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Item 1. Financial Statements

2023-10-26 compared with 2023-07-26 · 230 added, 137 removed, 422 unchanged (47% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

11 unchanged sentences

Depreciation and depletion 446,886 418,695 1,230,255 1,269,936

(Gain) loss on sale/exchange of long-lived assets ( 225 ) ( 981 ) 16,303 ( 2,190 )

Loss (gain) on sale/exchange of long-lived assets 1,511 ( 265 ) 17,814 ( 2,455 )

Impairment of contract asset — — — 184,945

2 unchanged sentences

Total operating expenses 1,170,295 1,144,877 3,274,230 3,619,640

Operating (loss) income ( 34,993 ) 1,361,901 1,575,887 ( 526,365 )

(Income) loss from investments ( 1,092 ) ( 3,577 ) ( 5,856 ) 17,208

Operating income 15,807 924,586 1,591,694 398,221

Loss (income) from investments 546 ( 2,877 ) ( 5,310 ) 14,331

Dividend and other income ( 132 ) ( 157 ) ( 869 ) ( 11,066 )

3 unchanged sentences

Income tax (benefit) expense ( 126,853 ) 152,206 217,975 ( 5,257 )

Net (loss) income ( 66,866 ) 894,224 1,152,367 ( 620,359 )

Net income 80,730 687,462 1,233,097 67,103

Net (loss) income attributable to noncontrolling interests ( 525 ) 3,792 ( 80 ) 8,120

Net (loss) income attributable to EQT Corporation $ ( 66,626 ) $ 891,361 $ 1,151,922 $ ( 624,687 )

(Loss) income per share of common stock attributable to EQT Corporation:

Net income attributable to EQT Corporation $ 81,255 $ 683,670 $ 1,233,177 $ 58,983

Income per share of common stock attributable to EQT Corporation:

Weighted average common stock outstanding 383,359 369,987 368,936 371,308

Net (loss) income attributable to EQT Corporation $ ( 0.18 ) $ 2.41 $ 3.18 $ ( 1.68 )

Net income attributable to EQT Corporation $ 0.21 $ 1.85 $ 3.34 $ 0.16

Diluted (Note 7):

Weighted average common stock outstanding 416,190 403,889 401,859 377,028

Net (loss) income attributable to EQT Corporation $ ( 0.18 ) $ 2.19 $ 2.94 $ ( 1.68 )

Net income attributable to EQT Corporation $ 0.20 $ 1.69 $ 3.08 $ 0.16

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

EQT CORPORATION AND SUBSIDIARIES

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

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net (loss) income $ ( 66,866 ) $ 894,224 $ 1,152,367 $ ( 620,359 )

Net income $ 80,730 $ 687,462 $ 1,233,097 $ 67,103

Other comprehensive income, net of tax:

2 unchanged sentences

57 63 270 190

Comprehensive (loss) income ( 66,817 ) 894,288 1,152,580 ( 620,232 )

Comprehensive income 80,787 687,525 1,233,367 67,293

Comprehensive (loss) income attributable to noncontrolling interests ( 525 ) 3,792 ( 80 ) 8,120

Comprehensive (loss) income attributable to EQT Corporation $ ( 66,577 ) $ 891,425 $ 1,152,135 $ ( 624,560 )

Comprehensive income attributable to EQT Corporation $ 81,312 $ 683,733 $ 1,233,447 $ 59,173

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

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

18 unchanged sentences

Total current liabilities 2,118,944 3,732,220

Term Loan Facility borrowings 1,243,280 —

Senior notes 4,174,163 5,167,849

17 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net income (loss) $ 1,152,367 $ ( 620,359 )

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

Net income $ 1,233,097 $ 67,103

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

Deferred income tax expense (benefit) 227,701 ( 14,229 )

17 unchanged sentences

Capital expenditures ( 1,485,898 ) ( 1,047,475 )

Cash paid for acquisitions ( 2,288,201 ) ( 150,000 )

Proceeds from sale/exchange of assets 4,831 5,394

Proceeds from sale of investment shares — 189,249

2 unchanged sentences

Cash flows from financing activities:

Proceeds from credit facility borrowings — 6,237,000

Repayment of credit facility borrowings — ( 6,137,000 )

Proceeds from revolving credit facility borrowings 313,000 10,242,000

Repayment of revolving credit facility borrowings ( 313,000 ) ( 10,242,000 )

