938,092 $ —

4 unchanged sentences

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

The December 31, 2021 carrying value of the Company's investment in Equitrans Midstream Corporation (Equitrans Midstream) approximates fair value as Equitrans Midstream is a publicly traded company.

In April 2022, the Company sold the remaining balance of its Equitrans Midstream common stock for net proceeds of approximately $ 189 million.

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 carrying value of any borrowings under the Company's credit facility and Term Loan Facility (defined in Note 6) approximates fair value as the interest rates are based on prevailing market rates.

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

3 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the Company's senior notes had a fair value of approximately $ 5.2 billion and $ 6.5 billion, respectively, and a carrying value of approximately $ 4.7 billion and $ 5.5 billion, respectively, inclusive of any current portion.

As of March 31, 2023 and December 31, 2022, the Company's senior notes had a fair value of approximately $ 5.8 billion and $ 6.1 billion, respectively, and a carrying value of approximately $ 5.4 billion and $ 5.6 billion, respectively, inclusive of any current portion.

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

As of September 30, 2022 and December 31, 2021, the Company's note payable to EQM had a fair value of approximately $ 96 million and $ 118 million, respectively, and a carrying value of approximately $ 96 million and $ 100 million, respectively, inclusive of any current portion.

As of March 31, 2023 and December 31, 2022, the Company's note payable to EQM had a fair value of approximately $ 96 million and $ 96 million, respectively, and a carrying value of approximately $ 93 million and $ 94 million, respectively, inclusive of any current portion.

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

1 unchanged sentence

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

See Note 3 for a discussion of the fair value measurement of the derivative liability recorded in connection with the Equitrans Share Exchange and the embedded derivative recorded in connection with the 2020 Divestiture.

See Note 8 for a discussion of the fair value measurement of the contract asset.

See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the fair value measurement of the Company's oil and gas properties and other long-lived assets, including impairment and expiration of leases.

For the three months ended March 31, 2023 and 2022, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the three months ended March 31, 2023.

For the three months ended March 31, 2023 and 2022, the Company recorded income tax expense (benefit) at an effective tax rate of 22.6 % and 23.5 %, respectively.

The Company's effective tax rate was higher compared to the U.S.

federal statutory rate due primarily to state taxes, including valuation allowances limiting certain state tax benefits.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the nine months ended September 30, 2022 and 2021, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the nine months ended September 30, 2022.

For the nine months ended September 30, 2022 and 2021, the Company recorded income tax benefit at an effective tax rate of ( 8.5 )% and 25.7 %, respectively.

The Company's effective tax rate for the nine months ended September 30, 2022 was lower compared to the U.S.

federal statutory rate due primarily to a reduction to deferred state taxes from the Pennsylvania law change enacted on July 8, 2022 that lowered the corporate net income tax rate from 9.99% to 8.99% in 2023 and by 0.5% thereafter until the corporate net income tax rate reaches 4.99% in 2031, partly offset by nondeductible repurchase premiums on the Convertible Notes.

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

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

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA).

The IRA establishes a 15% corporate alternative minimum tax for certain corporations and a 1% excise tax on stock repurchases made by publicly traded U.S.

corporations.

The IRA also includes new and renewed options for energy credits.

These changes are effective for tax years beginning after December 31, 2022.

The Company is evaluating the impact these changes will have on its financial statements and disclosures.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the IRA) which is effective for tax years beginning after December 31, 2022.

The IRA establishes a 15% corporate alternative minimum tax for certain corporations which is not applicable to the Company for 2023 in accordance with the safe harbor provided in IRS Notice 2023-7.

The IRA also includes a 1% excise tax on stock repurchases made by publicly traded U.S.

corporations and includes new and renewed options for energy credits.

These changes do not have a significant impact on the Company's financial statements and disclosures.

The Company intends to maintain a valuation allowance on certain of its state net operating loss deferred tax assets (DTAs) until there is sufficient evidence to support a reversal of all or a portion of such allowance.

