UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-K

 

FOR THE TRANSITION PERIOD FROM ___________ TO __________

COMMISSION FILE NUMBER 001-03551

 

 

 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [ X ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 

The Company’s definitive proxy statement relating to the 20182019 annual meeting of shareholders will be filed with the Securities and Exchange Commission within 120 days after the close of the Company’s fiscal year ended December 31, 20172018 and is incorporated by reference in Part III to the extent described therein.

 

 

equivalents, with one barrel of NGLs and crude oil

being equivalent to 6,000 cubic feet of natural gas

equivalents, with one barrel of NGLs and crude oil

being equivalent to 6,000 cubic feet of natural gas

equivalents, with one barrel of NGLs and crude oil

being equivalent to 6,000 cubic feet of natural gas

equivalents, with one barrel of NGLs and crude oil

being equivalent to 6,000 cubic feet of natural gas

Cautionary Statements

Disclosures in thisThis Annual Report on Form 10-K containcontains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and 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 in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this Annual Report on Form 10-K include the matters discussed in the sectionsections captioned “Strategy” and "Outlook" in Item 1, “Business,” the sectionssection captioned “Outlook” and “Impairment of Oil and Gas Properties and Goodwill” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and theall discussions of expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the Company and its subsidiaries, including guidance regarding the Company’s strategy to develop its Marcellus, Utica, Upper Devonian and other reserves; drilling plans and programs (including the number, type, feet of pay, averagedepth, spacing, lateral lengths and location of wells to be drilled and the availability of capital to complete these plans and programs); production and sales volumes (including liquids volumes) and growth rates; production of free cash flow and the Company's ability to reduce its drilling costs and capital expenditures; the Company's ability to maximize recoveries per acre; gathering and transmission volumes; the weighted average contract life of firm gathering, transmission and storage contracts; infrastructure programs (including the timing, cost and capacity of the gathering and transmission expansion projects);programs; the cost, capacity, timing of regulatory approvals and anticipated in-service date of the Mountain Valley Pipeline (MVP) project; the ultimate terms, partners and structure of Mountain Valley Pipeline, LLC; technology (including drilling and completion techniques);approvals; monetization transactions, including asset sales, joint ventures or other transactions involving the Company’s assets; acquisition transactions; whether the Company will sell its Ohio midstream assets to EQT Midstream Partners, LP and the timing of such transaction or transactions; the Company’s ability to achieve the anticipated synergies, operational efficiencies and returns from its acquisition of Rice Energy Inc.; the Company's ability to achieve the anticipated operational, financial and strategic benefits of its spin-off of Equitrans Midstream Corporation (Equitrans Midstream); the timing and structure of any dispositions of the Company's announcementapproximately 19.9% interest in Equitrans Midstream, and the planned use of a decision for addressing its sum-of-the-parts discount;the proceeds from any such dispositions; natural gas prices, changes in basis and the impact of commodity prices on the Company's business; reserves, including potential future downward adjustments;adjustments and reserve life; potential future impairments of the Company's assets; projected capital expenditures and capital contributions; the amount and timing of any repurchases underof the Company’sCompany's common stock including whether the Company will institute a share repurchase authorization;program; dividend amounts and rates; liquidity and financing requirements, including funding sources and availability; hedging strategy; the effects of government regulation and litigation; the expected impact of the Tax Cuts and Jobs Act of 2017;litigation and tax position. The forward-looking statements included in this Annual Report on Form 10-K involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events.events, taking into account all information currently available to the Company. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond the Company’s control. The risks and uncertainties that may affect the operations, performance and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and elsewhere in this Annual Report on Form 10-K.10-K, and the other documents the Company files from time to time with the SEC.

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

In reviewing any agreements incorporated by reference in or filed with this Annual Report on Form 10-K, please remember such agreements are included to provide information regarding the terms of such agreements and are not intended to provide any other factual or disclosure information about the Company. The agreements may contain representations and warranties by the Company, which should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements should those statements prove to be inaccurate. The representations and warranties were intended to be relied upon solely by the applicable party to such agreement and were made only as of the date of the relevant agreement or such other date or dates as may be specified in such agreement and are subject to more recent developments. Accordingly, these representations and warranties alone may not describe the actual state of affairs of the Company or its affiliates as of the date they were made or at any other time.time and should not be relied upon as statements of fact.

The Company’s proved reserves increased 59%2% in 2017, primarily as a result2018, or 11% when adjusted for the impact of acquisitions.the Huron Divestiture and Permian Divestiture (collectively, the 2018 Divestitures). The Company’sCompany's Marcellus assets constituted approximately 16.919.1 Tcfe of the Company's total proved reserves as of December 31, 2018 and increased 13% as compared to December 31, 2017.

