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Item 2. Management’s Discussion and Analysis

2024-04-24 compared with 2023-10-26 · 121 added, 193 removed, 245 unchanged (56% of the section changed)

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The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto included in this report.

Unless the context otherwise indicates, all references in this report to "EQT," the "Company," "we," "us," or "our" are to EQT Corporation and its subsidiaries, collectively.

Unless the context otherwise indicates, all references in this report to "EQT," the "Company," "we," "us," or "our" are to EQT Corporation and its consolidated subsidiaries, collectively.

For certain industry specific terms used in this Quarterly Report on Form 10-Q, please see "Glossary of Commonly Used Terms, Abbreviations and Measurements" in our Annual Report on Form 10-K for the year ended December 31, 2023.

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

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

Without limiting the generality of the foregoing, forward-looking statements contained in this Quarterly Report on Form 10-Q include the expectations of our plans, strategies, objectives and growth and anticipated financial and operational performance, including guidance regarding our strategy to develop our reserves;

Without limiting the generality of the foregoing, forward-looking statements contained in this Quarterly Report on Form 10-Q include the matters discussed in the section "Trends and Uncertainties" and expectations of our plans, strategies, objectives and growth and anticipated financial and operational performance, including guidance regarding our strategy to develop our reserves;

drilling plans and programs, including availability of capital to complete these plans and programs;

total resource potential and drilling inventory duration;

projected production and sales volume and growth rates;

projected production and sales volume, including liquified natural gas (LNG) volumes and sales;

natural gas prices;

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projected gathering and compression rates;

potential acquisitions or other strategic transactions, the timing thereof and our ability to achieve the intended operational, financial and strategic benefits from any such transactions or from any recently completed acquisitions or other strategic transactions, including the Tug Hill and XcL Midstream Acquisition (defined and discussed in Note 9 to the Condensed Consolidated Financial Statements);

potential and pending acquisitions or other strategic transactions, the timing thereof and our ability to achieve the intended operational, financial and strategic benefits from any such transactions or from any recently completed strategic transactions;

the amount and timing of any repayments, redemptions or repurchases of our common stock, outstanding debt securities or other debt instruments;

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environmental and weather risks, including the possible impacts of climate change;

and disruptions to our business due to acquisitions and other significant transactions, including the Tug Hill and XcL Midstream Acquisition.

These and other risks and uncertainties are described under the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022, and may be updated by the "Risk Factors" section of subsequent Quarterly Reports on Form 10-Q and other documents we subsequently file from time to time with the Securities and Exchange Commission.

risks related to the Equitrans Midstream Merger (defined in Note 10 to the Condensed Consolidated Financial Statements), including potential delays in consummating the potential transaction, including as a result of regulatory proceedings, the risk that our shareholders or the shareholders of Equitrans Midstream do not approve the potential transaction, the risk that regulatory approvals are not obtained or are obtained subject to conditions that are not anticipated by us, our ability to integrate Equitrans Midstream's operations in a successful manner and in the expected time period and the possibility that any of

EQT CORPORATION AND SUBSIDIARIES

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

the anticipated benefits and projected synergies of the potential transaction will not be realized or will not be realized within the expected time period;

and disruptions to our business due to recently completed or pending acquisitions and other significant transactions, including the Equitrans Midstream Merger.

These and other risks and uncertainties are described under the "Risk Factors" section in this Quarterly Report on Form 10-Q and under the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2023, and may be updated by the "Risk Factors" section of subsequent Quarterly Reports on Form 10-Q and other documents we subsequently file from time to time with the Securities and Exchange Commission.

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we do not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

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Consolidated Results of Operations

Net income attributable to EQT Corporation for the three months ended September 30, 2023 was $81.3 million, $0.20 per diluted share, compared to net income attributable to EQT Corporation for the same period in 2022 of $683.7 million, $1.69 per diluted share.

The decrease was attributable primarily to decreased sales of natural gas, NGLs and oil, partly offset by a gain on derivatives in 2023 compared to a loss on derivatives in 2022 and income tax benefit in 2023 compared to income tax expense in 2022.

Net income attributable to EQT Corporation for the nine months ended September 30, 2023 was $1,233.2 million, $3.08 per diluted share, compared to net income attributable to EQT Corporation for the same period in 2022 of $59.0 million, $0.16 per diluted share.

The increase was attributable primarily to a gain on derivatives in 2023 compared to a loss on derivatives in 2022, impairment of the contract asset in 2022 and a loss on debt extinguishment in 2022, partly offset by decreased sales of natural gas, NGLs and oil and income tax expense in 2023 compared to income tax benefit in 2022.

Results of operations for 2023 include the results of approximately one month of our operation of assets acquired in the Tug Hill and XcL Midstream Acquisition, which closed on August 22, 2023.

See Note 9 to the Condensed Consolidated Financial Statements for further discussion of the Tug Hill and XcL Midstream Acquisition.

Net income attributable to EQT Corporation for the three months ended March 31, 2024 was $103.5 million, $0.23 per diluted share, compared to $1,218.5 million, $3.10 per diluted share, for the same period in 2023.

