What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-24 compared with 2023-10-26 · 151 added, 330 removed, 322 unchanged (60% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Thousands, except per share amounts)

1 unchanged sentence

Sales of natural gas, natural gas liquids and oil $ 1,303,905 $ 1,830,358

Gain (loss) on derivatives 177,906 ( 1,627,296 ) 1,167,144 ( 5,550,028 )

Gain on derivatives 106,511 824,852

Net marketing services and other 1,852 5,861

6 unchanged sentences

Depreciation and depletion 486,750 387,685

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

Impairment of contract asset — — — 184,945

Loss on sale/exchange of long-lived assets 147 16,528

Impairment and expiration of leases 9,209 10,546

2 unchanged sentences

Operating income 182,720 1,610,880

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

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

Income from investments ( 2,260 ) ( 4,764 )

Other income ( 205 ) ( 175 )

Loss (gain) on debt extinguishment 3,449 ( 6,606 )

Interest expense, net 54,371 46,546

(Loss) income before income taxes ( 46,123 ) 839,668 1,451,072 61,846

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

Income before income taxes 127,365 1,575,879

Income tax expense 24,302 356,646

Net income 103,063 1,219,233

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 103,063 $ 1,219,233

Other comprehensive income, net of tax:

Other postretirement benefits liability adjustment, net of tax expense:

Other postretirement benefits liability adjustment, net of tax:

$ 13 and $ 15

57 63 270 190

Comprehensive income 103,106 1,219,397

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

4 unchanged sentences

Derivative instruments, at fair value 817,996 978,634

Income tax receivable 90,665 91,414

Prepaid expenses and other 93,914 38,255

32 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 to net cash provided by operating activities:

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

Deferred income tax expense 23,394 356,618

Depreciation and depletion 486,750 387,685

Impairment of long-lived assets and loss/gain on sale/exchange of long-lived assets 40,104 280,026

(Income) loss from investments ( 5,310 ) 14,331

(Gain) loss on debt extinguishment ( 55 ) 139,085

Impairments and loss/gain on sale/exchange of long-lived assets 9,356 27,074

Income from investments ( 2,260 ) ( 4,764 )

Loss (gain) on debt extinguishment 3,449 ( 6,606 )

Share-based compensation expense 10,551 11,276

Distribution of earnings from equity method investments 18,073 38,750

Distribution of earnings from equity method investment 2,852 5,456

Amortization, accretion and other 2,797 3,888

(Gain) loss on derivatives ( 1,167,144 ) 5,550,028

Net cash settlements received (paid) on derivatives 625,051 ( 4,672,998 )

Net premiums (paid) received on derivative instruments ( 231,343 ) 13,809

Gain on derivatives ( 106,511 ) ( 824,852 )

Net cash settlements received on derivatives 451,004 157,000

Net premiums paid on derivatives ( 33,904 ) ( 94,916 )

Changes in other assets and liabilities:

7 unchanged sentences

Cash paid for acquisitions ( 30,053 ) —

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

Proceeds from sale of investment shares — 189,249

Other investing activities ( 2,631 ) ( 3,542 )

3 unchanged sentences

Repayment of revolving credit facility borrowings ( 107,000 ) —

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

Proceeds from issuance of debt 750,000 —

Proceeds from net settlement of Capped Call Transactions (Note 6) 93,290 —

Debt issuance costs ( 8,147 ) —

Repayment and retirement of debt ( 752,112 ) ( 211,429 )

Discounts received (premiums paid) on debt extinguishment 5,313 ( 135,248 )

Discounts received on debt extinguishment — 7,981

Dividends paid ( 69,412 ) ( 54,070 )

Repurchase and retirement of common stock — ( 201,029 )

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

Net distribution to noncontrolling interest — ( 85 )

Other financing activities ( 35,059 ) ( 37,192 )

7 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)

Shares No Par Value Treasury Stock (Accumulated Deficit)

Retained Earnings Accumulated Other

Comprehensive Loss (a) Noncontrolling Interest in

Consolidated Subsidiaries Total Equity

(Thousands, except per share amounts)

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 ($ 0.15 per share)

( 55,493 ) ( 55,493 )

Share-based compensation plans 209 2,292 2,269 4,561

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 )

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:

Dividends ($ 0.15 per share)

( 54,249 ) ( 54,249 )

Share-based compensation plans 56 14,939 14,939

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 )

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.