The Company’s natural gas wells are generally low-risk, having ahave long reserve life with relatively low development and production costs on a per unit basis.lives.  Assuming that future annual production from these reserves is consistent with 20182019 production guidance, the remaining reserve life of the Company’s total proved reserves, as calculated by dividing total proved reserves by 2018 produced2019 production volumes guidance, is 14approximately 15 years.

The Company invested approximately $1,385$2,255.0 million on wellreserve development during 2017,2018, with total production sales volumes of 887.51,488 Bcfe, an increase of 17%68% over the previous year. EQT Production expects to spendThe Company drilled approximately $2.2 billion for well development (primarily drilling and completion) in 2018, which is expected to support the drilling of approximately 195153 gross wells (133 net), including 134105 Marcellus gross wells 16in Pennsylvania (99 net), 5 Upper Devonian wells in Pennsylvania, 12 Marcellus wells in West Virginia and 4531 Ohio Utica wells. The Company also intends to spend approximately $0.2 billion for acreage fill-ins, bolt-on leasing, and other items.gross wells (17 net). During the past three years, the Company’s number of wells drilled (spud) and related capital expenditures for wellreserve development were:

The EQT Production segment also includes the following gathering assets which are not owned by EQM or RMP:

No single customer accounted for more than 10% of EQT's total operating revenues for 2018, 2017 and 2016. One customer within the EQT Production segment accounted for approximately 10% of EQT's total operating revenues in 2015. The Company believes that the loss of this customer would not have a material adverse effect on its business because alternative customers for the Company's natural gas are available.

The following table presents the average sales price on a per Mcfe basis to EQT Corporation for sales of produced natural gas, NGLs and oil, with and without cash settled derivatives, for the years ended December 31:derivatives.

 

In addition, price information for all products is included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the caption “Consolidated Operational Data,“Average Realized Price Reconciliation,” and incorporated herein by reference.

  

NaturalOther natural gas producers compete with the Company in the acquisition of properties, the search for and development of reserves, the production transportation and sale of natural gas and NGLs and the securing of services, labor, equipment and equipmenttransportation required to conduct operations. CompetitorsThe Company's competitors include independent oil and gas companies, major oil and gas companies and individual producers, operators and operators within and outside of the Appalachian Basin.  

EQT Production’sThe Company’s exploration and production operations are subject to various types of federal, state and local laws and regulations, including regulations related to the location of wells; the method of drilling, well construction, well stimulation, hydraulic fracturing and casing design; water withdrawal and procurement for well stimulation purposes; well production; spill prevention plans; the use, transportation, storage and disposal of fluids and materials incidental to oil and gas operations; surface usage and the reclamation of properties upon which wells or other facilities have been located; the plugging and abandoning of wells; the calculation, reporting and disbursement of royalties and taxes; and the gathering of production in certain circumstances.  These regulations and any delays in obtaining related authorizations may affect the costs and timing of developing EQT Production’sthe Company’s natural gas resources.

EQT Production’sThe Company’s operations are also subject to conservation and correlative rights regulations, including the regulation of the size of drilling and spacing units or field rule units; setbacks; the number of wells that may be drilled in a unit or in close proximity to other wells; drilling in the vicinity of coal mining operations and certain other structures; and the unitization or pooling of natural gas properties. Kentucky, Ohio, Virginia and, for Utica or other deep wells, West Virginia allow the statutory pooling or unitization of tracts to facilitate development and exploration. In West Virginia, the Company must rely on voluntary pooling of lands and leases for Marcellus and Upper Devonian acreage. In 2013, the Pennsylvania legislature enacted lease integration legislation, which authorizes joint development of existing contiguous leases, and Texas permits similar joint development.leases. In addition, state conservation and oil and gas laws generally limit the venting or flaring of natural gas, and Texas sets allowables ongas. Various states also impose certain regulatory requirements to transfer wells to third parties or discontinue operations in the amountevent of production permitted from a well.divestitures by the Company.

The Company's gathering and transmission operations are subject to various types of federal and state environmental laws and local zoning ordinances, including air permitting requirements for compressor station and dehydration units and other permitting requirements; erosion and sediment control requirements for compressor station and pipeline construction projects; waste management requirements and spill prevention plans for compressor stations; various recordkeeping and reporting requirements for air permits and waste management practices; compliance with safety regulations; and siting and noise regulations for compressor stations and transmission facilities.stations. These regulations may increase the costs of operating existing pipelines and compressor stations and increase the costs of, and the time to develop, new or expanded pipelines and compressor stations.