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The exact timing and amount of the valuation allowance release would be subject to change based on the level of profitability that the Company can achieve.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below summarizes the Company's outstanding debt.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Principal Value Carrying Value (a) Principal Value Carrying Value (a)

Senior notes:

3.00 % notes due October 1, 2022

$ — $ — $ 568,823 $ 567,909

7.42 % series B notes due 2023

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901,521 898,650 911,467 908,168

5.678 % notes due October 1, 2025

500,000 496,899 500,000 496,578

1.75 % convertible notes due May 1, 2026

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1,169,503 1,164,610 1,233,008 1,227,582

5.700 % notes due April 1, 2028

500,000 494,230 500,000 493,941

5.00 % notes due January 15, 2029

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(b) Interest rates for this tranche of the Company's senior 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.

(c) As of September 30, 2022, the current portion of debt includes the 7.42 % series B notes, the 1.75 % convertible notes and a portion of the note payable to EQM.

As of December 31, 2021, the current portion of debt includes the 3.00 % notes, the 1.75 % convertible notes and a portion of the note payable to EQM.

Interest rates on the Company's other outstanding senior notes do not fluctuate.

(c) As of March 31, 2023, the current portion of debt includes the 1.75 % convertible notes and a portion of the note payable to EQM.

As of December 31, 2022, the current portion of debt includes the 7.42 % series B notes, the 1.75 % convertible notes and a portion of the note payable to EQM.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Debt Repayments .

The Company redeemed or repurchased the following debt during the nine months ended September 30, 2022.

The Company redeemed or repurchased the following debt during the three months ended March 31, 2023.

Debt Tranche Principal Premiums/(Discounts) Accrued but Unpaid Interest Total Cost

3.00 % notes due October 1, 2022

$ 568,823 $ 5,546 $ 7,150 $ 581,519

6.125 % notes due February 1, 2025

$ 9,946 $ 86 $ 268 $ 10,300

1.75 % convertible notes due May 1, 2026

85,096 127,906 250 213,252

3.125 % notes due May 15, 2026

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30,000 ( 4,011 ) 167 26,156

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Total $ 200,000 $ ( 8,074 ) $ 2,962 $ 194,888

Credit Facility .

The Company has a $ 2.5 billion credit facility.

On June 28, 2022, the Company entered into the Third Amended and Restated Credit Agreement (the Third Amendment) with the lenders party thereto and PNC Bank, National Association, as administrative agent, swing line lender and L/C issuer, amending and restating the Second Amended and Restated Credit Agreement, dated as of July 31, 2017 (the Credit Agreement).

The Third Amendment, among other things, (i) extends the maturity date of the commitments and loans under the Credit Agreement to June 28, 2027 and provides, at the Company's option, two one-year extensions thereafter, subject to the approval of the lenders, (ii) allows for commitment increases of up to $ 500 million, subject to the agreement of the Company and new or existing lenders and (iii) allows for Base Rate Loans, Term SOFR Rate Loans and Swing Line Loans (each defined in the Third Amendment).

The Company had approximately $ 27 million and $ 440 million of letters of credit outstanding under its credit facility as of September 30, 2022 and December 31, 2021, respectively.

Under the Company's credit facility, for the three months ended September 30, 2022 and 2021, the maximum amount of outstanding borrowings was $ 1,216 million and $ 1,652 million, respectively, the average daily balances were approximately $ 717 million and $ 813 million, respectively, and interest was incurred at a weighted average annual interest rate of 3.8 % and 1.9 %, respectively.

Under the Company's credit facility, for the nine months ended September 30, 2022 and 2021, the maximum amount of outstanding borrowings was $ 1,300 million and $ 1,652 million, respectively, the average daily balances were approximately $ 624 million and $ 525 million, respectively, and interest was incurred at a weighted average annual interest rate of 2.8 % and 2.0 %, respectively.

3.125 % Senior Notes and 3.625 % Senior Notes.

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

After deducting offering costs of $ 15.6 million, net proceeds from the sale of the notes of $ 984.4 million were used to partly fund the Alta Acquisition (defined in Note 9).

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

however, 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.

The Company has a $ 2.5 billion credit facility that matures in June 2027.

As of both March 31, 2023 and December 31, 2022, the Company had approximately $ 25 million of letters of credit outstanding under its credit facility.