The decrease was attributable primarily to decreased gain on derivatives, decreased sales of natural gas, increased depreciation and depletion expense, increased production expense and increased transportation and processing expense.

Results of operations for 2024 include the results of our operation of assets acquired in the Tug Hill and XcL Midstream Acquisition (defined in Note 9 to the Condensed Consolidated Financial Statements), which closed on August 22, 2023.

See Note 9 to the Condensed Consolidated Financial Statements.

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

See "Investing Activities" under "Capital Resources and Liquidity" for a discussion of capital expenditures.

Recent Events

On March 10, 2024, EQT Corporation and certain of its indirect wholly owned subsidiaries entered into the Merger Agreement (defined in Note 10 to the Condensed Consolidated Financial Statements) with Equitrans Midstream to acquire Equitrans Midstream via a two-step integrated merger process (the Equitrans Midstream Merger).

Pursuant to the Merger Agreement, each share of Equitrans Midstream common stock 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).

Consummation of the Equitrans Midstream Merger is subject to the satisfaction or waiver of certain closing conditions, including regulatory approvals, approval by EQT Corporation's shareholders and approval by Equitrans Midstream's shareholders.

As a result of the Equitrans Midstream Merger, we would acquire over 2,000 miles of pipeline infrastructure that have extensive overlap and connectivity in our core area of operations and become the first large-scale, integrated natural gas producer in the United States.

See Note 10 to the Condensed Consolidated Financial Statements for more information on the Merger Agreement and the Equitrans Midstream Merger.

On April 11, 2024, we completed our acquisition of a minority equity partner's 33.75% interest in the NEPA Gathering System (defined in Note 9 to the Condensed Consolidated Financial Statements) for a purchase price of approximately $205 million, subject to customary post-closing adjustments.

See Note 9 to the Condensed Consolidated Financial Statements for more information.

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

and its affiliates (collectively, the Equinor Parties), pursuant to which we agreed to sell to the Equinor Parties an undivided 40% interest in our non-operated natural gas assets in Northeast Pennsylvania with projected 2025 net production of approximately 225 million cubic feet per day (MMcf/d) in exchange for $500 million of cash, certain operated upstream assets with net production of approximately 150 MMcf/d and the remaining 16.25% equity interest in the NEPA Gathering System (the NEPA Non-Operated Asset Divestiture).

In addition, we have 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 us in the NEPA Non-Operated Asset Divestiture, whereby the Equinor Parties will purchase a specified amount of natural gas from us at a premium to in-basin pricing through the first quarter of 2028.

The NEPA Non-Operated Asset Divestiture is expected to generate approximately $1.1 billion of value, including synergies and development plan optimization.

The NEPA Non-Operated Asset Divestiture is subject to customary closing adjustments, required regulatory approvals and clearances and is expected to close in the second quarter of 2024.

See Note 9 to the Condensed Consolidated Financial Statements for more information.

We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania;

any such sale would be pursued opportunistically and only if we consider the transaction terms then-available in the market to be favorable.

Trends and Uncertainties

Our sales volume and operating expenses on a per Mcfe basis for 2022 and the first half of 2023 were negatively impacted by fewer wells turned-in-line during 2022 compared to our 2022 planned development schedule due to third-party supply chain constraints.

In addition, as a result of third-party supply chain constraints in 2022, we shifted the planned development of approximately 30 wells from 2022 to 2023 (the Rescheduled Wells).

All of the Rescheduled Wells have been completed and were turned-to-sales as of July 2023, resulting in our third quarter 2023 sales volume returning to our maintenance level of production;

however, our third quarter 2023 sales volume was negatively impacted by approximately 13 Bcfe of curtailments (inclusive of our operated and non-operated wells) principally in response to lower natural gas prices in the Appalachian Basin.

Future supply chain constraints or declines in natural gas prices may result in adjustments to our 2023 planned development schedule or the development schedule of non-operated wells in which we have a working interest.

Our sales volume and operating expenses on a per Mcfe basis for the second quarter of 2023 were also negatively impacted by lower-than-expected liquids volumes from unscheduled downtime at an in-basin ethane cracker plant to conduct equipment repairs and maintenance and a delay in the development schedule of certain wells that are not operated by us but in which we have a working interest in the volumes produced from such wells.

We cannot control or otherwise influence the development schedule of non-operated wells in which we have a working interest.

Adjustments to our 2023 planned development schedule or the development schedule of non-operated wells in which we have a working interest could impact our future sales volume, operating revenues and expenses, per unit metrics and capital expenditures.

The annual inflation rate in the United States was particularly high during 2022, and, although the inflation rate has decreased through 2023, it still remains elevated compared to historical levels.

On March 4, 2024, we announced our decision to strategically curtail approximately 1.0 Bcf per day of gross production beginning on February 24, 2024 (the Strategic Curtailment) in response to the low natural gas price environment resulting from warm winter weather and elevated storage inventories.

The Strategic Curtailment resulted in decreased sales volume of 28 Bcfe during the first quarter of 2024.