(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 (Accumulated Deficit)

Retained Earnings Accumulated Other

Shares Amount Retained Earnings Accumulated Other

Comprehensive Loss (a) Noncontrolling Interest in

4 unchanged sentences

Net income 1,218,548 685 1,219,233

Other postretirement benefits liability adjustment, net of tax expense:

Other postretirement benefits liability adjustment, net of tax:

Dividends ($ 0.15 per share)

5 unchanged sentences

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

Balance at January 1, 2024 419,896 $ 12,093,986 $ 2,681,898 $ ( 2,684 ) $ 7,617 $ 14,780,817

1 unchanged sentence

Net income (loss) 103,488 ( 425 ) 103,063

Other postretirement benefits liability adjustment, net of tax expense:

Other postretirement benefits liability adjustment, net of tax:

Dividends ($ 0.1575 per share)

2 unchanged sentences

Convertible Notes settlements 19,992 285,608 285,608

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

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

Net settlement of Capped Call Transactions 93,290 93,290

Balance at March 31, 2024 441,558 $ 12,450,876 $ 2,715,974 $ ( 2,641 ) $ 7,192 $ 15,171,401

Common shares authorized (in thousands):

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, 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.

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, 2024 and December 31, 2023 and the results of its operations, equity and cash flows for the three month periods ended March 31, 2024 and 2023.

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

2 unchanged sentences

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, 2023.

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.

Nine Months Ended September 30,

Three Months Ended March 31,

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 —

Issuance of EQT Corporation common stock for Convertible Notes settlement 285,608 70

Increase in asset retirement costs and obligations 6,918 2,686

Increase in right-of-use assets and lease liabilities, net 3,634 —

Investment in nonconsolidated entity 2,375 —

Capitalization of non-cash equity share-based compensation 1,771 1,362

Issuance of common stock for Convertible Notes settlement 98 48

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through the requirement of enhanced disclosure of significant segment expenses.

In addition, this ASU enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and provides new segment disclosure requirements for entities with a single reportable segment.

This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The Company does not expect adoption of ASU 2023-07 to have a material impact on its financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes:

Improvements to Income Tax Disclosures to improve its income tax disclosure requirements.

Under this ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

This ASU is effective for fiscal years beginning after December 15, 2024, and early adoption is permitted.

The Company does not expect adoption of ASU 2023-09 to have a material impact on its financial statements and related disclosures.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Revenue from Contracts with Customers

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

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

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

4 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.

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.

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 $ 307.2 million and $ 584.8 million in accounts receivable in the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively.

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

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

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

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

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Revenues from contracts with customers:

4 unchanged sentences

Other sources of revenue:

Gain (loss) on derivatives 177,906 ( 1,627,296 ) 1,167,144 ( 5,550,028 )

Gain on derivatives 106,511 824,852

Net marketing services and other 1,852 5,861

Total operating revenues $ 1,412,268 $ 2,661,071

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) October 1 through December 31.

As of March 31, 2024, the Company had no remaining performance obligations on its natural gas sales contracts with fixed consideration.

Derivative Instruments

5 unchanged sentences

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

These agreements may require payments to, or receipt of payments from, counterparties based on the differential between two prices for the commodity.

These agreements may result in payments to, or receipt of payments from, counterparties based on the differential between two prices for the commodity.

The Company uses these agreements to hedge its NYMEX and basis exposure.

2 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 gain (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 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.

6 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 1,866 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.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of its expected sales of production and portions of its basis exposure covering approximately 2,072 billion cubic feet (Bcf) of natural gas and 3,300 thousand barrels (Mbbl) of NGLs as of March 31, 2024 and 2,045 Bcf of natural gas and 1,049 Mbbl of NGLs as of December 31, 2023.

The open positions at both March 31, 2024 and December 31, 2023 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, 2023, the Company's senior notes were rated "Baa3" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

As of March 31, 2024, 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 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 March 31, 2024, 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, 2023, 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 $ 6.4 million, for which no deposits were required or recorded in the Condensed Consolidated Balance Sheet.

1 unchanged sentence

The Company records these deposits as a current liability 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.

As of both March 31, 2024 and December 31, 2023, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

EQT CORPORATION AND SUBSIDIARIES

7 unchanged sentences

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

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.

As of March 31, 2024 and December 31, 2023, the Company recorded $ 69.3 million and $ 13.0 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

September 30, 2023

March 31, 2024

Asset derivative instruments, at fair value $ 817,996 $ ( 221,506 ) $ — $ 596,490

4 unchanged sentences

Henry Hub Cash Bonus.

The Consolidated GGA (defined in Note 8) executed in connection with the Equitrans Share Exchange (defined in Note 8) provides for 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.