During the three months ended March 31, 2023, there were no borrowings under the Company's credit facility.

During the three months ended March 31, 2022, under the Company's credit facility, the maximum amount of outstanding borrowings was $ 615 million, the average daily balance was approximately $ 306 million and interest was incurred at a weighted average annual interest rate of 2.0 %.

Term Loan Facility .

The Company has an unsecured term loan facility (the Term Loan Facility) with aggregate lender commitments thereunder in the principal amount of $ 1.25 billion to partially finance the pending Tug Hill and XcL Midstream Acquisition as defined and described in Note 6 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

As of March 31, 2023 and December 31, 2022, all commitments under the Term Loan Facility remained undrawn.

On April 25, 2023, the Company extended the commitments under the Term Loan Facility to December 29, 2023 to better align with the Tug Hill and XcL Midstream Acquisition purchase agreement.

Prior to such extension, any unfunded commitments under the Term Loan Facility were scheduled to expire on June 30, 2023.

Convertible Notes .

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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 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;

• during any quarter as long as the last reported price of EQT Corporation 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 Corporation common stock and the conversion rate for the Convertible Notes on each such trading day;

• if the Company calls any or all of the Convertible Notes for redemption at any time prior to the close of business on the second scheduled trading day immediately preceding such redemption date;

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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.

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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

The initial conversion price represents a premium of 20 % to the $ 12.50 per share closing price of EQT common stock on April 23, 2020.

The conversion rate is subject to adjustment under certain circumstances.

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 Corporation 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.

As a result of the cash dividend the Company paid on its common stock in the first quarter of 2023, effective February 17, 2023, the conversion rate for the Convertible Notes was adjusted to 68.0740 shares of EQT Corporation common stock per $1,000 principal amount of the Convertible Notes.

Future dividend payments by the Company will result in further adjustments to the conversion rate.

The conversion rate is subject to adjustment under certain other circumstances.

In addition, following certain corporate events that occur prior to May 1, 2026 or if the Company delivers notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or notice of redemption.

As a result of the cash dividend the Company paid on its common stock in the first quarter of 2022, effective February 11, 2022, the conversion rate for the Convertible Notes was adjusted to 67.0535 shares of EQT common stock per $1,000 principal amount of the Convertible Notes.

As a result of the cash dividend the Company paid on its common stock in the second quarter of 2022, effective May 10, 2022, the conversion rate for the Convertible Notes was adjusted to 67.2836 shares of EQT common stock per $1,000 principal amount of the Convertible Notes.

As a result of the cash dividend paid by the Company on its common stock in the third quarter of 2022, effective August 8, 2022, the conversion rate for the Convertible Notes was adjusted to 67.5232 shares of EQT common stock per $1,000 principal amount of the Convertible Notes.

Future dividend payments by the Company will result in further adjustments to the conversion rate per share of EQT common stock.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of December 31, 2021 and September 30, 2022, and, accordingly, holders of the Convertible Notes are permitted to convert any of their Convertible Notes at their option at any time beginning on January 1, 2022 and continuing until December 31, 2022, subject to the terms and conditions set forth in the Convertible Notes indenture.

Therefore, as of December 31, 2021 and September 30, 2022, the net carrying value of the Convertible Notes was included in current portion of debt on the Condensed Consolidated Balance Sheets.

The following table summarizes Convertible Notes conversion right exercises from issuance through October 21, 2022.

The Company elected to settle all such conversions by issuing to the converting holders shares of EQT common stock.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of March 31, 2023 and December 31, 2022, and, accordingly, holders of the Convertible Notes are permitted to convert any of their Convertible Notes at their option at any time during the second quarter of 2023 and the first quarter of 2023, respectively, subject to the terms and conditions set forth in the Convertible Notes indenture.

Therefore, as of March 31, 2023 and December 31, 2022, the net carrying value of the Convertible Notes was included in current portion of debt in the Condensed Consolidated Balance Sheets.

The following table summarizes the settlement of Convertible Notes conversion right exercises for the three months ended March 31, 2023.

The Company elected to settle all such conversions by issuing to the converting holders shares of EQT Corporation common stock.