We expect to maintain the Strategic Curtailment through the end of May 2024 and will reassess market conditions thereafter.

EQT CORPORATION AND SUBSIDIARIES

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

Continued low natural gas prices may result in further adjustment to our 2024 planned development schedule or the development schedule of non-operated wells in which we have a working interest.

Further, we cannot control or otherwise influence the development schedule of non-operated wells in which we have a working interest.

Certain operators of wells in which we have a non-operating working interest also curtailed production in the first quarter of 2024.

Inclusive of the Strategic Curtailment of 28 Bcfe, we estimate that total expected sales volume was negatively impacted by approximately 30 to 35 Bcfe of curtailments during the first quarter of 2024.

Adjustments to our 2024 planned development schedule or the development schedule of non-operated wells in which we have a working interest, including due to declines in natural gas prices, the pace of well completions, access to sand and water to conduct drilling operations, access to sufficient pipeline takeaway capacity, unscheduled downtime at processing facilities or otherwise, could impact our future sales volume, operating revenues and expenses, per unit metrics and capital expenditures.

The annual inflation rate in the United States remains elevated compared to the rate of inflation over the prior five years.

Inflationary pressures have multiple impacts on our business, including increasing our operating expenses and our cost of capital.

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Although we believe our scale and supply chain contracting strategy of using multi-year sand and frac crew contracts allows us to maximize capital and operating efficiencies, future increases in the inflation rate will negatively impact our long-term contracts with consumer price index adjustments.

EQT CORPORATION AND SUBSIDIARIES

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

Additionally, while the prices for natural gas, NGLs and oil have historically been volatile, price volatility was especially pronounced during 2022, with natural gas prices peaking in August 2022 and steadily declining thereafter.

Natural gas prices have generally continued to trend down through the first half of 2023 but have moderately increased during the third quarter of 2023, although, through most of 2023, natural gas prices on average have remained lower than the prices experienced throughout 2022.

We expect commodity price volatility to continue or increase throughout the remainder of 2023 due to macroeconomic uncertainty and geopolitical tensions, including continued developments pertaining to Russia's invasion of Ukraine and conflicts in the Middle East.

Our revenue, profitability, rate of growth, liquidity and financial position will continue to be impacted in the future by the market prices for natural gas and, to a lesser extent, NGLs and oil.

We expect commodity prices to be volatile throughout 2024 due to macroeconomic uncertainty and geopolitical tensions, including developments pertaining to Russia's invasion of Ukraine and conflicts in the Middle East.

Our revenue, profitability, liquidity and financial position will continue to be impacted in the future by the market prices for natural gas and, to a lesser extent, NGLs and oil.

Additionally, after several years of delays, in the third quarter of 2023, Equitrans Midstream resumed forward construction of the Mountain Valley Pipeline following the approval of federal legislation ratifying and approving all permits and authorizations necessary for the construction and initial operation of the project.

The fee structure and various conditions precedent specified in certain of our agreements with Equitrans Midstream are tied to the date on which the Mountain Valley Pipeline is placed in service.

As a result, the timing of the date on which the Mountain Valley Pipeline is ultimately placed in service, which is outside of our control, could impact our operating results during 2024, including our operating expenses and per unit metrics, average differential and any payments required to settle the Henry Hub Cash Bonus (defined and described in Note 3 to the Consolidated Financial Statements), if required.

Average Realized Price Reconciliation

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Adjusted operating revenues should not be considered as an alternative to total operating revenues.

See "Non-GAAP Financial Measures Reconciliation" for a reconciliation of adjusted operating revenues with total operating revenues, the most directly comparable financial measure calculated in accordance with GAAP.

EQT CORPORATION AND SUBSIDIARIES

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Thousands, unless otherwise noted)

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Thousands, unless otherwise noted)

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(Deduct) add:

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

Net cash settlements received (paid) on derivatives 255,804 (2,033,727) 625,051 (4,672,998)

Premiums (paid) received for derivatives that settled during the period (65,216) 894 (232,128) (31,318)

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

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

Premiums paid for derivatives that settled during the period (34,669) (99,417)

Net marketing services and other (1,852) (5,861)

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Average realized price ($/Mcfe) $ 3.22 $ 4.11

EQT CORPORATION AND SUBSIDIARIES

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

Sales Volume and Revenues

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 Change % Change

(Thousands, unless otherwise noted)

Sales volume by shale (MMcfe):

Marcellus 492,172 456,495 35,677 7.8

Ohio Utica 21,801 30,531 (8,730) (28.6)

Other 8,727 640 8,087 1,263.6

Total sales volume 522,700 487,666 35,034 7.2

Total sales volume (MMcfe) 534,050 458,805 75,245 16.4

Average daily sales volume (MMcfe/d) 5,869 5,098 771 15.1

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Sales of natural gas, NGLs and oil $ 1,303,905 $ 1,830,358 $ (526,453) (28.8)

Gain (loss) on derivatives 177,906 (1,627,296) 1,805,202 (110.9)

Gain on derivatives 106,511 824,852 (718,341) (87.1)

Net marketing services and other 1,852 5,861 (4,009) (68.4)

Total operating revenues $ 1,412,268 $ 2,661,071 $ (1,248,803) (46.9)

Sales volume.