The consolidated gas gathering and compression agreement, dated February 26, 2020, between the Company and an affiliate of Equitrans Midstream Corporation (Equitrans Midstream) provides for 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 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 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 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.

As of March 31, 2024 and December 31, 2023, the derivative liability related to the Henry Hub Cash Bonus had a fair value of approximately $ 29 million and $ 48 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.

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.

11 unchanged sentences

(Level 2) Significant unobservable inputs

September 30, 2023

March 31, 2024

Asset derivative instruments, at fair value $ 817,996 $ 43,355 $ 774,641 $ —

5 unchanged sentences

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.

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

The Company has an investment in a fund (the Investment Fund) that invests in companies developing technology and operating solutions for exploration and production companies.

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 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 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.

The Company's senior notes had a fair value of approximately $ 4.9 billion as of both March 31, 2024 and December 31, 2023 and a carrying value of approximately $ 4.9 billion and $ 4.5 billion as of March 31, 2024 and December 31, 2023, respectively, inclusive of any current portion.

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

As of March 31, 2024 and December 31, 2023, the Company's note payable to EQM had a fair value of approximately $ 88 million and $ 91 million, respectively, and a carrying value of approximately $ 87 million and $ 88 million, respectively, inclusive of any current portion.

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

2 unchanged sentences

See Note 3 for a discussion of the fair value measurement of the Henry Hub Cash Bonus.

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.

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.

See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the fair value measurement and any subsequent impairments 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 three months ended March 31, 2024 and 2023, 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, 2024.

For the three months ended March 31, 2024 and 2023, the Company recorded income tax expense at an effective tax rate of 19.1 % and 22.6 %, respectively.

The Company's effective tax rate for the three months ended March 31, 2024 was lower compared to the U.S.

federal statutory rate primarily as a result of excess tax benefits from share-based payments partly offset by state taxes.

The Company's effective tax rate for the three months ended March 31, 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 table below summarizes the Company's outstanding debt.

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

1 unchanged sentence

Senior notes:

7.42 % series B notes due 2023

— — 10,000 10,000

6.125 % notes due February 1, 2025 (b)

601,521 600,650 601,521 600,389

5.678 % notes due October 1, 2025

— — 500,000 496,578

1.75 % convertible notes due May 1, 2026

1.75 % convertible notes due May 1, 2026 (c)

— — 290,177 286,185

13 unchanged sentences

435,165 430,310 435,165 430,141

5.750 % notes due February 1, 2034

750,000 742,201 — —

Note payable to EQM 86,954 86,954 88,483 88,483

Total debt 5,544,352 5,504,741 5,836,058 5,795,113

Current portion of debt (c) 420,874 414,592 430,668 422,632

Current portion of debt (d) 607,838 606,967 296,424 292,432

Long-term debt $ 4,936,514 $ 4,897,774 $ 5,539,634 $ 5,502,681

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

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

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

(b) 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 nine months ended September 30, 2023.

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

6.125 % notes due February 1, 2025

$ 309,946 $ 1,832 $ 6,801 $ 318,579

5.678 % notes due October 1, 2025

500,000 — 6,940 506,940

3.125 % notes due May 15, 2026

47,942 ( 3,042 ) 296 45,196

3.90 % notes due October 1, 2027

63,505 ( 3,534 ) 781 60,752

5.00 % notes due January 15, 2029

8,607 ( 309 ) 137 8,435

7.000 % notes due February 1, 2030

40,000 2,736 1,313 44,049

3.625 % notes due May 15, 2031

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

Total $ 1,000,000 $ ( 6,328 ) $ 16,435 $ 1,010,107

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

(b) Interest rates for the Term Loan Facility, the Company's 6.125 % senior notes and the Company's 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 for the Company's other outstanding debt do not fluctuate.

(c) As of December 31, 2023, the fair value of the Company's 1.75 % convertible notes was $ 768.6 million and was a Level 2 fair value measurement.

(d) As of March 31, 2024, the current portion of debt included the Company's 6.125 % senior notes and a portion of the note payable to EQM.

As of December 31, 2023, the current portion of debt included the Company's 1.75 % convertible notes and a portion of the note payable to EQM.

Revolving Credit Facility.

The Company has a $ 2.5 billion revolving credit facility that matures on June 28, 2027.

