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Item 2. Management’s Discussion and Analysis

2024-07-24 compared with 2024-04-24 · 177 added, 90 removed, 276 unchanged (49% of the section changed)

18 unchanged sentences

projected gathering and compression rates;

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;

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 strategic transactions, including the Equitrans Midstream Merger (defined and discussed in Note 10 to the Condensed Consolidated Financial Statements);

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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availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and sand and water required to execute our exploration and development plans, including as a result of inflationary pressures;

risks associated with operating primarily in the Appalachian Basin and obtaining a substantial amount of our midstream services from Equitrans Midstream Corporation (Equitrans Midstream);

risks associated with operating primarily in the Appalachian Basin;

the ability to obtain environmental and other permits and the timing thereof;

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

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

risks related to our ability to integrate the operations of Equitrans Midstream Corporation (Equitrans Midstream) in a successful manner and in the expected time period and the possibility that any of the anticipated benefits and projected synergies of the Equitrans Midstream Merger will not be realized or will not be realized within the expected time period;

and disruptions to our business due to recently completed 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

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.

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 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.

Net income attributable to EQT Corporation for the three months ended June 30, 2024 was $9.5 million, $0.02 per diluted share, compared to net loss attributable to EQT Corporation of $66.6 million, $0.18 per diluted share, for the same period in 2023.

The change was attributable primarily to the gain on the NEPA Non-Operated Asset Divestiture (defined in Note 9 to the Condensed Consolidated Financial Statements) and increased sales of natural gas, NGLs and oil, partly offset by a lower gain on derivatives, increased depreciation and depletion expense and increased production expense.

Net income attributable to EQT Corporation for the six months ended June 30, 2024 was $113.0 million, $0.25 per diluted share, compared to $1,151.9 million, $2.94 per diluted share, for the same period in 2023.

The decrease was attributable primarily to a lower gain on derivatives, decreased sales of natural gas, NGLs and oil, increased depreciation and depletion expense and increased production expense, partly offset by an income tax benefit in 2024 compared to income tax expense in 2023 as well as the gain on the NEPA Non-Operated Asset Divestiture.

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.

In addition, results of operations for 2024 include the results of our operation of assets received as consideration for the NEPA Non-Operated Asset Divestiture, which closed on May 31, 2024.

Such assets received included the remaining 16.25% equity interest in the NEPA Gathering System (defined in Note 9 to the Condensed Consolidated Financial Statements) (which was the sole remaining minority interest following our acquisition of a 33.75% equity interest in the NEPA Gathering System Acquisition on April 11, 2024), resulting in our 100% ownership of the NEPA Gathering System.

See Note 9 to the Condensed Consolidated Financial Statements.

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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.

On July 22, 2024, we completed the Equitrans Midstream Merger pursuant to the Merger Agreement (defined in Note 10 to the Condensed Consolidated Financial Statements).

Upon closing of the Equitrans Midstream Merger, each share of common stock, no par value, of Equitrans Midstream (Equitrans Midstream common stock) that was issued and outstanding immediately prior to the effective time of the First Merger (defined in Note 10 to the Condensed Consolidated Financial Statements) (other than shares of Equitrans Midstream common stock owned by Equitrans Midstream or its subsidiaries or by us) was converted into the right to receive, without interest, 0.3504 shares of EQT Corporation common stock, with cash in lieu of fractional shares.

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

See Note 10 to the Condensed Consolidated Financial Statements.

Trends and Uncertainties

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.

Following receipt of authorization from the Federal Energy Regulatory Commission, the Mountain Valley Pipeline entered into service on June 14, 2024.

Upon commencement of long-term firm capacity obligations, the MVP In-Service Date (as defined within the Consolidated GGA (defined in Note 3 to the Condensed Consolidated Financial Statements)) occurred on July 1, 2024.

We are committed to an initial 1.29 Bcf per day of firm capacity on the Mountain Valley Pipeline through June 30, 2044.

Accordingly, as a result of the Mountain Valley Pipeline commencing full service, we expect our future transmission expense to increase as a result of the additional contracted capacity and our future gathering cost structure pursuant to the Consolidated GGA to further decrease.