Settlement Month Principal Converted Shares Issued Average Conversion Price

September 2021 $ 9 599 $ 19.64

January 2023 $ 7 473 $ 33.70

February 2023 8 541 30.77

March 2023 6 408 31.46

April 2022 26 1,742 34.78

July 2022 5 335 36.91

October 2022 10 674 40.14

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.

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.

In connection with the Convertible Notes offering, the Company entered into privately negotiated capped call transactions (the Capped Call Transactions), the purpose of which is to reduce the potential dilution to EQT common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such obligation, with such reduction and offset subject to a cap.

The Capped Call Transactions have an initial strike price of $ 15.00 per share of EQT common stock and an initial capped price of $ 18.75 per share of EQT common stock, each of which are subject to certain customary adjustments, including adjustments as a result of the Company paying a dividend on its common stock.

The Capped Call Transactions are separate from the Convertible Notes.

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

The cost to purchase the Capped Call Transactions of $ 32.5 million was recorded as a reduction to equity and will not be remeasured.

Based on the closing stock price of EQT common stock of $ 40.75 on September 30, 2022 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 727 million.

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 Corporation common stock for amounts that exceed the principal amount of the obligation.

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 Corporation common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such obligation, with such reduction and offset subject to a cap.

The Capped Call Transactions have an initial strike price of $ 15.00 per share of EQT Corporation common stock and an initial capped price of $ 18.75 per share of EQT Corporation common stock, each of which are subject to certain customary adjustments, including adjustments as a result of the Company paying a dividend on its common stock.

Based on the closing stock price of EQT Corporation common stock of $ 31.91 on March 31, 2023 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 486 million.

EQT CORPORATION AND SUBSIDIARIES

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The table below summarizes the net carrying value and fair value of the Convertible Notes.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Principal $ 414,761 $ 414,832

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Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Contractual interest expense $ 1,814 $ 2,187

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Total Convertible Notes interest expense $ 2,395 $ 2,871

5.678 % Senior Notes and 5.700 % Senior Notes.

On October 4, 2022, the Company issued $ 500 million aggregate principal amount of 5.678 % senior notes due October 1, 2025 and $ 500 million aggregate principal amount of 5.700 % senior notes due April 1, 2028.

The Company intends to use the estimated net proceeds from the sale of the notes of $ 989.5 million (after deducting estimated offering costs of $ 10.5 million) to partly fund the Tug Hill and XcL Midstream Acquisition (defined in Note 9).

The covenants of the 5.678 % senior notes and 5.700 % senior notes are consistent with the Company's existing senior unsecured notes.

The 5.678 % senior notes and 5.700 % senior notes have a special mandatory redemption provision that provides that if the consummation of the Tug Hill and XcL Midstream Acquisition does not occur on or before June 30, 2023 or if the Company notifies the trustee of the notes that it will not pursue consummation of the Tug Hill and XcL Midstream Acquisition, the Company is required to redeem the notes of each series then outstanding at a price equal to 101 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

Term Loan Facility and Bridge Loan Facility .

In connection with the Tug Hill and XcL Midstream Purchase Agreement (defined in Note 9), on September 6, 2022, the Company entered into a debt commitment letter, which was amended and restated on September 20, 2022.

Pursuant to such amended and restated debt commitment letter, Royal Bank of Canada, PNC Bank, National Association, Mizuho Bank, Ltd.

and certain other financial institutions committed to provide the Company with an unsecured bridge loan facility in an aggregate principal amount of $ 1.25 billion (the Bridge Loan Facility) and an unsecured term loan facility in an aggregate principal amount of $ 1.25 billion (the Term Loan Facility), subject to satisfaction of standard conditions.

In connection with the closing of the offering of the Company’s 5.678 % senior notes and 5.700 % senior notes on October 4, 2022, the commitments under the Bridge Loan Facility were automatically reduced by $ 989.5 million (the estimated net proceeds from the sale of the notes) in accordance with the terms of the Bridge Loan Facility.

As of September 30, 2022, neither the Bridge Loan Facility nor the Term Loan Facility had closed, and, accordingly, commitments thereunder remained undrawn.