As of both March 31, 2024 and December 31, 2023, the Company had approximately $ 15 million of letters of credit outstanding under its revolving credit facility.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

Under the Company's revolving credit facility, for the three months ended March 31, 2024, the maximum amount of outstanding borrowings was $ 107 million, the average daily balance was approximately $ 11 million and interest was incurred at a weighted average annual interest rate of 6.9 %.

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

Term Loan Facility .

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.

On November 9, 2022, the Company entered into a Credit Agreement (as amended o n December 23, 2022 and April 25, 2023, the Term Loan Agreement) with PNC Bank, National Association, as administrative agent, and the other lenders party thereto, 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 (defined in Note 9).

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

On January 16, 2024, the Company entered into a third amendment to the Term Loan Agreement to, among other things, extend the maturity date of the Term Loan Agreement from June 30, 2025 to June 30, 2026.

The third amendment to the Term Loan Agreement became effective on January 19, 2024 upon the Company's prepayment of $ 750 million principal amount of the term loans outstanding under the Term Loan Facility (funded with the net proceeds from the issuance of the Company's 5.750 % senior notes and cash on hand) and the satisfaction of other closing conditions.

Pursuant to the Term Loan Agreement, 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 (as defined in the Term Loan Agreement).

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.

At the Company's election, the term loans outstanding 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.

For the three months ended March 31, 2024, interest was incurred under the Term Loan Facility at a weighted average annual interest rate of 6.9 %.

5.750 % 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)

On January 19, 2024, the Company issued $ 750 million aggregate principal amount of 5.750 % senior notes due February 1, 2034.

The Company used net proceeds of $ 742.0 million, composed of the principal amount of $ 750 million net of capitalized debt issuance costs and underwriters' discount of $ 8.0 million, and cash on hand to prepay $ 750 million principal amount of the term loans outstanding under the Term Loan Facility.

The covenants of the 5.750 % senior notes are consistent with the Company's existing senior unsecured notes.

Convertible Notes .

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

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 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;

• upon the occurrence of certain corporate events set forth in the Convertible Notes indenture.

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 was not permitted to 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.

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

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 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 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

January 2023 $ 7 473 $ 33.70

February 2023 8 541 30.77

March 2023 6 408 31.46

April 2023 58 3,948 32.01

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.

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 $ 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.

September 30, 2023 December 31, 2022

Principal $ 414,732 $ 414,832

Unamortized debt issuance costs 6,282 8,036

Net carrying value of Convertible Notes $ 408,450 $ 406,796

Fair value of Convertible Notes (a) $ 1,155,337 $ 967,728

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

In April 2020, the Company issued $ 500 million aggregate principal amount of 1.75 % convertible senior notes (the Convertible Notes).

The effective interest rate for the Convertible Notes was 2.4 %.

On January 2, 2024, in accordance with the indenture governing the Convertible Notes (the Convertible Notes Indenture), the Company issued an irrevocable notice of redemption for all of the outstanding Convertible Notes and announced that the Company would redeem any of the Convertible Notes outstanding on January 17, 2024 in cash for 100% of the principal amount, plus accrued and unpaid interest on such Convertible Notes to, but excluding, such redemption date (the Redemption Price).

Pursuant to the Convertible Notes Indenture, between January 2, 2024 and the conversion deadline of 5:00 p.m., New York City time, on January 12, 2024, certain holders of the Convertible Notes exercised their right to convert their Convertible Notes prior to the redemption and validly surrendered an aggregate principal amount of $ 289.6 million of Convertible Notes.

Based on a conversion rate of 69.0364 shares of EQT Corporation common stock per $1,000 principal amount of Convertible Notes, the Company issued to such holders an aggregate 19,992,482 shares of EQT Corporation common stock.

Settlement of such Convertible Note conversion right exercises net of unamortized deferred issuance costs increased shareholder's equity by $ 285.6 million.

The remaining $ 0.6 million in outstanding principal amount of Convertible Notes was redeemed on January 17, 2024 in cash for the Redemption Price.

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.

The effective interest rate for the Convertible Notes is 2.4 %.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Contractual interest expense $ 1,814 $ 1,821 $ 5,443 $ 6,191

Amortization of issuance costs 588 574 1,752 1,945

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

Inclusive of January 2024 settlements of Convertible Notes conversion right exercises that were exercised in December 2023, during January 2024, the Company settled $ 290.2 million aggregate principal amount of Convertible Notes conversion right exercises by issuing an aggregate 20,036,639 shares of EQT Corporation common stock to the converting holders at an average conversion price of $ 38.03 .

Settlement and Termination of Capped Call Transactions.