In 2010, the U.S. Congress adopted comprehensive financial reform legislation that establishesestablished federal oversight and regulation of the over-the-counter derivative market and entities, such as the Company, that participate in that market. The legislation, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), required the CFTC, the SEC and other regulatory agencies to promulgate rules and regulations implementing this legislation. As of the filing date of this Annual Report on Form 10-K, the CFTC had adopted and implemented many final rules that impose regulatory obligations on all market participants, including the Company, such as recordkeeping and certain reporting obligations.  Other CFTC rules that may be relevant to the Company have yet to be finalized.  Because significant CFTC rules relevant to natural gas hedging activities have not been adopted or implemented, it is not possible at this time to predict the extent of the impact of the regulations on the Company’s hedging program or regulatory compliance obligations.  The Company has experienced increased, and anticipates additional, compliance costs and changes to current market practices as participants continue to adapt to a changing regulatory environment.

Regulators periodically review or audit the Company’s compliance with applicable regulatory requirements.  The Company anticipates that compliance with existing laws and regulations governing current operations will not have a material adverse effect upon its capital expenditures, earnings or competitive position.  Additional proposals that affect the oil and gas industry are regularly considered by the U.S. Congress, the states, regulatory agencies and the courts. The Company cannot predict when or whether any such proposals may become effective or the effect that such proposals may have on the Company.

The Company and its subsidiaries had 2,067863 employees at the endas of 2017;January 31, 2019; none are subject to a collective bargaining agreement.

The Company makes certain filings with the SEC, including its annual report on Form 10-K, quarterly reports on Form  10-Q, current reports on Form 8-K and all amendments and exhibits to those reports, available free of charge through its website, http://www.eqt.com, as soon as reasonably practicable after they are filed with, or furnished to, the SEC.  The filings are also available atby accessing the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or by calling 1-800-SEC-0330. These filings are also available on the internetSEC's website at http://www.sec.gov.

Presented below are operating revenues for each class of products and services representing greater than 10% of total operating revenues.services.

The Company is a Pennsylvania corporation formed in 2008 in connection with a holding company reorganization of the former Equitable Resources, Inc.

 

In addition to the other information contained in this Annual Report on Form 10-K, the following risk factors should be considered in evaluating our business and future prospects.  Please note that additional risks not presently known to us or that are currently considered immaterial may also have a negative impact on our business and operations.  If any of the events or circumstances described below actually occurs, our business, financial condition or results of operations could suffer and the trading price of our common stock could decline.

Our drilling locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not achievebe able to raise the intended benefitssubstantial amount of capital that would be necessary to drill our drilling locations.

We are subject to risks associated with the operation of our wells pipelines and facilities.

We depend upon Equitrans Midstream, a third-party midstream provider, for a significant portion of our midstream services, and our failure to develop, obtain and maintain access or maintainto the necessary infrastructure to successfully deliver natural gas, NGLs and oil to market may adversely affect our earnings, cash flows and results of operations.

In addition, a numberNegative public perception regarding us and/or our industry resulting from, among other things, the explosion of areas withinnatural gas transmission and gathering lines, oil spills, and concerns raised by advocacy groups or the Appalachian Basin have historically been subjectmedia about hydraulic fracturing, greenhouse gas or methane emissions or fossil fuels in general, or about royalty payment and surface use issues, may lead to mining operations. For example, third partiesincreased litigation and regulatory, legislative and judicial scrutiny, which may, in turn, lead to new local, state and federal laws, regulations, guidelines and enforcement interpretations in safety, environmental, royalty and surface use areas.  These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens and increased risk of litigation.  Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in subsurface mining operations near or under our properties, whichthe permitting process, including through intervention in the courts. Negative public perception could cause subsidencethe permits we need to conduct our operations to be withheld, delayed, challenged or other damage to our properties, adversely impact our drilling operations or adversely impact our midstream activities or those on which we rely.

 We have substantial capital requirements,Federal, state and we may not be ablelocal legislative and regulatory initiatives relating to obtain needed financing on satisfactory terms.

Our operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to our business activities.

Regulations related to the protection of a company’s credit as assessed by one or more credit rating agencies. In order to be considered investment grade, a company must be rated “BBB-” or higher by S&P, “Baa3” or higher by Moody’s and “BBB-” or higher by Fitch.

Conservation measures and other factors.  Drillingtechnological advances could reduce demand for natural gas NGLsand oil.

Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to natural gas and oil, can be unprofitable, not only from dry wells, but from productive wells that do not produce sufficient revenues to return a profit.  Additionally, a failure to effectivelytechnological advances in fuel economy and efficiently operate existing wells may cause production volumes to fall shortenergy generation devices could reduce demand for natural gas and oil. The impact of our projections.  Without continued successful development or acquisition activities, together with effective operation of existing wells, our reservesthe changing demand for natural gas and revenues will decline as a result of our current reserves being depleted by production.