Sales volume increased for the three months ended March 31, 2024 compared to the same period in 2023 primarily as a result of sales volume increases of 66 Bcfe from the assets acquired in the Tug Hill and XcL Midstream Acquisition in addition to wells turned-in-line throughout 2023 and in 2024, partly offset by sales volume decreases of 28 Bcfe due to the Strategic Curtailment.

Sales of natural gas, NGLs and oil.

Sales of natural gas, NGLs and oil decreased for the three months ended September 30, 2023 compared to the same period in 2022 due to lower average realized price, partly offset by increased sales volume.

Average realized price decreased for the three months ended September 30, 2023 compared to the same period in 2022 due to lower NYMEX prices, partly offset by favorable cash settled derivatives and favorable differential.

For the three months ended September 30, 2023, we received $255.8 million of net cash settlements on derivatives, composed of $199.0 million of net cash settlements received on our NYMEX natural gas hedge positions and $56.8 million of net cash settlements received on our basis and liquids hedge positions.

For the same period in 2022, we paid $2,033.7 million of net cash settlements on derivatives, composed of $2,003.2 million of net cash settlements paid on our NYMEX natural gas hedge positions and $30.5 million of net cash settlements paid on our basis and liquids hedge positions.

Net cash settlements received (paid) on derivatives are included in average realized price but may not be included in operating revenues.

For the three months ended September 30, 2023 and 2022, we paid $65.2 million and received $0.9 million, respectively, of premiums for derivatives that settled during the period.

Sales volume increased for the three months ended September 30, 2023 compared to the same period in 2022 primarily as a result of sales volume increases of 25 Bcfe from the assets acquired in the Tug Hill and XcL Midstream Acquisition in addition to wells, including the Rescheduled Wells, turned-in-line during 2023.

Gain (loss) on derivatives.

For the three months ended September 30, 2023, we recognized a gain on derivatives of $177.9 million related primarily to increases in the fair market value of our NYMEX swaps and options due to decreases in NYMEX forward prices.

For the same period in 2022, we recognized a loss on derivatives of $1,627.3 million related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices.

Sales of natural gas, NGLs and oil decreased for the three months ended March 31, 2024 compared to the same period in 2023 due to lower average realized price, partly offset by increased sales volume.

Sales of natural

EQT CORPORATION AND SUBSIDIARIES

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

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Nine Months Ended September 30,

2023 2022 Change % Change

(Thousands, unless otherwise noted)

Sales volume by shale (MMcfe):

Marcellus 1,375,952 1,377,637 (1,685) (0.1)

Ohio Utica 64,481 98,206 (33,725) (34.3)

Other 11,911 5,615 6,296 112.1

Total sales volume 1,452,344 1,481,458 (29,114) (2.0)

Average daily sales volume (MMcfe/d) 5,320 5,427 (107) (2.0)

Operating revenues:

Sales of natural gas, NGLs and oil $ 3,680,566 $ 9,546,029 $ (5,865,463) (61.4)

Gain (loss) on derivatives 1,167,144 (5,550,028) 6,717,172 (121.0)

Net marketing services and other 18,214 21,860 (3,646) (16.7)

Total operating revenues $ 4,865,924 $ 4,017,861 $ 848,063 21.1

Sales of natural gas, NGLs and oil.

Sales of natural gas, NGLs and oil decreased for the nine months ended September 30, 2023 compared to the same period in 2022 due to lower average realized price and decreased sales volume.

Average realized price decreased for the nine months ended September 30, 2023 compared to the same period in 2022 due to lower NYMEX and liquids prices, partly offset by favorable cash settled derivatives and favorable differential.

For the nine months ended September 30, 2023, we received $625.1 million of net cash settlements on derivatives, composed of $738.1 million of net cash settlements received on our NYMEX natural gas hedge positions and $113.0 million of net cash settlements paid on our basis and liquids hedge positions.

For the same period in 2022, we paid $4,673.0 million of net cash settlements on derivatives, composed of $4,525.4 million of net cash settlements paid on our NYMEX natural gas hedge positions and $147.6 million of net cash settlements paid on our basis and liquids hedge positions.

Net cash settlements received (paid) on derivatives are included in average realized price but may not be included in operating revenues.

For the nine months ended September 30, 2023 and 2022, we paid premiums for derivatives that settled during the period of $232.1 million and $31.3 million, respectively.

Sales volume decreased for the nine months ended September 30, 2023 compared to the same period in 2022 primarily as a result of sales volume decreases from natural decline of producing wells, fewer wells turned-in-line throughout 2022 as a result of third-party supply chain constraints and delays in the development schedule of certain non-operated wells in which we have a working interest, partly offset by sales volume increases of 25 Bcfe from the assets acquired in the Tug Hill and XcL Midstream Acquisition as well as sales volume increases from our operated wells as a result of efficiencies in our drilling and completions operations and wells, including the Rescheduled Wells, turned-in-line during 2023.