EQT CORPORATION AND SUBSIDIARIES

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

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

The Strategic Curtailment resulted in total decreased sales volume of 82 Bcfe during the period beginning on February 24, 2024 through June 19, 2024, of which decreases of 54 Bcfe occurred during the second quarter of 2024.

In response to market fundamentals, we may continue to strategically curtail our production.

Our sales volume guidance for the second half of 2024 assumes additional strategic curtailments of approximately 90 Bcfe of net production.

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.

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

Inclusive of the Strategic Curtailment of 82 Bcfe, we estimate that total expected sales volume was negatively impacted by approximately 90 to 95 Bcfe of curtailments during the first half of 2024, the total of which includes curtailments by certain operators of wells in which we have a non-operating working interest.

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.

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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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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(Thousands, unless otherwise noted)

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(Thousands, unless otherwise noted)

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Sales Volume and Revenues

Three Months Ended March 31,

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Three Months Ended June 30,

2024 2023 Change % Change

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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 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

Sales volume increased for the three months ended June 30, 2024 compared to the same period in 2023 primarily as a result of sales volume increases of 58 Bcfe from the assets acquired in the Tug Hill and XcL Midstream Acquisition and from wells turned-in-line throughout 2023 and in the first half of 2024, partly offset by sales volume decreases of 54 Bcfe due to the Strategic Curtailment.

EQT CORPORATION AND SUBSIDIARIES

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

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.

Sales of natural gas, NGLs and oil.

Sales of natural gas, NGLs and oil increased for the three months ended June 30, 2024 compared to the same period in 2023 due to higher average realized price and increased sales volume.

Average realized price increased for the three months ended June 30, 2024 compared to the same period in 2023 due to favorable cash settled NYMEX derivatives and higher NGLs prices, partly offset by lower NYMEX prices.

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

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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.

For the three months ended June 30, 2024 and 2023, we paid premiums of $4.9 million and $67.5 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.

For the three months ended June 30, 2024, we recognized a gain on derivatives of $61.3 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 three months ended June 30, 2023, we recognized a gain on derivatives of $164.4 million related primarily to increases in the fair market value of our basis swaps, which was in a liability position as of March 31, 2023, partly offset by a loss on the derivative liability related to the Henry Hub Cash Bonus (defined and discussed in Note 4 to the Condensed Consolidated Financial Statements).

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Six Months Ended June 30,

2024 2023 Change % Change

(Thousands, unless otherwise noted)

Total sales volume (MMcfe) 1,041,562 929,644 111,918 12.0

Average daily sales volume (MMcfe/d) 5,723 5,136 587 11.4

Operating revenues:

Sales of natural gas, NGLs and oil $ 2,193,422 $ 2,678,683 $ (485,261) (18.1)

Gain on derivatives 167,844 989,238 (821,394) (83.0)

Net marketing services and other 3,514 11,901 (8,387) (70.5)

Total operating revenues $ 2,364,780 $ 3,679,822 $ (1,315,042) (35.7)

Sales volume.

Sales volume increased for the six months ended June 30, 2024 compared to the same period in 2023 primarily as a result of sales volume increases of 124 Bcfe from the assets acquired in the Tug Hill and XcL Midstream Acquisition and increases from wells turned-in-line throughout 2023 and in the first half of 2024, partly offset by sales volume decreases of 82 Bcfe due to the Strategic Curtailment.

Sales of natural gas, NGLs and oil.

Sales of natural gas, NGLs and oil decreased for the six months ended June 30, 2024 compared to the same period in 2023 due to lower average realized price, partly offset by increased sales volume.

EQT CORPORATION AND SUBSIDIARIES

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

Average realized price decreased for the six months ended June 30, 2024 compared to the same period in 2023 due to lower NYMEX prices and lower East Coast basis spreads, partly offset by favorable cash settled NYMEX derivatives and higher NGLs prices.

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

Six Months Ended

Net cash settlements received on NYMEX natural gas hedge positions $ 856,128 $ 539,005

Net cash settlements paid on basis and liquids hedge positions (106,943) (169,758)

Net cash settlements received on derivatives $ 749,185 $ 369,247

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

For the six months ended June 30, 2024 and 2023, we paid premiums of $39.6 million and $166.9 million, respectively, for derivatives that settled during the period.