In connection with, but separate from, the issuance of the Convertible Notes, in 2020, the Company entered into capped call transactions (the Capped Call Transactions) with certain financial institutions (the Capped Call Counterparties) to reduce the potential dilution to EQT Corporation common stock upon any conversion of Convertible Notes at maturity and/or offset any cash payments that the Company is required to make in excess of the principal amount of such converted notes.

The Capped Call Transactions had an initial strike price of $ 15.00 per share of EQT Corporation common stock and an initial cap price of $ 18.75 per share of EQT Corporation common stock, each of which were subject to certain customary adjustments, including adjustments as a result of the Company paying dividends on its common stock, and were set to expire in April 2026.

The Company recorded the cost to purchase the Capped Call Transactions of $ 32.5 million as a reduction to shareholders' equity.

On January 18, 2024, the Company entered into separate termination agreements with each of the Capped Call Counterparties, pursuant to which the Capped Call Counterparties paid the Company an aggregate $ 93.3 million (the Termination Payments), and the Capped Call Transactions were terminated.

The Company received the Termination Payments on January 22, 2024.

The Termination Payments were recorded as an increase to shareholders' equity.

Income Per Share

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Thousands, except per share amounts)

Net income attributable to EQT Corporation – Basic income available to shareholders $ 103,488 $ 1,218,548

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

Interest expense on Convertible Notes, net of tax 76 1,854

Diluted income available to shareholders $ 103,564 $ 1,220,402

1 unchanged sentence

Options, restricted stock, performance awards and stock appreciation rights 4,026 4,226

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

Convertible Notes 1,482 28,195

Weighted average common stock outstanding – Diluted 444,967 393,883

2 unchanged sentences

Diluted $ 0.23 $ 3.10

(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

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).

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).

Stock-based Compensation

In 2024, the Management Development and Compensation Committee of the Company's Board of Directors (the Compensation Committee) adopted the 2024 Incentive Performance Share Unit Program (2024 Incentive PSU Program) under the 2020 Long-Term Incentive Plan.

During the three months ended March 31, 2024, a total of 371,500 share units were granted under the 2024 Incentive PSU Program.

The payout of the share units will vary between zero and 200 % of the number of outstanding units contingent upon the Company's absolute total shareholder return and total shareholder return relative to a predefined peer group over the period of January 1, 2024 through December 31, 2026.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 of the contract asset 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 the contract asset of $ 29.3 million in the Statement of Condensed Consolidated Operations.

As of December 31, 2022, the previously recognized impairments 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.

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

Key assumptions used in the fair value calculation included the following:

(i) a probability-weighted estimate of the in-service date of the Mountain Valley Pipeline;

(ii) an estimate of the potential exercise and timing of the Cash Payment Option;

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

During the three months ended March 31, 2024, the Compensation Committee granted 976,270 restricted stock unit equity awards that will follow a three-year graded vesting schedule commencing with the date of grant, assuming continued employment through each vesting date.

The share total includes the Company's "equity-for-all" program, instituted in 2021, pursuant to which the Company grants equity awards to all permanent employees.

Acquisitions and Divestiture

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.

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 and the gathering and processing assets from THQ-XcL Holdings I, LLC 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 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.

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

The Company completed the purchase price allocation for the Tug Hill and XcL Midstream Acquisition during the first quarter of 2024.

The purchase accounting adjustments recorded in 2024 were not material.

NEPA Gathering System Acquisition.

The Company operates and has historically owned a 50 % interest in gathering assets located in northeast Pennsylvania (collectively, the NEPA Gathering System).

On April 11, 2024, the Company completed its acquisition of a minority equity partner's 33.75 % interest in the NEPA Gathering System (increasing the Company's interest in the NEPA Gathering System to approximately 83.75 %) for a purchase price of approximately $ 205 million (the NEPA Gathering System Acquisition), subject to customary post-closing adjustments.

NEPA Non-Operated Asset Divestiture.

On April 12, 2024, the Company entered into an agreement with Equinor USA Onshore Properties Inc.

and its affiliates (collectively, the Equinor Parties), pursuant to which the Company agreed to sell to the Equinor Parties an undivided 40 % interest in the Company's non-operated natural gas assets in Northeast Pennsylvania.

In exchange, the Company will receive from the Equinor Parties $ 500 million of cash, certain operated upstream assets and the remaining 16.25 % equity interest in the NEPA Gathering System.

The transaction (the NEPA Non-Operated Asset Divestiture) is subject to customary closing adjustments, required regulatory approvals and clearances.

In addition, the Company has agreed with the Equinor Parties to, upon consummation of the NEPA Non-Operated Asset Divestiture, enter into a gas buy-back agreement with respect to the assets to be received by the Company in the NEPA Non-Operated Asset Divestiture, whereby the Equinor Parties will purchase a specified amount of natural gas from the Company at a premium to in-basin pricing through the first quarter of 2028.

Following the completion of the NEPA Non-Operated Asset Divestiture, the Company will own 100 % of the NEPA Gathering System.

Equitrans Midstream Merger

On March 10, 2024, EQT Corporation, Humpty Merger Sub Inc., an indirect wholly owned subsidiary of EQT Corporation (Merger Sub), and Humpty Merger Sub LLC, an indirect wholly owned subsidiary of EQT Corporation (LLC Sub), entered into an agreement and plan of merger (the Merger Agreement) with Equitrans Midstream.

Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Equitrans Midstream (the First Merger), with Equitrans Midstream surviving as an indirect wholly owned subsidiary of EQT Corporation (the First Step Surviving Corporation), and, as the second step in a single integrated transaction with the First Merger, the First Step Surviving Corporation will merge with and into LLC Sub (the Second Merger and, together with the First Merger, the Equitrans Midstream Merger), with LLC Sub surviving the Second Merger as an indirect wholly owned subsidiary of EQT Corporation.

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

As a result of the Equitrans Midstream Merger, except as otherwise provided in the Merger Agreement, among other things, each share of common stock, no par value, of Equitrans Midstream (Equitrans Midstream common stock) that is issued and outstanding immediately prior to the effective time of the First Merger (other than shares of Equitrans Midstream common stock owned by Equitrans Midstream or its subsidiaries or by the Company) will be converted into the right to receive, without interest, 0.3504 shares of EQT Corporation common stock (with cash in lieu of fractional shares).

It is currently expected that, upon closing of the Equitrans Midstream Merger, EQT Corporation's existing shareholders will own approximately 74 % of the combined company and Equitrans Midstream's shareholders will own approximately 26 % of the combined company.

Also upon closing of the Equitrans Midstream Merger, three representatives from Equitrans Midstream will join EQT Corporation's Board of Directors.

The transaction is currently expected to close during the fourth quarter of 2024 and is subject to the satisfaction or waiver of certain closing conditions, including (i) the approval of the Merger Agreement and the Equitrans Midstream Merger by the holders of a majority of the outstanding shares of Equitrans Midstream common stock and Series A Perpetual Convertible Preferred Shares, no par value per share, of Equitrans Midstream (on an as-converted basis) voting as a single class, (ii) the approval of the issuance of the shares of EQT Corporation common stock in connection with the First Merger and an amendment to the Restated Articles of Incorporation of EQT Corporation to increase the number of shares of EQT Corporation common stock authorized thereunder, in each case by a majority of the votes cast at the special meeting of shareholders of EQT Corporation to be held in connection with the Equitrans Midstream Merger, (iii) there being no law, injunction, order or decree prohibiting consummation of the transaction and (iv) the expiration or termination of (a) all waiting periods (and any extensions thereof) applicable to the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (b) any commitment to, or any agreement with, any governmental entity to delay the consummation of the transaction or to not consummate the transaction (such condition, the HSR Act Condition).

The obligation of EQT Corporation to consummate the First Merger is also conditioned on (but which may be waived by EQT Corporation), among other things, Mountain Valley Pipeline, LLC having received authorization from the Federal Energy Regulatory Commission to place the Mountain Valley Pipeline Facilities (as defined in the Merger Agreement) into service and such authorization being in full force and effect as of the closing date of the Equitrans Midstream Merger without any material limitations, modifications or conditions that would prevent the Mountain Valley Pipeline Facilities from commencing full service.

The Merger Agreement contains certain termination rights for both EQT Corporation and Equitrans Midstream, including the right of either party, subject to certain limitations specified therein, to terminate the Merger Agreement if the First Merger is not consummated on or prior to March 10, 2025, which date will be automatically extended until September 10, 2025 if all of the conditions to closing, other than the condition relating to the absence of law, injunction, order or decree prohibiting consummation of the Equitrans Midstream Merger or the HSR Act Condition, have been satisfied.

Upon termination of the Merger Agreement under certain circumstances specified therein, (i) Equitrans Midstream will be required to pay EQT Corporation a termination fee equal to $ 191 million or (ii) EQT Corporation will be required to pay Equitrans Midstream a termination fee equal to $ 176 million or $ 545 million, depending on the circumstances which led to the termination.

EQT CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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