Gain (loss) on derivatives.

For the nine months ended September 30, 2023, we recognized a gain on derivatives of $1,167.1 million related primarily to increases in the fair market value of our NYMEX swaps and options due to decreases in NYMEX forward prices, partly offset by a loss on the derivative liability related to the Henry Hub Cash Bonus (defined and discussed in Note 3 to the Condensed Consolidated Financial Statements).

For the same period in 2022, we recognized a loss on derivatives of $5,550.0 million related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices, partly offset by a gain on the derivative liability related to the Henry Hub Cash Bonus.

gas decreased for the three months ended March 31, 2024 compared to the same period in 2023 due to lower average realized price, partly offset by increased sales volume;

however, sales of NGLs and oil increased for the three months ended March 31, 2024 compared to the same period in 2023 due to higher average NGLs price and increased sales volume from the liquids-rich assets acquired in the Tug Hill and XcL Midstream Acquisition.

Average realized price decreased for the three months ended March 31, 2024 compared to the same period in 2023 due to lower NYMEX prices and lower East Coast basis spreads, partly offset by higher NGLs prices and favorable cash settled NYMEX derivatives.

The following table presents the composition of net cash settlements received on derivatives.

Three Months Ended

Net cash settlements received on NYMEX natural gas hedge positions $ 464,261 $ 234,178

Net cash settlements paid on basis and liquids hedge positions (13,257) (77,178)

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

Net cash settlements received on derivatives are included in average realized price but may not be included in operating revenues.

For the three months ended March 31, 2024 and 2023, we paid premiums of $34.7 million and $99.4 million, respectively, for derivatives that settled during the period.

Gain on derivatives.

For the three months ended March 31, 2024 and 2023, we recognized a gain on derivatives of $106.5 million and $824.9 million, respectively, related primarily to increases in the fair market value of our NYMEX swaps and options due to decreases in NYMEX forward prices.

EQT CORPORATION AND SUBSIDIARIES

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Operating Expenses

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Three Months Ended September 30,

Three Months Ended March 31,

2024 2023 Change % Change

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Production depletion 0.90 0.83 0.07 8.4

Gathering expense decreased on an absolute and per Mcfe basis for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to lower gathering rates on certain contracts indexed to price as well as the impact of the gathering assets acquired in the Tug Hill and XcL Midstream Acquisition, which are wholly-owned by us and, therefore, reduce our gathering cost structure on a per Mcfe basis.

Transmission.

Transmission expense increased on an absolute and per Mcfe basis for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to additional capacity acquired.

Processing expense increased on an absolute basis for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to processing expenses for the liquids-rich assets acquired in the Tug Hill and XcL Midstream Acquisition.

LOE increased on an absolute basis for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to the assets acquired in the Tug Hill and XcL Midstream Acquisition, partly offset by lower salt water disposal costs and increased recycling.

Saltwater disposal costs and recycle rates were favorably impacted by increased use of our internally developed produced water gathering and storage system, which was placed in service during the fourth quarter of 2022.

Production taxes.

Production taxes decreased on an absolute and per Mcfe basis for the three months ended September 30, 2023 compared to the same period in 2022 due to lower West Virginia severance taxes and Pennsylvania impact fees, which decreased due to lower TETCO M2 and NYMEX prices, respectively.

EQT CORPORATION AND SUBSIDIARIES

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

Selling, general and administrative.

Selling, general and administrative expense decreased on an absolute and per Mcfe basis for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to lower long-term incentive compensation costs as a result of decreases in awards outstanding and changes in the fair value of awards.

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

Depreciation and depletion.

Production depletion expense increased on an absolute basis for the three months ended September 30, 2023 compared to the same period in 2022 due to increased sales volume.

Impairment and expiration of leases.

During the three months ended September 30, 2023 and 2022, we recognized impairment and expiration of leases of $6.4 million and $20.5 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Other operating expenses .

Other operating expenses increased for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to transaction costs associated with the Tug Hill and XcL Midstream Acquisition, partly offset by decreased legal reserves, including from settlements.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Nine Months Ended September 30,

2023 2022 Change % Change

(Thousands, unless otherwise noted)

Operating expenses:

Gathering $ 954,304 $ 997,161 $ (42,857) (4.3)

Gathering expense decreased on a per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to the lower gathering cost structure that resulted from our ownership of the gathering assets acquired in the Tug Hill and XcL Midstream Acquisition.

Transmission.

Processing 164,979 151,825 13,154 8.7

LOE 108,334 122,577 (14,243) (11.6)

Production taxes 61,737 112,776 (51,039) (45.3)

Exploration 2,602 2,870 (268) (9.3)

Selling, general and administrative 168,999 195,603 (26,604) (13.6)

Production depletion $ 1,212,499 $ 1,254,566 $ (42,067) (3.4)

Other depreciation and depletion 17,756 15,370 2,386 15.5

Total depreciation and depletion $ 1,230,255 $ 1,269,936 $ (39,681) (3.1)

Per Unit ($/Mcfe):

$ 0.66 $ 0.67 $ (0.01) (1.5)

0.33 0.30 0.03 10.0

0.11 0.10 0.01 10.0

LOE 0.07 0.08 (0.01) (12.5)

Transmission expense increased on an absolute basis for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to additional capacity acquired.