None.

Principal facilities are owned or, in the case of certain office locations, warehouse buildings and equipment, leased, by the Company’s business segments.Company and its subsidiaries.  The majority of the Company’s properties are located on or under (i) private properties owned in fee, held by lease or occupied under perpetual easements or other rights acquired for the most part without warranty of underlying land titles or (ii) public highways under franchises or permits from various governmental authorities.  The Company’s facilities are generally well maintained and, where appropriate, are replaced or expanded to meet operating requirements.

 

The Company’s estimate of proved natural gas, NGLs and oil reserves is prepared by Company engineers.  The engineer primarily responsible for preparing the reserve report and the technical aspects of the reserves audit received a bachelor’s degree

 

The Company’s estimate of proved natural gas, NGLs and oil reserves is audited by the independent consulting firm of Ryder Scott Company, L.P. (Ryder Scott), which is hired by the Company’s management.  Since 1937, Ryder Scott has evaluated oil and gas properties and independently certified petroleum reserves quantities in the United States and internationally. In the course of its audit, Ryder Scott reviewed 100% of the total net natural gas, NGLs and oil proved reserves attributable to the Company’s interests as of December 31, 2017.2018.  Ryder Scott conducted a detailed, well by well, audit of the Company’s largest properties.  This audit covered 81% of the Company’s proved developed reserves. Ryder Scott’s audit of the remaining approximately 19% of the Company’s proved developed properties consisted of an audit of aggregated groups not exceeding 200 wells per case for operated wells and 256115 wells per case for non-operated wells. For undeveloped locations, the Company determined, and Ryder Scott reviewed and approved, the areas within the Company’s acreage considered to be proven. For undeveloped locations, reservesReserves were assigned and projected by the Company’s reserves engineers for locations within these proven areas and approved by Ryder Scott based on analogous type curves and offset production information. Ryder Scott’s audit report has been filed herewith as Exhibit 99.

 

No report has been filed with any federal authority or agency reflecting a 5% or more difference from the Company’s estimated total reserves. Additional information relating to the Company’s estimates of natural gas, NGLs and crude oil reserves and future net cash flows is provided in Note 2318 (unaudited) to the Consolidated Financial Statements. 

In 2017,2018, the Company commenced drilling operations (spud or drilled) on 144117 gross horizontal Marcellus wells, 495 gross horizontal Upper Devonian wells sevenand 31 gross horizontal Ohio Utica wells and one other gross well. Total proved reserveswells. Sales volumes in 2018 from the Marcellus play, increased 51% to 16.9 Tcfe in 2017 primarily as a result of the Company’s acquisition and drilling activity. Production sales volumes in 2017 from the Marcellus, including the Upper Devonian play, was 770.61,230 Bcfe. Over the past five years, the Company has experienced a 97% developmental drilling success rate.

Natural gas, NGLs and crude oil pricing:

For additional information on pricing, see “Consolidated Operational Data”“Average Realized Price Reconciliation” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The Company’s average per unit production cost, excluding production taxes, of natural gas, NGLs and oil during 2018, 2017 and 2016 and 2015 was $0.07 per Mcfe, $0.13 per Mcfe and $0.15 per Mcfe, respectively.

As of December 31, 2017,2018, the Company had no proved undeveloped reserves that had remained undeveloped for more than five years.    

As of December 31, 2017, leases associated with approximately 92,000 gross undeveloped acres expire in 2018 if they are not renewed. The Company has an active lease renewal program in areas targeted for development. WithinIn the Marcellus formation,event that production is not established or the Company must drill one well intakes no action to extend or renew the terms of its leases, the Company's net undeveloped acreage that will expire over the next three years as of December 31, 2018 under a leaseis 90,543, 79,107 and acquisition agreement or 139 net acres will be at-risk.54,373 for the years ended December 31, 2019, 2020 and 2021, respectively.

Number of net productive and dry exploratory and development wells drilled:

The increase in dry developmental wells in 2018 and 2017 are primarily related to non-core wells no longer planned to be drilled to depth or completed and acquired wells with mechanical integrity issues. The number of dry developmental wells drilled in 2016 waswere primarily related to vertical wells that are no longer planned to be drilled horizontally due to the uncertainty of identifying a near-term pipeline solution. 