Proceeds from Term Loan Facility borrowings 1,250,000 —

Debt issuance costs ( 5,336 ) ( 17,852 )

3 unchanged sentences

Repurchase and retirement of common stock ( 201,029 ) ( 270,345 )

Distribution to noncontrolling interest, net of contributions ( 2,043 ) ( 2,894 )

Net (distribution to) contribution from noncontrolling interest ( 7,322 ) 4,050

Other financing activities ( 38,962 ) ( 9,853 )

12 unchanged sentences

(Thousands, except per share amounts)

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

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:

5 unchanged sentences

Convertible Notes settlements 1 10 10

Repurchase and retirement of common stock ( 1,768 ) ( 27,409 ) ( 47,627 ) ( 75,036 )

Distribution to noncontrolling interest ( 4,306 ) ( 4,306 )

Other 11,233 11,233

Balance at June 30, 2022 369,720 $ 9,948,646 $ ( 2,848 ) $ ( 880,127 ) $ ( 4,484 ) $ 28,903 $ 9,090,090

Balance at April 1, 2023 361,586 $ 9,776,392 $ — $ 2,338,572 $ ( 2,830 ) $ 41,454 $ 12,153,588

Comprehensive loss, net of tax:

Net loss ( 66,626 ) ( 240 ) ( 66,866 )

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

Balance at July 1, 2023 361,654 $ 9,790,855 $ — $ 2,217,698 $ ( 2,781 ) $ 39,256 $ 12,045,028

Comprehensive income, net of tax:

Net income (loss) 81,255 ( 525 ) 80,730

Other postretirement benefits liability adjustment, net of tax expense:

3 unchanged sentences

Convertible Notes settlements 1 16 16

Tug Hill and XcL Midstream Acquisition 49,600 2,152,631 2,152,631

Distribution to noncontrolling interest ( 5,279 ) ( 5,279 )

Balance at June 30, 2023 361,654 $ 9,790,855 $ — $ 2,217,698 $ ( 2,781 ) $ 39,256 $ 12,045,028

Common shares authorized:

Preferred shares authorized:

Dissolution of consolidated variable interest entity (Note 1) ( 25,227 ) ( 25,227 )

Other 911 911

Balance at September 30, 2023 411,311 $ 11,958,441 $ — $ 2,245,615 $ ( 2,724 ) $ 8,225 $ 14,209,557

Common shares authorized (in thousands):

Preferred shares authorized (in thousands):

There were no preferred shares issued or outstanding.

9 unchanged sentences

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:

Net (loss) income ( 624,687 ) 4,328 ( 620,359 )

Comprehensive income, net of tax:

Net income 58,983 8,120 67,103

Other postretirement benefits liability adjustment, net of tax expense:

5 unchanged sentences

Distribution to noncontrolling interest ( 7,200 ) ( 7,200 )

Contribution from noncontrolling interest 11,250 11,250

Other 11,233 11,233

Balance at June 30, 2022 369,720 $ 9,948,646 $ ( 2,848 ) $ ( 880,127 ) $ ( 4,484 ) $ 28,903 $ 9,090,090

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

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

Comprehensive income, net of tax:

Net income 1,151,922 445 1,152,367

Net income (loss) 1,233,177 ( 80 ) 1,233,097

Other postretirement benefits liability adjustment, net of tax expense:

4 unchanged sentences

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

Tug Hill and XcL Midstream Acquisition 49,600 2,152,631 2,152,631

Distribution to noncontrolling interest ( 11,072 ) ( 11,072 )

Contribution from noncontrolling interest 3,750 3,750

Balance at June 30, 2023 361,654 $ 9,790,855 $ — $ 2,217,698 $ ( 2,781 ) $ 39,256 $ 12,045,028

Common shares authorized:

Preferred shares authorized:

Dissolution of consolidated variable interest entity (Note 1) ( 25,227 ) ( 25,227 )

Other 911 911

Balance at September 30, 2023 411,311 $ 11,958,441 $ — $ 2,245,615 $ ( 2,724 ) $ 8,225 $ 14,209,557

Common shares authorized (in thousands):

Preferred shares authorized (in thousands):

There were no preferred shares issued or outstanding.

6 unchanged sentences

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

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of June 30, 2023 and December 31, 2022, the results of its operations and equity for the three and six month periods ended June 30, 2023 and 2022 and its cash flows for the six month periods ended June 30, 2023 and 2022.

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, 2023 and December 31, 2022, the results of its operations and equity for the three and nine month periods ended September 30, 2023 and 2022 and its cash flows for the nine month periods ended September 30, 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" and "the Company" refer collectively to EQT Corporation and its consolidated subsidiaries.

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

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.

Dissolution of Consolidated Variable Interest Entity.

In 2020, the Company entered into a partnership (the Partnership) with a third-party investor (the Investor) to purchase certain mineral rights in the Appalachian Basin.

During the three months ended September 30, 2023, the Partnership's assets were distributed pro rata to the Company and the Investor, and the Partnership was dissolved.

Prior to its dissolution, the Partnership was accounted for as a consolidated variable interest entity as the Company had the power to direct the activities that most significantly affected the Partnership's economic performance.

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.

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid during the period for:

2 unchanged sentences

Non-cash activity during the period for:

Tug Hill and XcL Midstream Acquisition $ 2,152,631 $ —

Increase in right-of-use assets and lease liabilities, net 25,849 1,651

Dissolution of consolidated variable interest entity 25,227 —

Increase in asset retirement costs and obligations 5,216 14,102

Capitalization of non-cash equity share-based compensation 4,587 3,923

Increase in right-of-use assets and lease liabilities, net 507 819

Issuance of common stock for Convertible Notes settlement 98 48

7 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Based on management's judgment, the performance obligations for the sale of natural gas, NGLs and oil are satisfied at a point in time because the customer obtains control and legal title of the asset when the natural gas, NGLs or oil is delivered to the designated sales point.

1 unchanged sentence

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 $ 376.9 million and $ 1,171.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively.

For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $ 382.2 million and $ 1,171.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively.

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

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Total operating revenues $ 1,186,102 $ 2,069,463 $ 4,865,924 $ 4,017,861

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of June 30, 2023.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of June 30, 2023.

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, 2023.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of September 30, 2023.

2023 (a) 2024 Total

Natural gas sales $ 1,007 $ 469 $ 1,476

(a) July 1 through December 31.

(a) October 1 through December 31.

Derivative Instruments

2 unchanged sentences

The overall objective of the Company's hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The derivative commodity instruments used by the Company are primarily swap, collar and option agreements.

8 unchanged sentences

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

3 unchanged sentences

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

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of its expected sales of production and portions of its basis exposure covering approximately 1,711 billion cubic feet (Bcf) of natural gas and 1,545 thousand barrels (Mbbl) of NGLs as of June 30, 2023 and 1,424 Bcf of natural gas and 1,483 Mbbl of NGLs as of December 31, 2022.

The open positions at both June 30, 2023 and December 31, 2022 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 1,866 billion cubic feet (Bcf) of natural gas and 881 thousand barrels (Mbbl) of NGLs as of September 30, 2023 and 1,424 Bcf of natural gas and 1,483 Mbbl of NGLs as of December 31, 2022.

The open positions at both September 30, 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 June 30, 2023, the Company's senior notes were rated "Ba1" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

As of September 30, 2023, the Company's senior notes were rated "Baa3" 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 June 30, 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 $ 30.3 million and $ 347.6 million, respectively, for which no deposits were required or recorded in the Condensed Consolidated Balance Sheets for either period.

As of September 30, 2023, none of the Company's OTC derivative instruments with credit rating risk-related contingent features were in a net liability position.

As of December 31, 2022, the aggregate fair value of the Company's OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 347.6 million, for which no deposits were required or recorded in the Condensed Consolidated Balance Sheet.

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

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

As of both June 30, 2023 and December 31, 2022, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

As of both September 30, 2023 and December 31, 2022, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

5 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, the Company recorded $ 27.4 million and $ 100.6 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As of September 30, 2023 and December 31, 2022, the Company recorded $ 14.6 million and $ 100.6 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

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

2 unchanged sentences

master netting agreements Margin requirements with counterparties Net derivative instruments

June 30, 2023

September 30, 2023

Asset derivative instruments, at fair value $ 577,926 $ ( 198,511 ) $ — $ 379,415

7 unchanged sentences

As of December 31, 2022, the Company reduced the derivative liability related to the Henry Hub Cash Bonus to zero given the uncertainties surrounding the in-service date of the Mountain Valley Pipeline and the Company's then-held belief that achieving an in-service date of the Mountain Valley Pipeline prior to December 31, 2024 was not probable.

On June 3, 2023, President Biden signed legislation that raises the United States' debt limit, ratifies and approves all permits and authorizations necessary for the construction and initial operation of the Mountain Valley Pipeline and directs the applicable federal officials and agencies to maintain such authorizations.

On June 3, 2023, President Biden signed legislation that raised the United States' debt limit, ratified and approved all permits and authorizations necessary for the construction and initial operation of the Mountain Valley Pipeline and directs the applicable federal officials and agencies to maintain such authorizations.

Further, the legislation requires the Secretary of the Army to issue all permits or verifications necessary to complete project construction and allow for the Mountain Valley Pipeline's operation and maintenance.

Given the impact of this legislation, the Company reevaluated its probability-weighted assessment of the achievement of an in-service date of the Mountain Valley Pipeline prior to December 31, 2024 and concluded that, as of June 30, 2023, based on the facts and circumstances that existed as of that date, the derivative liability related to the Henry Hub Cash Bonus had a fair value of approximately $ 62.1 million.

Given the impact of this legislation, the Company reevaluated its probability-weighted assessment of the achievement of an in-service date of the Mountain Valley Pipeline prior to December 31, 2024 and concluded that, as of September 30, 2023, based on the facts and circumstances that existed as of that date, the derivative liability related to the Henry Hub Cash Bonus had a fair value of approximately $ 54.4 million.

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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Fair Value Measurements

4 unchanged sentences

The Company estimates nonperformance risk by analyzing publicly available market information, including a comparison of the yield on debt instruments with credit ratings similar to the Company's or counterparty's credit rating and the yield on a risk-free instrument.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company has categorized its assets and liabilities recorded at fair value into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique.

2 unchanged sentences

Exchange traded commodity swaps have Level 1 inputs.

The fair value of the commodity swaps with Level 2 inputs is based on standard industry income approach models that use significant observable inputs, including, but not limited to, NYMEX natural gas forward curves, LIBOR-based discount rates, basis forward curves and NGLs forward curves.

The fair value of the commodity swaps with Level 2 inputs is based on standard industry income approach models that use significant observable inputs, including, but not limited to, NYMEX natural gas forward curves, SOFR-based discount rates, basis forward curves and NGLs forward curves.

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

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

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

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

4 unchanged sentences

(Level 2) Significant unobservable inputs

June 30, 2023

September 30, 2023

Asset derivative instruments, at fair value $ 577,926 $ 42,352 $ 535,574 $ —

4 unchanged sentences

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

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

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

The Company considers these fair values to be Level 1 fair value measurements.

1 unchanged sentence

The Company values the Investment Fund using, as a practical expedient, the net asset value provided in the financial statements received from fund managers.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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

As of June 30, 2023 and December 31, 2022, the Company's senior notes had a fair value of approximately $ 5.0 billion and $ 6.1 billion, respectively, and a carrying value of approximately $ 4.6 billion and $ 5.6 billion, respectively, inclusive of any current portion.

As of September 30, 2023 and December 31, 2022, the Company's senior notes had a fair value of approximately $ 5.2 billion and $ 6.1 billion, respectively, and a carrying value of approximately $ 4.6 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 June 30, 2023 and December 31, 2022, the Company's note payable to EQM had a fair value of approximately $ 94 million and $ 96 million, respectively, and a carrying value of approximately $ 91 million and $ 94 million, respectively, inclusive of any current portion.

As of September 30, 2023 and December 31, 2022, the Company's note payable to EQM had a fair value of approximately $ 89 million and $ 96 million, respectively, and a carrying value of approximately $ 90 million and $ 94 million, respectively, inclusive of any current portion.

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

3 unchanged sentences

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

See Note 9 for a discussion of the fair value measurement of the Tug Hill and XcL Midstream Acquisition (defined in Note 9).

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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the six months ended June 30, 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 six months ended June 30, 2023.

For the six months ended June 30, 2023 and 2022, the Company recorded income tax expense (benefit) at an effective tax rate of 23.0 % and 20.2 %, respectively.

The Company's effective tax rate for the six months ended June 30, 2023 was higher compared to the U.S.

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

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

federal statutory rate due primarily to nondeductible repurchase premiums on the Convertible Notes (defined in Note 6), partly offset by state taxes, including valuation allowances limiting certain state tax benefits.

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.

However, given the Company's anticipated future earnings, the Company believes that there is a reasonable possibility that, in the near term, sufficient positive evidence may become available that supports the release of a portion of the Company's valuation allowance, which would result in the recognition of certain DTAs and a decrease to income tax expense for the period in which the release is recorded.

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.

For the nine months ended September 30, 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 nine months ended September 30, 2023.

For the nine months ended September 30, 2023 and 2022, the Company recorded income tax expense (benefit) at an effective tax rate of 15.0 % and ( 8.5 )%, respectively.

The Company's effective tax rate for the nine months ended September 30, 2023 was lower compared to the U.S.

federal statutory rate due primarily as a result of the release of valuation allowances limiting certain state deferred tax assets and net state deferred tax benefit related to a rate reduction from a Pennsylvania tax law change enacted on July 8, 2022 and the Tug Hill and XcL Midstream Acquisition.

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 a Pennsylvania tax law change enacted on July 8, 2022, partly offset by nondeductible repurchase premiums on the Convertible Notes (defined in Note 6).

The Company recognizes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset (DTA) will not be realized.

All available evidence, both positive and negative, is considered when determining the need for a valuation allowance.

To determine whether a valuation allowance is required, the Company uses judgement to estimate future taxable income and considers the tax consequences in the jurisdiction where such taxable income is generated as well as evidence including the Company's current financial position, actual and forecasted results of operations, the reversal of deferred tax liabilities and tax planning strategies in addition to the current and forecasted business economics of the oil and gas industry.

During the three months ended September 30, 2023, the Company concluded that the positive evidence, including the Company's change in its cumulative income position from loss to income and its forecasted income, more likely than not outweighed the negative evidence regarding the realization of the Company's DTA for certain state tax net operating loss (NOL) carryforwards.

As a result, the Company recorded a state deferred tax benefit of $ 101 million related to its valuation allowance for its state NOL carryforwards in the Statement of Condensed Consolidated Operations for the three months ended September 30, 2023.

The Company has retained a valuation allowance related to its NOLs for certain entities and jurisdictions in which it is more likely than not that the benefit from the related DTA will not be realized as well as a valuation allowance against the portion of its federal and state DTAs, such as capital losses, which may expire before being fully utilized due to the limitation to offset only capital gains.

EQT CORPORATION AND SUBSIDIARIES

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The table below summarizes the Company's outstanding debt.

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

Term Loan Facility due June 30, 2025 (b) $ 1,250,000 $ 1,243,280 $ — $ —

Senior notes:

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

(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.

(c) As of June 30, 2023, the current portion of debt included the 1.75 % convertible notes and a portion of the note payable to EQM.

(b) Interest rates for the Term Loan Facility, the 6.125 % senior notes and the 7.000 % 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 debt do not fluctuate.

(c) As of September 30, 2023, the current portion of debt included the 1.75 % convertible notes and a portion of the note payable to EQM.

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

Debt Repayments .

The Company redeemed or repurchased the following debt during the six months ended June 30, 2023.

The Company redeemed or repurchased the following debt during the nine months ended September 30, 2023.

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

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(a) Includes third-party costs and fees paid to dealer managers and brokers.

Credit Facility .

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As of both June 30, 2023 and December 31, 2022, the Company had approximately $ 25 million of letters of credit outstanding under its credit facility.

During the three and six months ended June 30, 2023, there were no borrowings under the Company's credit facility.

During the three and six months ended June 30, 2022, under the Company's credit facility, the maximum amount of outstanding borrowings was $ 1,300 million for both periods, the average daily balance was approximately $ 844 million and $ 576 million, respectively, and interest was incurred at a weighted average annual interest rate of 2.3 % and 2.2 %, respectively.

Revolving Credit Facility .

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

As of September 30, 2023 and December 31, 2022, the Company had approximately $ 15 million and $ 25 million, respectively, of letters of credit outstanding under its revolving credit facility.

During the three months ended September 30, 2023 and 2022, under the Company's revolving credit facility, the maximum amount of outstanding borrowings was $ 158 million and $ 1,216 million, respectively, the average daily balance was approximately $ 28 million and $ 717 million, respectively, and interest was incurred at a weighted average annual interest rate of 6.9 % and 3.8 %, respectively.

During the nine months ended September 30, 2023 and 2022, under the Company's revolving credit facility, the maximum amount of outstanding borrowings was $ 158 million and $ 1,300 million, respectively, the average daily balance was approximately $ 9 million and $ 624 million, respectively, and interest was incurred at a weighted average annual interest rate of 6.9 % and 2.8 %, respectively.

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 partly finance the pending Tug Hill and XcL Midstream Acquisition (defined and discussed 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 June 30, 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.

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

5.700 % Notes Consent Solicitation and Indenture Amendment.

On May 10, 2023, following the receipt of the requisite consents of holders of a majority of the aggregate principal amount of the Company's 5.700 % senior notes, which were obtained through a solicitation of consents that the Company commenced on May 3, 2023, the Company amended the indenture governing the Company's outstanding 5.700 % senior notes to extend the Outside Date (defined below) for the special mandatory redemption provision from June 30, 2023 to December 29, 2023.

In October 2022, the Company issued its 5.700 % senior notes to partly finance the pending Tug Hill and XcL Midstream Acquisition.

Under the indenture governing the Company's 5.700 % senior notes, the Company is required to redeem the outstanding 5.700 % senior notes at a redemption price equal to 101 % of the principal amount of the 5.700 % senior notes plus accrued and unpaid interest, if any, to, but excluding, the date of such mandatory redemption if (i) the Tug Hill and XcL Midstream Acquisition is not consummated on or before June 30, 2023 (the Outside Date) or (ii) the Company notifies the trustee of the 5.700 % senior notes that it will not pursue the consummation of the Tug Hill and XcL Midstream Acquisition.

Under the terms set forth in the consent solicitation statement, on May 11, 2023, the Company paid to holders of outstanding 5.700 % senior notes who delivered valid consents a consent fee of $ 3.6 million in the aggregate.

In addition, pursuant to the terms set forth in the consent solicitation statement, on July 5, 2023, the Company paid to such holders an additional consent fee of $ 1.8 million in the aggregate.

On November 9, 2022, the Company entered into a Credit Agreement with PNC Bank, National Association, as administrative agent, and the other lenders party thereto (as amended, the Term Loan Agreement), under which such lenders agreed to make to the Company unsecured term loans in a single draw in an aggregate principal amount of up to $ 1.25 billion (the Term Loan Facility) to partly fund the Tug Hill and XcL Midstream Acquisition.

On August 21, 2023, the Company borrowed $ 1.25 billion under the Term Loan Facility, receiving proceeds, net of $ 7.1 million of debt issuance costs, of $ 1,242.9 million.

At the Company's election, the $ 1.25 billion of borrowings under the Term Loan Facility bear interest at a Term SOFR Rate plus the SOFR Adjustment or Base Rate (all terms defined in the Term Loan Agreement), each plus a margin based on the Company's credit ratings.

The Company may voluntarily prepay, in whole or in part, borrowings under the Term Loan Facility without premium or penalty but subject to reimbursement of funding losses with respect to prepayment of loans that bear interest based on the Term SOFR Rate.

Borrowings under the Term Loan Facility that are repaid may not be re-borrowed.

During the period from August 21, 2023 through September 30, 2023, under the Term Loan Facility, interest was incurred at a weighted average annual interest rate of 7.0 %.

The Term Loan Agreement contains certain representations and warranties and various affirmative and negative covenants and events of default, including (i) a restriction on the ability of the Company and certain of its subsidiaries to incur or permit liens on assets, subject to certain significant exceptions, (ii) a restriction on the ability of certain of the Company's subsidiaries to incur debt, subject to certain significant exceptions, (iii) the establishment of a maximum consolidated debt-to-total capital ratio of the Company and its subsidiaries of 65 %, (iv) a limitation on certain changes to the Company's business and (v) certain restrictions related to mergers and sales of all or substantially all of the Company's assets.

As of September 30, 2023, the Company was in compliance with these covenants.

5.700 % Senior Notes.

On October 4, 2022, the Company issued its 5.700 % senior notes to partly fund the Tug Hill and XcL Midstream Acquisition.

On May 10, 2023, following the receipt of the requisite consents of holders of a majority of the aggregate principal amount of the Company's 5.700 % senior notes, the Company amended the mandatory redemption provision of the indenture governing the Company's outstanding 5.700 % senior notes.

Under the terms set forth in the consent solicitation statement, the Company paid consent fees of $ 5.3 million in the aggregate to holders of outstanding 5.700 % senior notes who delivered valid consents.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Convertible Notes .

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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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

1 unchanged sentence

A sinking fund is not provided for the Convertible Notes.

As a result of the cash dividends EQT Corporation paid on its common stock during the first half of 2023, the conversion rate for the Convertible Notes was adjusted as noted in the following table.

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

The table below summarizes adjustments made to the conversion rate for the Convertible Notes as a result of cash dividends paid by the Company on EQT Corporation common stock during the nine months ended September 30, 2023.

Future cash dividends paid by the Company will result in further adjustments to the conversion rate.

Dividend Paid Effective Date of Adjustment to Conversion Rate Conversion Shares of EQT Corporation Common Stock per $1,000 Principal Amount

Q1 2023 February 17, 2023 68.0740

Q2 2023 May 9, 2023 68.3917

First Quarter of 2023 February 17, 2023 68.0740

Second Quarter of 2023 May 9, 2023 68.3917

Third Quarter of 2023 August 8, 2023 68.6360

The conversion rate is also 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.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of June 30, 2023, and, accordingly, the Convertible Notes indenture permits holders of the Convertible Notes to convert any of their Convertible Notes at their option at any time during the third quarter of 2023, subject to the terms and conditions set forth in the Convertible Notes indenture.

In addition, following certain corporate events that occur prior to May 1, 2026 or if the Company delivers a 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.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of September 30, 2023, and, accordingly, the Convertible Notes indenture permits holders of the Convertible Notes to convert any of their Convertible Notes at their option at any time during the fourth quarter of 2023, subject to the terms and conditions set forth in the Convertible Notes indenture.

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

Therefore, as of June 30, 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 settlements of Convertible Notes conversion right exercises for the six months ended June 30, 2023.

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

Therefore, as of September 30, 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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below summarizes settlements of Convertible Notes conversion right exercises for the nine months ended September 30, 2023.

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

Convertible Notes conversion right exercises are accrued in the period received.

Settlement Month Principal Converted Shares Issued Average Conversion Price

4 unchanged sentences

June 2023 4 272 39.06

July 2023 10 682 40.92

September 2023 6 411 42.35

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 EQT Corporation paying a dividend on its common stock.

Based on the closing stock price of EQT Corporation common stock of $ 41.13 on June 30, 2023 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 752 million.

Based on the closing stock price of EQT Corporation common stock of $ 40.58 on September 29, 2023 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 740 million.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Principal $ 414,732 $ 414,832

3 unchanged sentences

(a) The fair value is a Level 2 fair value measurement.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

2 unchanged sentences

Total Convertible Notes interest expense $ 2,402 $ 2,395 $ 7,195 $ 8,136

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Loss) Income Per Share

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

Income Per Share

The table below provides the computation for basic and diluted income per share.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Thousands, except per share amounts)

Net (loss) income attributable to EQT Corporation – Basic (loss) income available to shareholders $ ( 66,626 ) $ 891,361 $ 1,151,922 $ ( 624,687 )

Net income attributable to EQT Corporation – Basic income available to shareholders $ 81,255 $ 683,670 $ 1,233,177 $ 58,983

Interest expense on Convertible Notes, net of tax (a) 2,042 921 6,117 —

Diluted (loss) income available to shareholders $ ( 66,626 ) $ 893,640 $ 1,155,613 $ ( 624,687 )

Diluted income available to shareholders $ 83,297 $ 684,591 $ 1,239,294 $ 58,983

Weighted average common stock outstanding – Basic 383,359 369,987 368,936 371,308

Options, restricted stock, performance awards and stock appreciation rights (a) — 4,132 3,455 —

Options, restricted stock, performance awards and stock appreciation rights 4,398 5,880 4,606 5,720

Convertible Notes (a) 28,433 28,022 28,317 —

Weighted average common stock outstanding – Diluted 416,190 403,889 401,859 377,028

(Loss) income per share of common stock attributable to EQT Corporation:

Income per share of common stock attributable to EQT Corporation:

Basic $ 0.21 $ 1.85 $ 3.34 $ 0.16

Diluted $ 0.20 $ 1.69 $ 3.08 $ 0.16

(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 June 30, 2023 and six months ended June 30, 2022, all such securities of 4.7 million and 6.9 million, respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

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

For the three months ended June 30, 2023 and six months ended June 30, 2022, such if-converted securities of approximately 28.3 million and 33.4 million, respectively, as well as the respective 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.

(a) The Company uses the if-converted method to calculate the impact of the Convertible Notes on diluted income per share.

For the nine months ended September 30, 2022, such if-converted securities of approximately 31.6 million as well as the related add back of interest expense on the Convertible Notes, net of tax, of $ 6.1 million were excluded from potentially dilutive securities because of their anti-dilutive effect on income per share.

Impairment of Contract Asset

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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 (defined below).

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.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

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(iii) an estimated production volume forecast and (iv) a market-based weighted average cost of capital.

Tug Hill and XcL Midstream Acquisition

On August 22, 2023, the Company completed its acquisition (the Tug Hill and XcL Midstream Acquisition) of the upstream assets from THQ Appalachia I, LLC (the Upstream Seller) and the gathering and processing assets from THQ-XcL Holdings I, LLC (the Midstream Seller) 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 pursuant to the Amended and Restated Purchase Agreement, dated December 23, 2022 (as amended, the Purchase Agreement), entered into by and among EQT Corporation, EQT Production Company (a wholly-owned indirect subsidiary of EQT Corporation), the Upstream Seller and the Midstream Seller.

The purchase price for the Tug Hill and XcL Midstream Acquisition consisted of 49,599,796 shares of EQT Corporation common stock and approximately $ 2.4 billion in cash, subject to customary post-closing adjustments.

The Company funded the cash portion of the consideration with $ 1.25 billion of borrowings under its Term Loan Facility, $ 1.0 billion of cash on hand and the $ 150 million cash deposit previously placed in escrow.

The Purchase Agreement has an economic effective date of July 1, 2022.

As a result of the Tug Hill and XcL Midstream Acquisition, the Company acquired approximately 90,000 net West Virginia acres, approximately 800 million cubic feet of natural gas equivalents (MMcfe) per day of current net production, approximately 145 miles of midstream gathering pipeline, compression and gas processing assets and approximately 55 miles of connected water infrastructure with four centralized storage facilities.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Allocation of Purchase Price .

The Tug Hill and XcL Midstream Acquisition was accounted for as a business combination using the acquisition method.

The table below summarizes the preliminary purchase price and estimated fair values of assets acquired and liabilities assumed as of August 22, 2023.

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

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

Preliminary Purchase Price Allocation

Consideration:

Equity $ 2,152,631

Cash 2,403,301

Settlement of pre-existing relationships ( 31,754 )

Total consideration $ 4,524,178

Fair value of assets acquired:

Cash and cash equivalents $ 100

Accounts receivable, net 75,961

Derivative instruments, at fair value 162,455

Prepaid expenses and other 1,825

Property, plant and equipment 4,555,311

Other assets 5,921

Total amount attributable to assets acquired $ 4,801,573

Fair value of liabilities assumed:

Accounts payable $ 162,668

Other current liabilities 47,399

Other liabilities and credits 67,328

Total amount attributable to liabilities assumed $ 277,395

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

Significant inputs include future commodity prices, projections of estimated quantities of reserves, estimated future rates of production, projected reserve recovery factors, timing and amount of future development and operating costs and a weighted average cost of capital.

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

Significant inputs include timing and amount of future development from a market participant perspective.

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

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

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

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Post-Acquisition Operating Results .

The table below summarizes amounts contributed by the upstream, gathering and processing assets acquired in the Tug Hill and XcL Midstream Acquisition to the Company's consolidated results for the period from August 22, 2023 through September 30, 2023.

August 22, 2023 through September 30, 2023

Sales of natural gas, NGLs and oil $ 64,541

Loss on derivatives ( 6,126 )

Net marketing services and other 299

Total operating revenues $ 58,714

Net loss $ ( 26,612 )

Unaudited Pro Forma Information .

The table below summarizes the Company's results as though the Tug Hill and XcL Midstream Acquisition had been completed on January 1, 2022.

Certain of the Upstream Seller's and Midstream Seller's historical amounts were reclassified to conform to the Company's financial presentation of operations.

Such unaudited pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the Tug Hill and XcL Midstream Acquisition occurred on January 1, 2022 nor are they indicative of future consolidated results of operations.

Nine Months Ended September 30,

(Thousands, except per share amounts)

Pro forma sales of natural gas, NGLs and oil $ 4,145,295 $ 10,899,338

Pro forma gain (loss) on derivatives 1,324,773 ( 5,535,540 )

Pro forma net marketing services and other 20,720 31,034

Pro forma total operating revenues $ 5,490,788 $ 5,394,832

Pro forma net income $ 1,410,143 $ 646,609

Pro forma net (loss) income attributable to noncontrolling interests ( 80 ) 8,120

Pro forma net income attributable to EQT Corporation $ 1,410,223 $ 638,489

Pro forma income per share of common stock attributable to EQT Corporation:

Pro forma net income attributable to EQT Corporation – Basic $ 3.82 $ 1.72

Pro forma net income attributable to EQT Corporation – Diluted $ 3.52 $ 1.69

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