Transmission expense decreased on a per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to increased sales volume from the assets acquired in the Tug Hill and XcL Midstream Acquisition.

Processing expense increased on an absolute and per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to increased processing expense from the liquids-rich assets acquired in the Tug Hill and XcL Midstream Acquisition.

LOE increased on an absolute and per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to increased LOE from the assets acquired in the Tug Hill and XcL Midstream Acquisition.

Production taxes.

0.04 0.08 (0.04) (50.0)

Production taxes increased on an absolute and per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due to increased West Virginia property tax expense from the assets acquired in the Tug Hill and XcL Midstream Acquisition and higher price as well as increased severance tax expense from increased volumes from the assets acquired in the Tug Hill and XcL Midstream Acquisition.

Selling, general and administrative.

Production depletion 0.83 0.85 (0.02) (2.4)

Gathering expense decreased on an absolute basis for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to lower gathering rates on certain contracts indexed to price as well as decreased sales volume.

Gathering expense decreased on a per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to lower gathering rates on certain contracts indexed to price.

Transmission.

Transmission expense increased on an absolute and per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to additional capacity acquired, partly offset by credits received from the Texas Eastern Transmission Pipeline.

Selling, general and administrative expense increased on an absolute and per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to higher personnel costs due to increased workforce headcount.

EQT CORPORATION AND SUBSIDIARIES

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

Processing expense increased on an absolute and per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to processing expenses for the liquids-rich assets acquired in the Tug Hill and XcL Midstream Acquisition as well as inflation of contracted processing rates.

LOE decreased on an absolute and per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to lower salt water disposal costs and increased recycling.

Production taxes.

Production taxes decreased on an absolute and per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due to lower West Virginia severance taxes and Pennsylvania impact fees, which decreased due to lower sales volume and lower TETCO M2 and NYMEX prices, respectively.

Selling, general and administrative.

Selling, general and administrative expense decreased on an absolute and per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to lower long-term incentive compensation costs as a result of decreases in awards outstanding and changes in the fair value of awards.

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

Depreciation and depletion.

Production depletion expense decreased on an absolute and per Mcfe basis for the nine months ended September 30, 2023 compared to the same period in 2022 due to a lower annual depletion rate and decreased sales volume.

Loss (gain) on sale/exchange of long-lived assets .

During the nine months ended September 30, 2023, we recognized a loss on sale/exchange of long-lived assets of $17.8 million related to acreage trade agreements where the carrying value of the acres traded exceeded the fair value of the acres received.

Impairment of contract asset.

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

See Note 8 to the Condensed Consolidated Financial Statements.

Impairment and expiration of leases.

During the nine months ended September 30, 2023 and 2022, we recognized impairment and expiration of leases of $22.3 million and $97.5 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Production depletion expense increased on an absolute and per Mcfe basis for the three months ended March 31, 2024 compared to the same period in 2023 due to increased sales volume and higher annual depletion rate.

Loss on sale/exchange of long-lived assets .

During the three months ended March 31, 2023, we recognized a loss on sale/exchange of long-lived assets of $16.5 million related to acreage trade agreements where the carrying value of the acres traded exceeded the fair value of the acres received.

Other operating expenses .

Other operating expenses increased for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to transaction costs associated with the Tug Hill and XcL Midstream Acquisition, partly offset by decreased legal reserves, including from settlements.

Other operating expenses decreased for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to proceeds from insurance claim recoveries and decreased legal and environmental reserves, including from settlements, partly offset by transaction costs related to the Equitrans Midstream Merger.

Other Income Statement Items

(Income) loss from investments.

For the nine months ended September 30, 2023, we recognized income from investments due to equity earnings on our equity method investments and a gain on our investment in the Investment Fund (defined in Note 4 to the Condensed Consolidated Financial Statements).

For the nine months ended September 30, 2022, we recognized a loss from investments due to a loss on our sale of our investment in Equitrans Midstream, partly offset by equity earnings on our equity method investments and a gain on our investment in the Investment Fund.

Dividend and other income .

Dividend and other income decreased for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to lower dividends received on our investment in the Investment Fund as well as dividends received on our investment in Equitrans Midstream in 2022.

Loss (gain) on debt extinguishment.

During the three and nine months ended September 30, 2022, we recognized a loss on debt extinguishment of $27.8 million and $139.1 million, respectively, due to the repayment and repurchase of debt discussed in Note 6 to the Condensed Consolidated Financial Statements.

EQT CORPORATION AND SUBSIDIARIES

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

During the three months ended March 31, 2024, we recognized a loss on debt extinguishment of $3.4 million due to our prepayment of a portion of the Term Loan Facility (defined in Note 6 to the Condensed Consolidated Financial Statements).