The table below provides select production, sales and acreage data by state (as of December 31, 20172018 unless otherwise noted), which is substantially all from the Appalachian Basin. NGLs and oil were converted to Mcfe at the rate of six Mcfe per barrel for all periods. Refer to the "Average Realized Price Reconciliation" table in Item 7 of this Annual Report on page 38Form 10-K for sales volumes by final product.

(a) All production information related to natural gas is reported net of the effect of any reduction in natural gas volumes resulting from the processing of NGLs.

(b) Other primarily includes Kentucky and Virginia. During 2018, as a result of the Huron Divestiture, the Company sold approximately 2.5 million non-core, net acres in the Huron play, however, the Company retained the deep drilling rights across the divested acreage in Kentucky and Virginia Marylandof 1.5 million and Texas.0.2 million, respectively, which are excluded from the acreage totals above. Natural gas, oil and NGLs production and sales primarily represents activity prior to the completion of the 2018 Divestitures.

The Company sells natural gas and NGLs within the Appalachian Basin and in markets accessible through its transportation portfolio under a variety of contractual agreements, some of which specify the delivery of fixed and determinable quantities.  The Company expects to fulfill these delivery commitments with existing proved developed and proved undeveloped reserves.  As of December 31, 2017,2018, the Company’s delivery commitments for the next five years were as follows:

 

Wells located in Pennsylvania and West Virginia are primarily in Marcellus formations with depths ranging from 5,000 feet to 8,000 feet. Wells located in West Virginia are primarily in Marcellus and Huron formations with depths ranging from 2,500 feet to 7,700 feet.  Wells located in Kentucky are primarily in Huron formations with depths ranging from 2,500 feet to 6,5008,500 feet. Wells located in Ohio are primarily in Utica formations with depths ranging from 8,500 feet to 10,500 feet. Other wells are

The Company’s corporate headquarters is located in Coalbed Methane, deep Utica and Permian formations. 

See “Capital Resources and Liquidity” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a discussion of capital expenditures.

Not Applicable.

All executive officers have executed agreements with the Company and serve at the pleasure of the Company’s Board of Directors.  Officers are elected annually to serve during the ensuing year or until their successors are elected and qualified, or until death, resignation or removal.

The Company’s common stock is listed on the New York Stock Exchange.  The high and low sales prices reflected inExchange trading under the New York Stock Exchange Composite Transactions and the dividends declared and paid per share for 2017 and 2016 are summarized as follows (in U.S. dollars per share):

As of January 31, 2018,2019, there were 2,3582,188 shareholders of record of the Company’s common stock.

 

The amount and timing of dividends declared and paid by the Company, if any, is subject to the discretion of the Company's Board of Directors and depends upon business conditions, such as the Company’s lines of business, results of operations and financial condition, strategic direction and other factors. The Company's Board of Directors has the discretion to change the annual dividend rate at any time for any reason.

None.

 

The following table sets forth the Company’s repurchases of equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, that occurred during the three months ended December 31, 2017:2018:

 

The following graph compares the most recent five-year cumulative total return attained by holders of the Company’s common stock with the cumulative total returns of the S&P 500 Index and atwo customized peer group.groups. The individual companies of the prior customized peer group (the 2016 Self-Constructed Peer Group) and the new2017 customized peer group (the 2017 Self-Constructed Peer Group) and the 2018 customized peer group (the 2018 Self-Constructed Peer Group) are listed below.in footnotes (a) and (b) below, respectively. An investment of $100 (with reinvestment of all dividends) is assumed to have been made at the close of business on December 31, 20122013 in the Company’s common stock, in the S&P 500 Index and in each of the customized peer group.groups. Historical prices prior to the Separation and Distribution in November 2018 have been adjusted to reflect the value of the Separation and Distribution transactions. Relative performance is tracked through December 31, 2017.2018.

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” for information relating to compensation plans under which the Company’s securities are authorized for issuance.

Item 7.                    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations

 

Income from continuing operations for 2017 was $1,508.5 million, $8.04$1.4 billion, $7.39 per diluted share, compared with a loss attributable to EQT Corporationfrom continuing operations of $453.0 million,$0.5 billion, a loss of $2.71$3.18 per diluted share, in 2016. The $1,961.5 million$1.9 billion increase in net income attributable to EQT Corporationfrom continuing operations was primarily attributable to higher sales of natural gas, oil and NGLs, an income tax benefit recorded as a result of the lower federal corporate tax rate beginning in 2018 the result ofand a gain on derivatives not designated as hedges in 2017 compared to a loss in 2016, a 23% increase in the average realized price, a 17% increase in production sales volumes, and higher pipeline, water and net marketing services, partiallypartly offset by higher operating expenses, higher interest expense higher net income attributable to noncontrolling interests and a loss on debt extinguishment in 2017.