Earnings (Loss) Per Share

For the three and nine months ended September 30, 2022, potentially dilutive securities, composed of the Company's options, restricted stock, performance awards and stock appreciation rights, of 5,879,634 and 5,719,990 , respectively, were included in the Company's calculation of diluted earnings per share.

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

As a result, for the three and nine months ended September 30, 2021, all such securities of 7,506,075 and 7,642,451 , respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

The following table shows the computation for basic and diluted earnings (loss) per share.

Three Months Ended

(Thousands, except per share amounts)

Net income (loss) attributable to EQT Corporation – basic earnings available to shareholders $ 1,218,548 $ ( 1,516,048 )

Interest expense on Convertible Notes, net of tax (a) 1,854 —

Diluted earnings (loss) available to shareholders $ 1,220,402 $ ( 1,516,048 )

Weighted average common stock outstanding – basic 361,462 374,142

Options, restricted stock, performance awards and stock appreciation rights (a) 4,226 —

Convertible debt (a) 28,195 —

Weighted average common stock outstanding – diluted 393,883 374,142

Income (loss) per share of common stock attributable to EQT Corporation:

Basic $ 3.37 $ ( 4.05 )

Diluted $ 3.10 $ ( 4.05 )

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

As a result, for the three months ended March 31, 2022, all such securities of 7.3 million were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

EQT CORPORATION AND SUBSIDIARIES

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In addition, the Company uses the if-converted method to calculate the impact of the Convertible Notes on diluted earnings (loss) per share.

For the three months ended September 30, 2022, such potentially dilutive securities of approximately 28.0 million were included in the Company's calculation of diluted earnings per share.

For the nine months ended September 30, 2022, such if-converted securities of approximately 31.6 million were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share when considering the numerator adjustments.

For both the three and nine months ended September 30, 2021, such if-converted securities of approximately 33.3 million were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

See Notes 1 and 6 for further discussion of the Convertible Notes.

For the three months ended March 31, 2022, such if-converted securities of approximately 33.5 million and the related add back of interest expense on the Convertible Notes, net of tax, were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

Impairment of Contract Asset

During the first quarter of 2020, the Company sold to Equitrans Midstream approximately 50 % of the Company's then-owned equity interest in Equitrans Midstream in exchange for a combination of cash and rate relief under certain of the Company's gathering contracts with an affiliate of Equitrans Midstream (the Equitrans Share Exchange).

During the first quarter of 2020, the Company sold to Equitrans Midstream Corporation (Equitrans Midstream) approximately 50 % of the Company's then-owned equity interest in Equitrans Midstream in exchange for a combination of cash and rate relief under certain of the Company's gathering contracts with 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 Equitrans Midstream (the Consolidated GGA).

In addition, because the Mountain Valley Pipeline was not in service by January 1, 2022, the Consolidated GGA provided the Company the option to forgo a portion of the gathering fee relief that would otherwise be applicable following the Mountain Valley Pipeline in-service date in exchange for a cash payment of approximately $ 196 million (the Cash Payment Option).

During the third quarter of 2022, the Company elected to exercise the Cash Payment Option, and, on October 4, 2022, the Company received the cash proceeds from the Cash Payment Option.

On the closing date of the Equitrans Share Exchange, the Company recorded in the Condensed Consolidated Balance Sheet a contract asset of $ 410 million representing the estimated fair value of the rate relief inclusive of the Cash Payment Option.

During the first quarter of 2022, the Company identified indicators that the carrying value of the contract asset may not be fully recoverable, including increased uncertainty of the estimated timing of completion of the Mountain Valley Pipeline due to recent court rulings.

As a result of the Company's impairment evaluation, the Company recognized impairment of $ 184.9 million in the Statement of Condensed Consolidated Operations.

The impairment reduced the carrying value of the contract asset to its estimated fair value as of March 31, 2022 of $ 225 million, of which $ 196 million was attributable to the Cash Payment Option provided by the Consolidated GGA and presented in prepaid expenses and other in the Condensed Consolidated Balance Sheet and $ 29 million was attributable to the residual rate relief realizable upon the in-service date of the Mountain Valley Pipeline and presented in contract asset in the Condensed Consolidated Balance Sheet.

Because the Mountain Valley Pipeline was not in service by January 1, 2022, the Consolidated GGA provided the Company the option to forgo a portion of the gathering fee relief that would otherwise be applicable following the Mountain Valley Pipeline in-service date in exchange for a cash payment of approximately $ 196 million (the Cash Payment Option).

During the third quarter of 2022, the Company elected to exercise the Cash Payment Option, and, in the fourth quarter of 2022, the Company received the cash proceeds from the Cash Payment Option.

During 2022, the Company identified indicators that the carrying value of the contract asset may not be fully recoverable, including increased uncertainty of the estimated timing of completion of the Mountain Valley Pipeline due to court rulings and public statements from Equitrans Midstream with respect to its completion.

As a result of the Company's impairment evaluation, the Company recognized impairment during the first quarter of 2022 of $ 184.9 million in the Statement of Condensed Consolidated Operations.

During the fourth quarter of 2022, the Company recognized additional impairment of $ 29.3 million in the Statement of Condensed Consolidated Operations.

As of December 31, 2022, the previously recognized impairment plus the election of the Cash Payment Option reduced the carrying value of the contract asset to zero .

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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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Tug Hill and XcL Midstream Acquisition.

On September 6, 2022, the Company entered into a purchase agreement with EQT Production Company (a wholly-owned indirect subsidiary of the Company), THQ Appalachia I, LLC (Tug Hill) and THQ-XcL Holdings I, LLC (XcL Midstream) (the Tug Hill and XcL Midstream Purchase Agreement), pursuant to which the Company and EQT Production Company agreed to acquire Tug Hill's upstream assets and XcL Midstream's gathering and processing assets through the acquisition of all of the issued and outstanding membership interests of each of THQ Appalachia I Midco, LLC and THQ-XcL Holdings I Midco, LLC (the Tug Hill and XcL Midstream Acquisition) for consideration of approximately $ 2.6 billion in cash and 55.0 million shares of EQT common stock, as adjusted pursuant to customary closing purchase price adjustments.

The Tug Hill and XcL Midstream Purchase Agreement has an effective date of July 1, 2022.

The Tug Hill and XcL Midstream Acquisition is expected to close in the fourth quarter of 2022, subject to regulatory approvals.

Upon execution of the Tug Hill and XcL Midstream Purchase Agreement, the Company deposited $ 150 million into an escrow account, which will be credited toward the cash consideration upon closing of the Tug Hill and XcL Midstream Acquisition and is recorded in other assets in the September 30, 2022 Condensed Consolidated Balance Sheet.

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.

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.

The Company completed the purchase price allocation for the Alta Acquisition during the second quarter of 2022, at which time the value of the assets acquired and liabilities assumed were revised.

The purchase accounting adjustments recorded in 2022 were not material to the Company's financial statements.

Post-Acquisition Operating Results .

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

July 21, 2021 through September 30, 2021

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

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

Net marketing services and other 2,525

Total operating revenues $ ( 40,186 )

Net loss $ ( 129,779 )

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Unaudited Pro Forma Information .

The table below summarizes the Company's results as though the Alta Acquisition had been completed on January 1, 2021.

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, 2021 nor are they necessarily indicative of future consolidated results of operations.

Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021

(Thousands, except per share amounts)

Pro forma sales of natural gas, NGLs and oil $ 1,839,002 $ 4,437,755

Pro forma loss on derivatives ( 3,268,035 ) ( 4,918,616 )

Pro forma net marketing services and other 7,798 28,452

Pro forma total operating revenues $ ( 1,421,235 ) $ ( 452,409 )

Pro forma net loss $ ( 1,974,059 ) $ ( 2,950,427 )

Pro forma net loss attributable to noncontrolling interests 601 25

Pro forma net loss attributable to EQT Corporation $ ( 1,974,660 ) $ ( 2,950,452 )

Pro forma loss per share (basic and diluted) $ ( 5.53 ) $ ( 9.67 )

EQT CORPORATION AND SUBSIDIARIES

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

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

What changed 10-Q

Item 1. Financial Statements