During the three months ended March 31, 2023, we recognized a gain on debt extinguishment of $6.6 million due to our repayment and repurchase of our senior notes at a discount to par value.

Interest expense, net.

Interest expense, net was flat for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to higher interest expense on debt as a result of senior notes issuances in the fourth quarter of 2022 as well as the draw down of the Term Loan Facility (defined and discussed in Note 6 to the Condensed Consolidated Financial Statements) in August 2023, wholly offset by higher interest income earned as well as lower interest expense on our revolving credit facility from lower borrowings thereunder.

Interest expense, net decreased for the nine months ended September 30, 2023 compared to the same period in 2022 due primarily to higher interest income earned as well as lower interest expense on our revolving credit facility from lower borrowings and reduced letters of credit balances thereunder, partly offset by higher interest expense on debt as a result of senior notes issuances in the fourth quarter of 2022 as well as the draw down of the Term Loan Facility in August 2023.

Income tax (benefit) expense.

Interest expense, net increased for the three months ended March 31, 2024 compared to the same period in 2023 due primarily to lower interest income earned on cash on hand, interest expense on our 5.750% senior notes and interest expense on our borrowings under the Term Loan Facility, partly offset by lower interest expense due to our repayment and repurchase of our 5.678% senior notes, 6.125% senior notes and 1.75% convertible notes as well as higher capitalized interest from the assets acquired in the Tug Hill and XcL Midstream Acquisition.

See Note 6 to the Condensed Consolidated Financial Statements.

Income tax expense.

See Note 5 to the Condensed Consolidated Financial Statements.

Capital Resources and Liquidity

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Planned Capital Expenditures and Sales Volume .

In the fourth quarter of 2023, we expect to spend approximately $525 million to $575 million in total capital expenditures.

In the second quarter of 2024, we expect to spend approximately $545 million to $620 million in total capital expenditures, excluding amounts attributable to the assets expected to be acquired in the Equitrans Midstream Merger.

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

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and drilling, completion and acquisition costs.

In the fourth quarter of 2023, we expect our sales volume to be 525 Bcfe to 575 Bcfe.

In the second quarter of 2024, we expect our sales volume to be 455 Bcfe to 505 Bcfe, including expected curtailments and excluding amounts attributable to the NEPA Non-Operated Asset Divestiture.

Operating Activities.

Net cash provided by operating activities was $2,554 million for the nine months ended September 30, 2023 compared to $2,402 million for the same period in 2022.

The increase was due primarily to net cash settlements received on derivatives in 2023 compared to net cash settlements paid on derivatives in 2022, favorable changes in working capital driven by declining accounts receivable and lower margin postings as well as lower cash operating expenses and interest expense, partly offset by lower cash operating revenues.

Net cash provided by operating activities was $1,156 million for the three months ended March 31, 2024 compared to $1,663 million for the same period in 2023.

The decrease was due primarily to lower cash operating revenues, unfavorable timing of working capital payments and higher operating expenses, partly offset by higher net cash settlements received on derivatives.

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

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For a discussion of potential commodity market risks, refer to "Risk Factors – Natural gas, NGLs and oil price volatility, or a prolonged period of low natural gas, NGLs and oil prices, may have an adverse effect on our revenue, profitability, future rate of growth, liquidity and financial position" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Investing Activities.

Net cash used in investing activities was $3,774 million for the nine months ended September 30, 2023 compared to $1,017 million for the same period in 2022.

The increase was attributable primarily to cash paid for the Tug Hill and XcL Midstream Acquisition in 2023 and increased capital expenditures.

EQT CORPORATION AND SUBSIDIARIES

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

Investing Activities.

Net cash used in investing activities was $567 million for the three months ended March 31, 2024 compared to $498 million for the same period in 2023.

The increase was attributable primarily to increased capital expenditures.

The following table summarizes our capital expenditures.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Reserve development $ 355 $ 271 $ 1,147 $ 797

Land and lease (a) 41 34 101 122

Reserve development (a) $ 452 $ 393

Land and lease (b) 27 36

Other production infrastructure 22 14

Midstream 13 1

Capitalized overhead 17 14

Capitalized interest 17 10

Other production infrastructure 17 27 49 59

Other 9 3 19 6

Total capital expenditures 549 469

Non-cash items (b) 59 6 99 5

(Deduct) add:

Non-cash items (c) (15) 26

Total cash capital expenditures $ 534 $ 495

(a) Capital expenditures attributable to noncontrolling interests were $6.6 million for the three months ended September 30, 2022 and $8.5 million and $11.0 million for the nine months ended September 30, 2023 and 2022, respectively.

There were no capital expenditures attributable to noncontrolling interests for the three months ended September 30, 2023.

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

(a) Includes capital expenditures for water infrastructure of $15.2 million and $11.0 million for three months ended March 31, 2024 and 2023, respectively.

(b) Capital expenditures attributable to noncontrolling interests was $5.4 million for the three months ended March 31, 2023.