Gain on derivatives.

For the six months ended June 30, 2024, we recognized a gain on derivatives of $167.8 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 six months ended June 30, 2023, we recognized a gain on derivatives of $989.2 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.

EQT CORPORATION AND SUBSIDIARIES

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

Operating Expenses

Three Months Ended March 31,

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Three Months Ended June 30,

2024 2023 Change % Change

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Production depletion 0.90 0.83 0.07 8.4

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.

Gathering expense decreased on an absolute and per Mcfe basis for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to the lower gathering cost structure that resulted pursuant to the Consolidated GGA as well as from our acquisition of the remaining minority interest in the NEPA Gathering System during the second quarter of 2024.

In addition, gathering expense per Mcfe for the three months ended June 30, 2024 compared to the same period in 2023 benefited from our ownership of the gathering assets acquired in the Tug Hill and XcL Midstream Acquisition during the third quarter of 2023.

Transmission.

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.

Transmission expense increased on an absolute and per Mcfe basis for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to credits received from the Texas Eastern Transmission Pipeline in 2023 as well as additional capacity acquired.

Processing expense increased on an absolute and per Mcfe basis for the three months ended June 30, 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 June 30, 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.

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.

Production taxes increased on an absolute and per Mcfe basis for the three months ended June 30, 2024 compared to the same period in 2023 due primarily 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.

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 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.

Selling, general and administrative expense increased on an absolute basis for the three months ended June 30, 2024 compared to the same period in 2023 due primarily to higher legal costs as well as higher personnel costs due to increased workforce headcount.

Depreciation and depletion.

Production depletion expense increased on an absolute and per Mcfe basis for the three months ended June 30, 2024 compared to the same period in 2023 due to higher annual depletion rate and increased sales volume.

(Gain) loss on sale/exchange of long-lived assets .

During the three months ended June 30, 2024, we recognized a gain on the NEPA Non-Operated Asset Divestiture of approximately $320.0 million.

See Note 9 to the Condensed Consolidated Financial Statements.

Impairment and expiration of leases.

During the three months ended June 30, 2024 and 2023, we recognized impairment and expiration of leases of $37.7 million and $5.3 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 June 30, 2024 compared to the same period in 2023 due primarily to increased legal and environmental reserves as well as transaction costs related to the Equitrans Midstream Merger, partly offset by lower transaction costs related to the Tug Hill and XcL Midstream Acquisition.

EQT CORPORATION AND SUBSIDIARIES

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

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Six Months Ended June 30,

2024 2023 Change % Change

(Thousands, unless otherwise noted)

Operating expenses:

Gathering $ 606,292 $ 625,755 $ (19,463) (3.1)

Transmission 346,821 307,079 39,742 12.9

Processing 135,135 105,312 29,823 28.3

LOE 113,901 64,016 49,885 77.9

Production taxes 90,605 38,962 51,643 132.5

Exploration 2,294 2,155 139 6.5

Selling, general and administrative 140,260 112,057 28,203 25.2

Production depletion $ 938,037 $ 772,886 $ 165,151 21.4

Other depreciation and depletion 14,695 10,483 4,212 40.2

Total depreciation and depletion $ 952,732 $ 783,369 $ 169,363 21.6

Per Unit ($/Mcfe):

$ 0.58 $ 0.67 $ (0.09) (13.4)

0.33 0.33 — —

0.13 0.11 0.02 18.2

LOE 0.11 0.07 0.04 57.1

Production taxes

0.09 0.04 0.05 125.0

Selling, general and administrative 0.13 0.12 0.01 8.3

Production depletion 0.90 0.83 0.07 8.4

Gathering expense decreased on an absolute and per Mcfe basis for the six months ended June 30, 2024 compared to the same period in 2023 due primarily to the lower gathering cost structure that resulted from our acquisition of the remaining minority interest in the NEPA Gathering System during the second quarter of 2024.

In addition, gathering expense per Mcfe for the six months ended June 30, 2024 compared to the same period in 2023 benefited from our ownership of the gathering assets acquired in the Tug Hill and XcL Midstream Acquisition during the third quarter of 2023.

Transmission.

Transmission expense increased on an absolute basis for the six months ended June 30, 2024 compared to the same period in 2023 due primarily to additional capacity acquired as well as credits received from the Texas Eastern Transmission Pipeline in 2023.

Processing expense increased on an absolute and per Mcfe basis for the six months ended June 30, 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 six months ended June 30, 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.

Production taxes increased on an absolute and per Mcfe basis for the six months ended June 30, 2024 compared to the same period in 2023 due primarily 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.

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 increased on an absolute and per Mcfe basis for the six months ended June 30, 2024 compared to the same period in 2023 due primarily to higher legal costs as well as higher personnel costs due to increased workforce headcount.

Depreciation and depletion.

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.

Production depletion expense increased on an absolute and per Mcfe basis for the six months ended June 30, 2024 compared to the same period in 2023 due to increased sales volume and higher annual depletion rate.

(Gain) loss on sale/exchange of long-lived assets .

During the six months ended June 30, 2024, we recognized a gain on the NEPA Non-Operated Asset Divestiture of approximately $320.0 million.

See Note 9 to the Condensed Consolidated Financial Statements.

During the six months ended June 30, 2023, we recognized a loss on exchange of long-lived assets of $16.3 million related to acreage trade agreements where the carrying value of the acres traded exceeded the fair value of the acres received.

Impairment and expiration of leases.

During the six months ended June 30, 2024 and 2023, we recognized impairment and expiration of leases of $46.9 million and $15.9 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 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 operating expenses increased for the six months ended June 30, 2024 compared to the same period in 2023 due primarily to transaction costs related to the Equitrans Midstream Merger and increased legal and environmental reserves, partly offset by lower transaction costs related to the Tug Hill and XcL Midstream Acquisition.

Other Income Statement Items

Income from investments.

Income from investments decreased for the six months ended June 30, 2024 compared to the same period in 2023 due primarily to lower equity earnings from our equity method investments.

Loss (gain) on debt extinguishment.

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.

During the three months ended June 30, 2024 and 2023, we recognized a loss on debt extinguishment of $1.8 million and $5.5 million, respectively, due to our repayment and repurchase of certain of our senior notes at a premium to par value.

During the six months ended June 30, 2024, we recognized a loss on debt extinguishment of $5.3 million due to our prepayment of a portion of the Term Loan Facility (defined in Note 6 to the Condensed Consolidated Financial Statements) as well as our redemption of our 6.125% senior notes at a premium to par value.

During the six months ended June 30, 2023, we recognized a gain on debt extinguishment of $1.1 million due to our repayment and repurchase of certain of our senior notes at a discount to par value during the first quarter of 2023, partly offset by the loss recognized during the three months ended June 30, 2023.

Other income.

During the six months ended June 30, 2024, we received proceeds from insurance claim recoveries of $19.1 million related to the assets acquired in the Tug Hill and XcL Midstream Acquisition.

Interest expense, net.

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.

Interest expense, net increased for both the three and six months ended June 30, 2024 compared to the same periods in 2023 due primarily to lower interest income earned on cash on hand as well as the interest expense on our 5.750% senior notes issued in January 2024 and the interest expense on our borrowings under the Term Loan Facility, partly offset by lower interest expense due to our repayment and repurchase of certain of our senior 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.

Income tax (benefit) expense.

See Note 5 to the Condensed Consolidated Financial Statements.

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Although we cannot provide any assurance, we believe cash flows from operating activities and availability under our revolving credit facility should be sufficient to meet our cash requirements inclusive of, but not limited to, normal operating needs, debt service obligations, planned capital expenditures and commitments for at least the next twelve months and, based on current expectations, for the long term.

EQT CORPORATION AND SUBSIDIARIES

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

Planned Capital Expenditures and Sales Volume .

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.

Following the completion of the Equitrans Midstream Merger, we revised our estimated total capital expenditures for the third quarter of 2024 to $620 million to $720 million and fourth quarter of 2024 to $580 million to $680 million.

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 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.

We expect our sales volume, including expected curtailments, to be 510 Bcfe to 560 Bcfe for the third quarter of 2024 and 515 Bcfe to 565 Bcfe for the fourth quarter of 2024.

Operating Activities.

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.

Net cash provided by operating activities was $1,478 million for the six months ended June 30, 2024 compared to $2,100 million for the same period in 2023.

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.

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.

Net cash used in investing activities was $879 million for the six months ended June 30, 2024 compared to $984 million for the same period in 2023.

The decrease was attributable primarily to proceeds received from the NEPA Non-Operated Asset Divestiture, partly offset by cash paid for the NEPA Gathering System Acquisition and increased capital expenditures.

The following table summarizes our capital expenditures.

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Reserve development (a) $ 460 $ 399 $ 912 $ 792

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Capitalized interest 16 9 33 19

Other 7 5 8 6

Total capital expenditures 576 473 1,125 942

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Total cash capital expenditures $ 559 $ 487 $ 1,093 $ 982

(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.

(a) Includes capital expenditures for water infrastructure of $14.6 million and $7.7 million for the three months ended June 30, 2024 and 2023, respectively, and $29.8 million and $18.7 million for the six months ended June 30, 2024 and 2023, respectively.

(b) Capital expenditures attributable to noncontrolling interests were $3.1 million and $8.5 million for the three and six months ended June 30, 2023, respectively.

There were no capital expenditures attributable to noncontrolling interests for the three and six months ended June 30, 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.

EQT CORPORATION AND SUBSIDIARIES

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

Financing Activities.

Net cash used in financing activities was $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 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.

Net cash used in financing activities was $649 million for the six months ended June 30, 2024 compared to $1,359 million for the same period in 2023.

For the six months ended June 30, 2024, the primary uses of financing cash flows were our prepayment of a portion of the Term Loan Facility, redemption of our 6.125% senior notes 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 six months ended June 30, 2023, the primary uses of financing cash flows were our repayment and retirement 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, including financing activities entered into in connection with the completion of the Equitrans Midstream Merger.

In connection with the completion of the Equitrans Midstream Merger, we acquired Equitrans Midstream's controlling interest in EQM Midstream Partners, LP (EQM), which will be consolidated into our financial statements in the third quarter of 2024.

As of June 30, 2024, EQM had outstanding senior notes in an aggregate principal amount of approximately $7 billion.

On July 16, 2024, our Board of Directors declared a quarterly cash dividend of $0.1575 per share of EQT Corporation common stock, payable on September 1, 2024, to shareholders of record at the close of business on August 7, 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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See Note 6 to the Condensed Consolidated Financial Statements for discussion of redemptions and repurchases of debt.

EQT CORPORATION AND SUBSIDIARIES

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

Material Cash Requirement.

On June 25, 2024, we delivered to Equitrans Midstream a written election exercising our right under the Merger Agreement to cause Equitrans Midstream to purchase and redeem, prior to the completion of the Equitrans Midstream Merger, all of the issued and outstanding Equitrans Midstream Preferred Stock (defined in Note 10 to the Condensed Consolidated Financial Statements).

On July 22, 2024, prior to the closing of the Equitrans Midstream Merger, using borrowings under our revolving credit facility, we paid $685.3 million to effect such purchase and redemption..

Security Ratings and Financing Triggers

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

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

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

EQT CORPORATION AND SUBSIDIARIES

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

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

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

As of June 30, 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.

EQT CORPORATION AND SUBSIDIARIES

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

Commodity Risk Management

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

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

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

Q2 2024 (a) Q3 2024 Q4 2024 Q1 2025 Q2 2025

Q3 2024 (a) Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025

Hedged Volume (MMDth) 291 362 332 336 71 33

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

(a) April 1 through June 30 .

(a) July 1 through September 30 .

We have also entered into derivative instruments to hedge basis.

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

EQT CORPORATION AND SUBSIDIARIES

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

Commitments and Contingencies

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Any such accruals are adjusted thereafter as appropriate to reflect changed circumstances.

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.

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 with any update thereto in this Quarterly Report on Form 10-Q, as applicable, although we are not required to accrue such loss.

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.

In instances where such estimates can be made, any such estimates are based on our analysis of currently available information and are subject to significant judgment and a variety of assumptions and uncertainties and may change as new information is obtained.

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 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

See Note 11 to the Condensed Consolidated Financial Statements herein and Note 11 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for discussions of our commitments and contingencies, including certain pending legal and regulatory proceedings and other contingent matters.

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