There were no capital expenditures attributable to noncontrolling interests for the three months ended March 31, 2024.

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

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

On April 11, 2024, we completed our acquisition of a 33.75% interest in the NEPA Gathering System for a purchase price of approximately $205 million, subject to customary post-closing adjustments.

On April 12, 2024, we entered into an agreement for the NEPA Non-Operated Asset Divestiture, pursuant to which we agreed to sell an undivided 40% interest in our non-operated natural gas assets in Northeast Pennsylvania in exchange for $500 million of cash and certain upstream and midstream assets, including the remaining 16.25% interest in the NEPA Gathering System not owned by us.

See Note 9 to the Condensed Consolidated Financial Statements for further discussion of our acquisition of the NEPA Gathering System and the NEPA Non-Operated Asset Divestiture.

Financing Activities.

Net cash used in financing activities was $174 million for the nine months ended September 30, 2023 compared to $1,411 million for the same period in 2022.

For the nine months ended September 30, 2023, the primary source of financing cash flows was proceeds from the Term Loan Facility borrowings, and the primary uses of financing cash flows were repayment and retirement of debt, repurchase and retirement of EQT Corporation common stock and payment of dividends.

For the nine months ended September 30, 2022, the primary uses of financing cash flows were repayment and repurchase of debt, repurchase and retirement of EQT Corporation common stock and payment of dividends.

Net cash used in financing activities was $21 million for the three months ended March 31, 2024 compared to $496 million for the same period in 2023.

For the three months ended March 31, 2024, the primary uses of financing cash flows were our prepayment of a portion of the Term Loan Facility and payment of dividends, and the primary sources of financing cash flows were proceeds from the issuance of our 5.750% senior notes and proceeds from the net settlement of the Capped Call Transactions (defined in Note 6 to the Condensed Consolidated Financial Statements).

For the three months ended March 31, 2023, the primary uses of financing cash flows were our repayment and repurchase of debt, repurchase and retirement of EQT Corporation common stock and payment of dividends.

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

On October 12, 2023, our Board of Directors declared a quarterly cash dividend of $0.1575 per share of EQT Corporation common stock, payable on December 1, 2023, to shareholders of record at the close of business on November 8, 2023.

On April 17, 2024, our Board of Directors declared a quarterly cash dividend of $0.1575 per share of EQT Corporation common stock, payable on June 1, 2024, to shareholders of record at the close of business on May 8, 2024.

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

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Security Ratings and Financing Triggers

The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as of September 30, 2023.

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

The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as of March 31, 2024.

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

We cannot ensure that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by a rating agency if, in the rating agency's judgment, circumstances so warrant.

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Rating agency Senior notes Outlook

Moody's Investors Service (Moody's) Baa3 Stable

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

Moody's Investor Service (Moody's) Baa3 Negative

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

Fitch Ratings Service (Fitch) BBB– Stable

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Our revolving credit facility and the Term Loan Facility contain financial covenants that require us to have a total debt to total capitalization ratio no greater than 65%.

As of September 30, 2023, we were in compliance with all debt provisions and covenants under our debt agreements.

As of March 31, 2024, we were in compliance with all debt provisions and covenants under our debt agreements.

See Note 6 to the Condensed Consolidated Financial Statements for a discussion of borrowings under our revolving credit facility and the Term Loan Facility.

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

The following table summarizes the approximate volume and prices of our NYMEX hedge positions as of October 20, 2023.

The following table summarizes the approximate volume and prices of our NYMEX hedge positions as of April 19, 2024.

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

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Hedged Volume (MMDth/d) 2.9 2.6 2.8 2.5 2.5

Volume (MMDth) 14 — — — —

Price ($/Dth) $ 4.77 $ — $ — $ — $ —

Swaps – Short

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Cash Settlement of Deferred Premiums (millions) $ (4) $ (4) $ — $ — $ —

(a) October 1 through December 31 .

(a) April 1 through June 30 .

We have also entered into derivative instruments to hedge basis.

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In the event we determine that (i) a loss is probable but the amount of the loss cannot be reasonably estimated, or (ii) a loss is less likely than probable but is reasonably possible, then we are required to disclose the matter in our Annual Report on Form 10-K or this Quarterly Report on Form 10-Q, as applicable, although we are not required to accrue such loss.

EQT CORPORATION AND SUBSIDIARIES

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

When able, we determine an estimate of reasonably possible losses or ranges of reasonably possible losses, whether in excess of any related accrued liability or where there is no accrued liability, for legal proceedings.

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See Note 13 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our commitments and contingencies, including certain pending legal and regulatory proceedings and other contingent matters.

As of September 30, 2023, there have been no material changes to such matters as disclosed therein.

See also "Legal Proceedings" for a description of certain other pending environmental matters for which we accrued contingent liabilities.

As of March 31, 2024, there have been no material changes to such matters as disclosed therein.

EQT CORPORATION AND SUBSIDIARIES

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

Additionally, in the normal course of business, we are subject to various other pending and threatened legal proceedings in which claims for monetary damages or other relief are asserted.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis