UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	FOR THE TRANSITION PERIOD FROM TO

	COMMISSION FILE NUMBER ~~1-3551~~001-03551

EQT CORPORATION

(Exact name of registrant as specified in its charter)



PENNSYLVANIA		25-0464690
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

625 Liberty Avenue, Suite 1700, Pittsburgh, Pennsylvania		15222
(Address of principal executive offices)		(Zip code)

(412) 553-5700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.



Large Accelerated Filer x		Accelerated Filer ¨	Emerging Growth Company ¨
Non-Accelerated Filer ¨	(Do not check if a smaller reporting company)	Smaller Reporting Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~September 30, 2017, 173,343~~March 31, 2018, 265 (in ~~thousands)~~millions) shares of common stock, no par value, of the registrant were outstanding.

Table of Contents

EQT CORPORATION AND SUBSIDIARIES

Index



		Page No.
Part I. Financial Information:

Item 1.	Financial Statements (Unaudited):

	Statements of Consolidated Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	3

	Statements of Consolidated Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	4

	Statements of Condensed Consolidated Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	5

	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	6

	Statements of Condensed Consolidated Equity for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	8

	Notes to the Condensed Consolidated Financial Statements	9

Item 2.	~~Management��s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	2330

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4048

Item 4.	Controls and Procedures	4250

Part II. Other Information:

Item 1.	Legal Proceedings	4351

Item 1A.	Risk Factors	4351

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4454

Item 6.	Exhibits	4555

Signature		4656

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EQT CORPORATION AND SUBSIDIARIES

Statements of Consolidated Operations (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended March 31,
	2017			2016			2017		2016			2018			2017
	(Thousands, except per share amounts)											(Thousands, except per share amounts)
Revenues:
Sales of natural gas, oil and NGLs	$	552,953		$	403,939		$	1,803,132	$	1,072,898		$	1,226,374		$	673,465
Pipeline and net marketing services	71,735			59,431			222,904		188,770
Gain (loss) on derivatives not designated as hedges	35,625			93,356			222,693		(32,342		)
Pipeline, water and net marketing services												144,617			79,962
Gain on derivatives not designated as hedges												62,592			140,742
Total operating revenues	660,313			556,726			2,248,729		1,229,326			1,433,583			894,169

Operating expenses:
Transportation and processing	136,219			89,883			404,743		251,283			190,140			133,706
Operation and maintenance	20,604			18,198			61,471		51,687			25,740			16,817
Production	39,630			38,999			129,812		126,092			60,123			45,672
Exploration	2,436			2,671			9,039		9,385			5,104			3,122
Selling, general and administrative	77,170			61,430			206,237		196,765			52,615			71,957
Depreciation, depletion and amortization	246,560			237,088			719,295		682,948			437,893			231,918
Impairment of long-lived assets												2,329,045			—
Transaction costs												35,711			—
Amortization of intangible assets												20,728			—
Total operating expenses	522,619			448,269			1,530,597		1,318,160			3,157,099			503,192

Operating income (loss)	137,694			108,457			718,132		(88,834		)
Operating (loss) income												(1,723,516		)	390,977

Other income	6,859			10,715			16,878		23,199			9,585			3,048
Interest expense	50,377			35,984			137,110		108,469			70,013			42,655
Income (loss) before income taxes	94,176			83,188			597,900		(174,104		)
(Loss) income before income taxes												(1,783,944		)	351,370
Income tax (benefit) expense	(11,281		)	13,084			119,093		(151,826		)	(338,965		)	100,665
Net income (loss)	105,457			70,104			478,807		(22,278		)
Net (loss) income												(1,444,979		)	250,705
Less: Net income attributable to noncontrolling interests	82,117			78,120			250,349		238,747			141,015			86,713
Net income (loss) attributable to EQT Corporation	$	23,340		$	(8,016	)	$	228,458	$	(261,025	)
Net (loss) income attributable to EQT Corporation												$	(1,585,994	)	$	163,992

Earnings per share of common stock attributable to EQT Corporation:
Basic:
Weighted average common stock outstanding	173,476			172,867			173,368		165,197			264,877			173,213
Net income (loss)	$	0.13		$	(0.05	)	$	1.32	$	(1.58	)
Net (loss) income												$	(5.99	)	$	0.95
Diluted:
Weighted average common stock outstanding	173,675			172,867			173,572		165,197			264,877			173,511
Net income (loss)	$	0.13		$	(0.05	)	$	1.32	$	(1.58	)
Net (loss) income												$	(5.99	)	$	0.95
Dividends declared per common share	$	0.03		$	0.03		$	0.09	$	0.09		$	0.03		$	0.03

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

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EQT CORPORATION AND SUBSIDIARIES

Statements of Consolidated Comprehensive Income (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands)
Net income (loss) $ 105,457
$ 70,104
$ 478,807
$ (22,278 )

Other comprehensive (loss) income, net of tax:

Net change in cash flow hedges:

Natural gas, net of tax benefit of $(955), $(9,894), $(2,640), and $(28,934) (1,451 ) (14,740 ) (4,011 ) (43,104 )
Interest rate, net of tax expense of $26, $26, $78, and $78 36
36
108
108
Pension and other post-retirement benefits liability adjustment,
net of tax expense of $49, $52, $148, and $6,287 77
82
230
9,917
Other comprehensive loss (1,338 ) (14,622 ) (3,673 ) (33,079 )
Comprehensive income (loss) 104,119
55,482
475,134
(55,357 )
Less: Comprehensive income attributable to noncontrolling interests 82,117
78,120
250,349
238,747
Comprehensive income (loss) attributable to EQT Corporation $ 22,002
$ (22,638 ) $ 224,785
$ (294,104 )



	Three Months Ended March 31,
	2018			2017
	(Thousands)
Net (loss) income	$	(1,444,979	)	$	250,705

Other comprehensive (loss) income, net of tax:
Net change in cash flow hedges:
Natural gas, net of tax benefit of $(100) and $(584)	(287		)	(888		)
Interest rate, net of tax expense of $18 and $25	44			36
Other post-retirement benefits liability adjustment, net of tax expense of $30 and $49	86			76
Other comprehensive loss	(157		)	(776		)
Comprehensive (loss) income	(1,445,136		)	249,929
Less: Comprehensive income attributable to noncontrolling interests	141,015			86,713
Comprehensive (loss) income attributable to EQT Corporation	$	(1,586,151	)	$	163,216

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

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EQT CORPORATION AND SUBSIDIARIES

Statements of Condensed Consolidated Cash Flows (Unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018			2017
	(Thousands)						(Thousands)
Cash flows from operating activities:
Net income (loss)	$	478,807		$	(22,278	)
Net (loss) income							$	(1,444,979	)	$	250,705
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes	121,704			(145,739		)	(338,734		)	100,665
Depreciation, depletion and amortization	719,295			682,948			437,893			231,918
Lease impairments	5,053			5,498
(Recoveries of) provision for losses on accounts receivable	(1,230		)	1,165
Amortization of intangibles							20,728			—
Amortization of financing costs							2,872			1,806
Asset and lease impairments							2,332,924			1,837
Reduction of allowance for doubtful accounts							(1,138		)	(1,607		)
Other income	(16,878		)	(23,199		)	(9,585		)	(3,048		)
Stock-based compensation expense	27,894			34,551			5,892			14,765
(Gain) loss on derivatives not designated as hedges	(222,693		)	32,342
Cash settlements (paid) received on derivatives not designated as hedges	(6,837		)	222,516
Pension settlement charge	—			9,403
Gain on derivatives not designated as hedges							(62,592		)	(140,742		)
Cash settlements paid on derivatives not designated as hedges							(38,629		)	(8,967		)
Changes in other assets and liabilities:
Accounts receivable	64,057			(11,521		)	62,423			64,374
Accounts payable	(15,446		)	(12,916		)	307			(15,225		)
Other items, net	57,646			(5,071		)	(62,970		)	18,336
Net cash provided by operating activities	1,211,372			767,699			904,412			514,817

Cash flows from investing activities:
Capital expenditures	(1,152,865		)	(1,193,321		)	(732,417		)	(311,399		)
Capital expenditures for acquisitions	(818,957		)	(412,348		)	—			(669,479		)
Sales of investments in trading securities	283,758			—			—			283,758
Capital contributions to Mountain Valley Pipeline, LLC	(103,448		)	(76,297		)	(117,019		)	(19,760		)
Sales of interests in Mountain Valley Pipeline, LLC	—			12,533
Restricted cash, net	75,000			—
Net cash used in investing activities	(1,716,512		)	(1,669,433		)	(849,436		)	(716,880		)

Cash flows from financing activities:
Proceeds from the issuance of common shares of EQT Corporation, net of issuance costs	—			1,225,999
Proceeds from the issuance of common units of EQT Midstream Partners, LP, net of issuance costs	—			217,102
Increase in borrowings on EQT Midstream Partners, LP credit facilities	334,000			430,000
Decrease in borrowings on EQT Midstream Partners, LP credit facilities	(229,000		)	(638,000		)
Increase in borrowings on credit facilities							1,217,500			—
Repayment of borrowings on credit facilities							(1,086,500		)	—
Dividends paid	(15,620		)	(14,966		)	(7,942		)	(5,206		)
Distributions to noncontrolling interests	(172,498		)	(137,719		)	(88,896		)	(54,636		)
Proceeds from awards under employee compensation plans	—			2,040
Repayments and retirements of Senior Notes							(7,999		)	—
Proceeds and excess tax benefits from awards under employee compensation plans							1,946			—
Cash paid for taxes related to net settlement of share-based incentive awards	(18,030		)	(26,517		)	(20,009		)	(17,253		)
Debt issuance costs and revolving credit facility origination fees	(13,679		)	—
Repurchase of common stock	(15		)	(23		)	(9		)	(7		)
Net cash (used in) provided by financing activities	(114,842		)	1,057,916
Net change in cash and cash equivalents	(619,982		)	156,182
Cash and cash equivalents at beginning of period	1,103,540			1,601,232
Net cash used in financing activities							8,091			(77,102		)
Net change in cash, cash equivalents and restricted cash							63,067			(279,165		)
Cash, cash equivalents and restricted cash at beginning of period							147,315			1,178,540
Cash and cash equivalents at end of period	$	483,558		$	1,757,414		$	210,382		$	899,375

Cash paid during the period for:
Interest, net of amount capitalized	$	113,618		$	88,281		$	27,519		$	17,845
Income taxes, net	$	9,702		$	1,294		$	(9	)	$	(87	)

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

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EQT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(Thousands)				(Thousands)
Assets

Current assets:
Cash and cash equivalents	$	483,558	$	1,103,540	$	210,382	$	147,315
Trading securities	—		286,396
Accounts receivable (less accumulated provision for doubtful accounts: $5,663 at September 30, 2017 and $6,923 at December 31, 2016)	279,201		341,628
Accounts receivable (less accumulated provision for doubtful accounts: $7,089 at March 31, 2018 and $8,226 at December 31, 2017)					674,104		725,236
Derivative instruments, at fair value	67,555		33,053		262,283		241,952
Prepaid expenses and other	28,144		63,602		44,812		48,552
Total current assets	858,458		1,828,219		1,191,581		1,163,055

Property, plant and equipment	20,296,620		18,216,775		27,083,946		30,990,309
Less: accumulated depreciation and depletion	5,755,358		5,054,559		4,208,106		6,105,294
Net property, plant and equipment	14,541,262		13,162,216		22,875,840		24,885,015

Restricted cash	—		75,000
Intangible assets, net					715,631		736,360
Goodwill					1,998,726		1,998,726
Investment in nonconsolidated entity	339,978		184,562		546,428		460,546
Other assets	244,950		222,925		304,140		278,902
Total assets	$	15,984,648	$	15,472,922	$	27,632,346	$	29,522,604

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

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EQT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Thousands)						(Thousands)
Liabilities and Shareholders’ Equity

Current liabilities:
Current portion of long-term debt	$	707,470		$	—
Current portion of Senior Notes							$	—		$	7,999
Accounts payable	388,059			309,978			699,520			654,624
Derivative instruments, at fair value	71,374			257,943			59,198			139,089
Other current liabilities	268,356			236,719			349,958			430,525
Total current liabilities	1,435,259			804,640			1,108,676			1,232,237

Credit facility borrowings	105,000			—			1,892,000			1,761,000
Long-term debt	2,586,041			3,289,459
Senior Notes							5,564,826			5,562,555
Deferred income taxes	1,866,208			1,760,004			1,431,148			1,768,900
Other liabilities and credits	567,463			499,572			771,934			783,299
Total liabilities	6,559,971			6,353,675			10,768,584			11,107,991

Equity:
Shareholders’ equity:
Common stock, no par value, authorized 320,000 shares, shares issued: 177,896 at September 30, 2017 and 177,896 at December 31, 2016	3,449,119			3,440,185
Treasury stock, shares at cost: 4,553 at September 30, 2017 (including 251 held in rabbi trust) and 5,069 at December 31, 2016 (including 226 held in rabbi trust)	(81,729		)	(91,019		)
Common stock, no par value, authorized 320,000 shares, shares issued: 267,871 at March 31, 2018 and 267,871 at December 31, 2017							9,363,289			9,388,903
Treasury stock, shares at cost: 2,871 at March 31, 2018 (including 299 held in rabbi trust) and 3,551 at December 31, 2017 (including 253 held in rabbi trust)							(51,304		)	(63,602		)
Retained earnings	2,721,911			2,509,073			2,406,952			3,996,775
Accumulated other comprehensive (loss) income	(1,631		)	2,042
Accumulated other comprehensive (loss)							(2,615		)	(2,458		)
Total common shareholders’ equity	6,087,670			5,860,281			11,716,322			13,319,618
Noncontrolling interests in consolidated subsidiaries	3,337,007			3,258,966			5,147,440			5,094,995
Total equity	9,424,677			9,119,247			16,863,762			18,414,613
Total liabilities and equity	$	15,984,648		$	15,472,922		$	27,632,346		$	29,522,604

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

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EQT CORPORATION AND SUBSIDIARIES

Statements of Condensed Consolidated Equity (Unaudited)

Common Stock Accumulated Other
Comprehensive
Income (Loss) Noncontrolling
Interests in
Consolidated
Subsidiaries
Shares
Outstanding No
Par Value Retained
Earnings Total
Equity
(Thousands)
Balance, January 1, 2016 152,554
$ 2,049,201
$ 2,982,212
$ 46,378
$ 2,950,251
$ 8,028,042
Comprehensive income (net of tax):
Net (loss) income

(261,025 )
238,747
(22,278 )
Net change in cash flow hedges:

Natural gas, net of tax benefit of $(28,934) (43,104 ) (43,104 )
Interest rate, net of tax expense of $78 108
108
Pension and other post-retirement benefits liability adjustment, net of tax expense of $6,287 9,917
9,917
Dividends ($0.09 per share)

(14,966 )

(14,966 )
Stock-based compensation plans, net 654
26,211

161
26,372
Distributions to noncontrolling interests ($2.235 and $0.406 per common unit from EQT Midstream Partners, LP and EQT GP Holdings, LP, respectively)

(137,719 ) (137,719 )
Issuance of common shares of EQT Corporation 19,550
1,225,999
1,225,999
Issuance of common units of EQT Midstream Partners, LP 217,102
217,102
Changes in ownership of consolidated subsidiaries 25,293

(40,487 ) (15,194 )
Balance, September 30, 2016 172,758
$ 3,326,704
$ 2,706,221
$ 13,299
$ 3,228,055
$ 9,274,279

Balance, January 1, 2017 172,827
$ 3,349,166
$ 2,509,073
$ 2,042
$ 3,258,966
$ 9,119,247
Comprehensive income (net of tax):
Net income

228,458

250,349
478,807
Net change in cash flow hedges:

Natural gas, net of tax benefit of $(2,640) (4,011 ) (4,011 )
Interest rate, net of tax expense of $78 108
108
Other post-retirement benefit liability adjustment, net of tax expense of $148 230
230
Dividends ($0.09 per share)

(15,620 )

(15,620 )
Stock-based compensation plans, net 516
18,224

190
18,414
Distributions to noncontrolling interests ($2.675 and $0.578 per common unit from EQT Midstream Partners, LP and EQT GP Holdings, LP, respectively)

(172,498 ) (172,498 )
Balance, September 30, 2017 173,343
$ 3,367,390
$ 2,721,911
$ (1,631 ) $ 3,337,007
$ 9,424,677



	Common Stock							Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests in Consolidated Subsidiaries
	Shares Outstanding	No Par Value			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests in Consolidated Subsidiaries			Total Equity
	(Thousands)
Balance, January 1, 2017	172,827	$	3,349,166		$	2,509,073		$	2,042		$	3,258,966		$	9,119,247
Comprehensive income (net of tax):
Net income					163,992						86,713			250,705
Net change in cash flow hedges:
Natural gas, net of tax benefit of $(584)								(888		)				(888		)
Interest rate, net of tax expense of $25								36						36
Other post-retirement benefits liability adjustment, net of tax expense of $49								76						76
Dividends ($0.03 per share)					(5,206		)							(5,206		)
Stock-based compensation plans, net	489	1,052									190			1,242
Distributions to noncontrolling interests ($0.85 and $0.177 per common unit from EQT Midstream Partners, LP and EQT GP Holdings, LP, respectively)											(54,636		)	(54,636		)
Balance, March 31, 2017	173,316	$	3,350,218		$	2,667,859		$	1,266		$	3,291,233		$	9,310,576

Balance, January 1, 2018	264,320	$	9,325,301		$	3,996,775		$	(2,458	)	$	5,094,995		$	18,414,613
Comprehensive income (net of tax):
Net (loss) income					(1,585,994		)				141,015			(1,444,979		)
Net change in cash flow hedges:
Natural gas, net of tax benefit of $(100)								(287		)				(287		)
Interest rate, net of tax expense of $18								44						44
Other post-retirement benefit liability adjustment, net of tax expense of $30								86						86
Dividends ($0.03 per share)					(7,942		)							(7,942		)
Stock-based compensation plans, net	680	(13,365		)							390			(12,975		)
Distributions to noncontrolling interests ($1.025, $0.244 and $0.2917 per common unit from EQT Midstream Partners, LP, EQT GP Holdings, LP, and Rice Midstream Partners LP, respectively)											(88,896		)	(88,896		)
Change in accounting principle (a)					4,113									4,113
Change in ownership of consolidated subsidiaries		49									(64		)	(15		)
Balance, March 31, 2018	265,000	$	9,311,985		$	2,406,952		$	(2,615	)	$	5,147,440		$	16,863,762

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

(a) Related to adoption of ASU No. 2016-01. See Note K and S for additional information.

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EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A. Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States GAAP for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017 and the results of its operations, ~~for the three and nine month periods ended September 30, 2017 and 2016 and~~ its cash flows and equity for the ~~nine~~three month periods ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017. Certain previously reported amounts have been reclassified to conform to the current year presentation. In this Quarterly Report on Form 10-Q, references to “we,” “us,” “our,” “EQT,” “EQT Corporation,” and the “Company” refer collectively to EQT Corporation and its consolidated subsidiaries.

~~As of December 31, 2016,~~Prior to the Rice Merger (as defined in Note B), the Company ~~reports~~reported its results of operations through three business segments: EQT Production, EQT Gathering and EQT Transmission. ~~The segment disclosures~~These reporting segments reflected the Company's lines of business and ~~discussions contained~~were reported in ~~this Quarterly Report on Form 10-Q have been recast to reflect~~ the ~~current~~same manner in which the Company evaluated its operating performance through September 30, 2017. Following the Rice Merger, the Company adjusted its internal reporting structure to incorporate the newly acquired assets. The Company now conducts its business through five business segments: EQT Production, EQM Gathering (formerly known as EQT Gathering), EQM Transmission (formerly known as EQT Transmission), RMP Gathering and RMP Water.

In February 2018, the Company's Board of Directors unanimously approved a plan to separate its upstream and midstream businesses, creating a standalone publicly traded corporation (NewCo) that will focus on midstream operations. NewCo will own the midstream interests held by EQT. The separation is intended to qualify as tax-free to EQT shareholders for ~~all periods presented. Certain previously reported amounts have been reclassified~~U.S. federal income tax purposes and is expected to ~~conform~~be completed by the end of the third quarter 2018. Under the separation plan, EQT shareholders will retain their shares of EQT stock and receive a pro-rata share of the new independent midstream company. The Company also announced that it plans to pursue (i) a sale of Rice retained midstream assets acquired by EQT in connection with the ~~current year presentation under the current segment reporting structure.~~Rice Merger to EQM; (ii) a merger of EQM and RMP; and (iii) a sale of RMP’s incentive distribution rights to EQGP.

The balance sheet at December 31, ~~2016~~2017 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by ~~United States~~ GAAP for complete financial statements.

For further information, ~~on the Company,~~ refer to the consolidated financial statements and related footnotes ~~thereto~~as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 23 of this Quarterly Report on Form 10-Q.~~2017.

B.Rice Merger

On November 13, 2017, the Company completed its previously announced acquisition of Rice Energy Inc. (Rice) pursuant to the Agreement and Plan of Merger, dated June 19, 2017 (as amended, the Merger Agreement), by and among the Company, Rice and a wholly owned indirect subsidiary of the Company (RE Merger Sub). Pursuant to the terms of the Merger Agreement, on November 13, 2017, RE Merger Sub merged with and into Rice (the Rice Merger) with Rice continuing as the surviving corporation and a wholly owned indirect subsidiary of the Company. Immediately after the effective time of the Rice Merger (the Effective Time), Rice merged with and into another wholly owned indirect subsidiary of the Company.

As a result of the Rice Merger, the Company also acquired Rice's interests in Rice Midstream Partners LP (RMP) (NYSE: RMP), as disclosed in Note E.

The Company recorded $15.9 million in acquisition-related expenses related to the Rice Merger during the three months ended March 31, 2018. The Rice Merger acquisition-related expenses included $6.8 million for compensation arrangements and $5.9 million for professional fees and are included in transaction costs in the Statement of Consolidated Operations.

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EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Allocation of Purchase Price

The Rice Merger was accounted for as a business combination, using the acquisition method. The following table summarizes the preliminary purchase price and the preliminary estimated fair values of assets and liabilities assumed as of November 13, 2017, with any excess of the purchase price over the estimated fair value of the identified net assets acquired recorded as goodwill. Approximately, $549.2 million and $1,449.5 million of goodwill has been allocated to EQT Production and RMP Gathering, respectively. Goodwill primarily relates to the value of RMP that cannot be assigned to other assets recognized under GAAP as substantially all of RMP's revenues are from affiliates, deferred tax liabilities arising from differences between the purchase price allocated to Rice’s assets and liabilities based on fair value and the tax basis of these assets and liabilities that carried over to the Company in the Rice Merger, and the Company’s ability to control the Rice acquired assets and recognize synergies. Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, title defect analysis and final appraisals of assets acquired and liabilities assumed and the finalization of certain income tax computations. The Company expects to complete the purchase price allocation once the Company has received all of the necessary information, at which time the value of the assets and liabilities will be revised as appropriate.



(in thousands)	Preliminary Purchase Price Allocation
Consideration given:
Equity consideration	$	5,943,289
Cash consideration	1,299,407
Buyout of preferred equity in Rice Midstream Holdings LLC	429,708
Buyout of Common Units in RMGP	125,828
Settlement of pre-existing relationships	(14,699		)
Total consideration	7,783,533

Fair value of liabilities assumed:
Current liabilities	566,774
Long-term debt	2,151,656
Deferred income taxes	1,106,000
Other long-term liabilities	67,533
Amount attributable to liabilities assumed	3,891,963

Fair value of assets acquired:
Cash	294,671
Accounts receivable	337,007
Current assets	109,465
Net property, plant and equipment	9,903,938
Intangible assets	747,300
Noncontrolling interests	(1,715,611		)
Amount attributable to assets acquired	9,676,770
Goodwill	$	1,998,726

The fair values of natural gas and oil properties were based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of natural gas and oil properties were measured using valuation techniques that convert future cash flows into a single discounted amount. Significant inputs to the valuation of natural gas and oil properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average cost of capital. These inputs required significant judgments and estimates by management, are still under review, and may be subject to change. These inputs have a significant impact on the valuation of oil and gas properties and future changes may occur. The fair value of undeveloped property was determined based upon a market approach of comparable transactions using Level 3 inputs.

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EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The estimated fair value of midstream facilities and equipment, generally consisting of pipeline systems and compression stations, were estimated using the cost approach. Significant unobservable inputs in the estimate of fair value include management’s assumptions about the replacement costs for similar assets, the relative age of the acquired assets and any potential economic or functional obsolescence associated with the acquired assets. As a result, the estimated fair value of the midstream facilities and equipment represents a Level 3 fair value measurement.

The non-controlling interest in the acquired business is comprised of the limited partner units in RMP which were not acquired by EQT as well as the non-controlling interest in Strike Force Midstream LLC (Strike Force Midstream). The RMP limited partner units are actively traded on the New York Stock Exchange, and were valued based on observable market prices as of the transaction date and therefore represent a Level 1 fair value measurement. The non-controlling interest in Strike Force Midstream was calculated based on the enterprise value of Strike Force Midstream and the percentage ownership not acquired by EQT. Significant unobservable inputs in the estimate of the enterprise value of Strike Force Midstream include future revenue estimates and future cost assumptions. As a result, the non-controlling interest in Strike Force Midstream represents a Level 3 fair value measurement.

As part of the preliminary purchase price allocation, the Company identified intangible assets for customer relationships with third party customers and non-compete agreements with certain former Rice executives. The fair value of the identified intangible assets was determined using the income approach, which requires a forecast of the expected future cash flows generated and an estimated market-based weighted average cost of capital. Significant unobservable inputs in the determination of fair value include future production levels, future revenue estimates, future cost assumptions, the estimated probability that former executives would compete in the absence of such non-compete agreements and estimated customer retention rates. As a result, the estimated fair value of the identified intangible assets represents a Level 3 fair value measurement. Differences between the preliminary purchase price allocation and the final purchase price allocation may change the amount of intangible assets and goodwill ultimately recognized in conjunction with the Rice Merger.

In conjunction with the Rice Merger, the Company has carryover tax basis of $422.5 million of tax deductible goodwill.

Unaudited Pro Forma Information

The following unaudited pro forma combined financial information presents the Company’s results as though the Rice Merger had been completed at January 1, 2017. The pro forma combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the Rice Merger taken place on January 1, 2017; furthermore, the financial information is not intended to be a projection of future results.



(in thousands, except per share data) (unaudited)	Three Months Ended March 31, 2017
Pro forma operating revenues	$	1,266,383
Pro forma net income	$	236,070
Pro forma net income attributable to noncontrolling interests	$	109,085
Pro forma net income attributable to EQT	$	126,985
Pro forma income per share (basic)	$	0.48
Pro forma income per share (diluted)	$	0.48

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EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

C. EQT GP Holdings, LP

In January 2015, the Company formed EQT GP Holdings, LP (EQGP) (NYSE: EQGP), a Delaware limited partnership, to own the Company's partnership interests in EQT Midstream Partners, LP (EQM) (NYSE: EQM). EQT owns 239,715,000 common units, which represent a 90.1% limited partner interest, and the entire non-economic general partner interest in EQGP. EQGP owned the following EQM partnership interests as of ~~September 30, 2017,~~March 31, 2018, which represent EQGP’s only cash-generating assets: 21,811,643 EQM common units, representing a 26.6% limited partner interest in EQM; 1,443,015 EQM general partner units, representing a 1.8% general partner interest in EQM; and all of EQM’s incentive distribution rights, or IDRs, which entitle EQGP to receive up to 48.0% of all incremental cash distributed in a quarter after $0.5250 has been distributed in respect of each common unit and general partner unit of EQM for that quarter. Through EQGP's general partner interest, limited partner interest and IDRs in EQM, EQGP has a controlling financial interest in EQM; therefore, EQGP consolidates EQM. The Company is the ultimate parent company of EQGP and EQM.

The Company consolidates the results of EQGP but records an income tax provision only on its ownership percentage of EQGP earnings. The Company records the noncontrolling interest of the EQGP and EQM public limited partners (i.e., the EQGP limited partner interests not owned by the Company and the EQM limited partner interests not owned by EQGP) in its financial statements.

On ~~October~~April 24, ~~2017,~~2018, the Board of Directors of EQGP's general partner declared a cash distribution to EQGP’s unitholders for the ~~third~~first quarter of ~~2017~~2018 of ~~$0.228~~$0.258 per common unit, or approximately ~~$60.7~~$68.7 million. The distribution will be paid on ~~November 22, 2017~~May 24, 2018 to unitholders of record, including the Company, at the close of business on ~~November 3, 2017.~~May 4, 2018.

C.D. EQT Midstream Partners, LP

In January 2012, the Company formed EQM to own, operate, acquire and develop midstream assets in the Appalachian Basin. EQM provides midstream services to the Company and ~~other~~ third parties. EQM is consolidated in the Company’s financial statements. The Company records the noncontrolling interest of the EQM public limited partners in its financial statements.

On ~~October~~April 24, ~~2017,~~2018, the Board of Directors of EQM's general partner declared a cash distribution to EQM’s unitholders for the ~~third~~first quarter of ~~2017~~2018 of ~~$0.980~~$1.065 per common unit. The cash distribution will be paid on ~~November 14, 2017~~May 15, 2018 to unitholders of record, including EQGP, at the close of business on ~~November 3, 2017.~~May 4, 2018. Based on the ~~80,581,758~~80,591,366 EQM common units outstanding on ~~October~~April 26, ~~2017,~~2018, the ~~aggregate~~ cash distributions by EQM to EQGP for the ~~third~~first quarter ~~2017~~2018 will be approximately ~~$61.1~~$69.7 million consisting of: ~~$21.4~~$23.2 million in respect of its limited partner interest, ~~$2.1~~$2.3 million in respect of its general partner interest and ~~$37.6~~

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~~EQT Corporation and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

$44.2 million in respect of its IDRs. These distribution amounts to EQGP related to its general partner interest and IDRs in EQM are subject to change if EQM issues additional common units on or prior to the record date for the ~~third~~first quarter ~~2017~~2018 distribution.

D.E.Rice Midstream Partners LP

In connection with the Rice Merger, the Company acquired a 28.1% limited partner interest, all of the IDRs and the entire non-economic general partner interest in RMP. The Company is the ultimate parent of RMP, and the Company records the noncontrolling interest of the RMP public limited partners in its financial statements. RMP owns, operates and develops midstream assets in the Appalachian Basin. RMP's assets consist of gathering pipelines and compressor stations, as well as water handling and treatment facilities. RMP provides gathering and water services to the Company and third parties.

As a result of the declaration of RMP’s fourth quarter 2017 cash distribution, which was paid on February 14, 2018, the subordination period with respect to RMP’s subordinated units expired on February 15, 2018 and all of the outstanding RMP subordinated units converted into RMP common units on a one-for-one basis on that day.

On April 24, 2018, the Board of Directors of the general partner of RMP declared a cash distribution to RMP’s unitholders for the first quarter of 2018 of $0.3049 per common unit. The cash distribution will be paid on May 15, 2018 to unitholders of record at the close of business on May 4, 2018. Based on the 102,303,108 RMP common units outstanding on April 26, 2018, distributions by RMP to the Company for the first quarter 2018 will be approximately $13.2 million, consisting of $8.8 million in respect of its limited partner interest and $4.4 million in respect of its IDRs in RMP. The distribution amounts related to IDRs in RMP are subject to change if RMP issues additional common units on or prior to the record date for the first quarter 2018 distribution.

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EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

F. Revenue from Contracts with Customers

As discussed in Note S, the Company adopted Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), on January 1, 2018 using the modified retrospective method of adoption. Adoption of the ASU did not require an adjustment to the opening balance of equity and did not materially change the Company's amount and timing of revenues. The Company applied the ASU only to contracts that were not completed as of January 1, 2018. The Company has elected to exclude all taxes from the measurement of transaction price.

For the sale of natural gas, oil and natural gas liquids (NGLs), the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. These contracts typically require payment within 25 days of the end of the calendar month in which the gas is delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company’s efforts to satisfy the performance obligations. Other contracts contain fixed consideration (i.e. fixed price contracts or contracts with a fixed differential to NYMEX or index prices). The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price.

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

The sales of natural gas, oil and NGLs as presented on the Statements of Consolidated Operations represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling natural gas, oil and NGLs on behalf of royalty owners or working interest owners, EQT is acting as an agent and thus reports the revenue on a net basis.

The Company provides gathering, transmission and storage services in two manners: firm service and interruptible service. Firm service contracts are typically long term and include firm reservation fees, which are fixed, monthly charges for the guaranteed reservation of pipeline or storage capacity. Interruptible service contracts include volumetric based fees, which are charges for the volume of gas actually gathered, transported or stored and do not guaranty access to the pipeline or storage facility. These contracts can be short or long term. Volumetric based fees can also be charged under firm contracts for actual volumes transported, gathered or stored in excess of the firm contracted volume. Firm and interruptible contracts are billed at the end of each calendar month, with payment typically due within 21 days.

Based on total projected contractual revenues and including contracts associated with expected future capacity from expansion projects that are not yet fully constructed but for which EQM has entered into firm contracts, EQM's firm gathering contracts and firm transmission and storage contracts had weighted average remaining terms of approximately 8 and 15 years, respectively, as of December 31, 2017.

Under a firm contract, the Company has a stand-ready obligation to provide the service over the life of the contract. The performance obligation for firm reservation fee revenues is satisfied over time as the pipeline capacity is made available to the customer. As such, the Company recognizes firm reservation fee revenue evenly over the contract period, using a time-elapsed output method to measure progress. The performance obligation for volumetric based fee revenues is generally satisfied upon the Company's monthly billing to the customer for actual volumes gathered, transported or stored during the month. The amount billed corresponds directly to the value of the Company’s performance to date as the customer obtains value as each volume is gathered, transported or stored.

Water services revenues primarily represent fees charged by RMP for the delivery of fresh water to a customer at a specified delivery point. All of RMP’s water services revenues are generated pursuant to variable price per volume contracts with customers in the Appalachian Basin. For water services contracts, the only performance obligation in each contract is for RMP to provide water (usually a minimum daily volume) to the customer at any designated delivery point. This performance obligation is generally satisfied upon RMP’s monthly billing to the customer for the volume of water provided during the month. For water services arrangements, the customer is typically invoiced on a monthly basis with payment due 21 days after the receipt of the invoice.

Because the Company's performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company has recognized amounts due from contracts with customers of $438.6 million as accounts receivable within the Condensed Consolidated Balance Sheet.

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EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The table below provides disaggregated information regarding the Company’s revenues, presented consistently with the Company’s segment reporting. Certain contracts that provide for the release of capacity that is not used to transport the Company’s produced volumes were deemed to be outside the scope of Revenue from Contracts with Customers. The cost of, and recoveries on, that capacity are reported within pipeline and net marketing services at EQT Production. Derivative contracts are also outside the scope of Revenue from Contracts with Customers.



Three Months Ended March 31, 2018	Revenues from contracts with customers			Other sources of revenue		Total
	(Thousands)
Natural gas sales	$	1,089,760		$	—	$	1,089,760
NGLs sales	125,468			—		125,468
Oil sales	11,146			—		11,146
Sales of natural gas, oil and NGLs	$	1,226,374		$	—	$	1,226,374

Pipeline and net marketing services at EQT Production	$	38,843		$	20,793	$	59,636
EQM Gathering:
Firm reservation fee revenues	109,933			—		109,933
Volumetric based fee revenues:
Usage fees under firm contracts	12,108			—		12,108
Usage fees under interruptible contracts	3,867			—		3,867
EQM Transmission:
Firm reservation fee revenues	97,775			—		97,775
Volumetric based fee revenues:
Usage fees under firm contracts	3,822			—		3,822
Usage fees under interruptible contracts	5,337			—		5,337
RMP Gathering:
Gathering revenues	52,730			—		52,730
Compression revenues	8,771			—		8,771
Water services at RMP Water	22,963			—		22,963
Intersegment eliminations	(232,325		)	—		(232,325		)
Pipeline, water and net marketing services	$	123,824		$	20,793	$	144,617

Gain on derivatives not designated as hedges	$	—		$	62,592	$	62,592

Total operating revenues	$	1,350,198		$	83,385	$	1,433,583

The following table includes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration. The table excludes all contracts that qualified for the exception to the relative standalone selling price method. Gathering firm reservation fees and transmission and storage firm reservation fees include amounts related to affiliate contracts.



	2018 (a)		2019		2020		2021		2022		Thereafter		Total
	(Thousands)
Natural gas sales	$	54,946	$	15,207	$	—	$	—	$	—	$	—	$	70,153
Gathering firm reservation fees	$	338,978	$	449,124	$	448,896	$	448,896	$	447,607	$	1,485,787	$	3,619,288
Transmission and storage firm reservation fees	$	294,044	$	384,018	$	381,788	$	377,619	$	372,544	$	3,039,812	$	4,849,825

(a) April through December 31.

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EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

G. Investment in Nonconsolidated Entity

As of ~~September 30, 2017,~~March 31, 2018, EQM owned a 45.5% interest (the MVP Interest) in Mountain Valley Pipeline, LLC (MVP Joint Venture). The MVP Joint Venture ~~plans to construct~~is constructing the Mountain Valley Pipeline (MVP), an estimated 300-mile natural gas interstate pipeline spanning from northern West Virginia to southern Virginia. The MVP Joint Venture has secured a total of 2.0 Bcf per day of 20-year firm capacity commitments, including a 1.29 Bcf per day firm capacity commitment by the Company. On

In October ~~13,~~ 2017, the Federal Energy Regulatory Commission (FERC) issued the Certificate of Public Convenience and Necessity for the project. In early 2018, the MVP Joint Venture received limited notice to proceed with certain construction activities from the FERC. The ~~pipeline~~MVP Joint Venture commenced construction on the MVP in the first quarter of 2018, which is targeted to be placed in-service during the fourth quarter of 2018.

The MVP Joint Venture has been determined to be a variable interest entity because it has insufficient equity to finance its activities during the construction stage of the project. EQM is not the primary beneficiary because it does not have the power to direct the activities of the MVP Joint Venture that most significantly impact its economic performance. Certain business decisions require the approval of owners holding more than a 66 2/3% interest in the MVP Joint Venture and no one member owns more than a 66 2/3% interest. The ~~Company, through its ownership interest in EQM, accounts for the interest in the~~ MVP Joint Venture asis an equity method investment for accounting purposes as EQM has the ability to exercise significant influence over operating and financial policies of the MVP Joint Venture.

In ~~August 2017,~~February 2018, the MVP Joint Venture issued a capital call notice to MVP Holdco, LLC (MVP Holdco), a direct wholly owned subsidiary of EQM, for ~~$48.0~~$65.8 million, of which ~~$27.2 million was paid in October 2017 and the remaining $20.8 million~~ is expected to be paid in ~~November 2017.~~May 2018. The capital contribution payable has been reflected on the ~~Condensed Consolidated Balance Sheet~~consolidated balance sheet as of ~~September 30, 2017~~March 31, 2018 with a corresponding increase to the Company's investment in the MVP Joint Venture.

EQM’s ownership share of the MVP Joint Venture's earnings for the three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ was ~~$6.0~~$8.8 million and ~~$2.7 million, respectively. EQM’s ownership share of the earnings for the nine months ended September 30, 2017 and 2016 was $15.4 million and $6.1~~$4.3 million, respectively. These earnings are reported in other income on the Statements of Consolidated Operations for the periods presented.

As of ~~September 30, 2017,~~March 31, 2018, EQM had issued a $91 million performance guarantee in favor of the MVP Joint Venture to provide performance assurances for MVP Holdco's obligations to fund its proportionate share of the construction budget for the MVP. Upon the FERC's initial release to begin construction of the MVP, EQM's guarantee will terminate. EQM will then be obligated to issue a new guarantee in an amount equal to 33% of MVP Holdco’s proportionate share of the then remaining construction budget, less, subject to certain limits, any credit assurances issued by any affiliate of EQM under such affiliate's precedent agreement with the MVP Joint Venture.

As of ~~September 30, 2017,~~March 31, 2018, EQM's maximum financial statement exposure related to the MVP Joint Venture was approximately ~~$431~~$637 million, which consists of the investment in nonconsolidated entity balance on the Condensed Consolidated Balance Sheet as of ~~September 30, 2017~~March 31, 2018 and amounts which could have become due under EQM's performance guarantee as of that date.

E.H. Consolidated Variable Interest Entities

The Company determined EQGP, EQM, RMP and ~~EQM~~Strike Force Midstream to be variable interest entities. Through EQT's ownership and control of EQGP's general partner, ~~and control of~~RMP's general partner, EQM's general partner and Strike Force Midstream Holdings LLC (Strike Force Midstream Holdings), which owns a 75% limited liability company interest in Strike Force Midstream, EQT has the power to direct the activities that most significantly impact ~~their~~the economic ~~performance.~~performance of EQGP, EQM, RMP and Strike Force Midstream. In addition, through EQT's limited partner interest in EQGP and EQGP's general partner interest, limited partner interest and IDRs in EQM, EQT has the obligation to absorb the losses of EQGP and EQM and the right to receive benefits from EQGP and EQM, in accordance with such interests. Furthermore, through EQT's limited partner interest and IDRs in RMP and majority ownership interest in Strike Force Midstream, EQT has the obligation to absorb the losses of RMP and Strike Force Midstream and the right to receive benefits from RMP and Strike Force Midstream, in accordance with such interests. As EQT has a controlling financial interest in, ~~EQGP,~~ and is ~~the~~ primary beneficiary of, EQGP, EQM, RMP and Strike Force Midstream, EQT consolidates EQGP, EQM, RMP and ~~EQGP consolidates EQM.~~Strike Force Midstream. See Note 1213 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for additional information related to the consolidated variable interest entities.

The risks associated with the operations of EQGP, EQM and ~~EQM~~RMP are discussed in their respective Annual Reports on Form 10-K for the year ended December 31, ~~2016,~~2017, as updated by any Quarterly Reports on Form 10-Q. The risks associated with the operations of Strike Force Midstream are discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as updated by any Quarterly Reports on Form 10-Q. See further discussion of the impact that EQT's ownership and control of EQGP, EQM, RMP and ~~EQM~~Strike Force Midstream have on EQT's financial position, results of operations and cash flows included in EQT's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, including in the section captioned ~~"Management's~~

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Notes to Condensed Consolidated Financial Statements (Unaudited)

"Management's Discussion and Analysis of Financial Condition and Results of ~~Operations" contained therein.~~Operations." See Notes BC, D, and CE for further discussion of EQGP, EQM and ~~EQM,~~RMP, respectively.

The following table presents amounts included in the Company's Condensed Consolidated Balance Sheets that were for the use or obligation of EQGP or EQM as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.


Classification	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(Thousands)				(Thousands)
Assets:
Cash and cash equivalents	$	6,933	$	60,453	$	9,301	$	2,857
Accounts receivable	21,768		20,662		29,481		28,804
Prepaid expenses and other	4,196		5,745		12,860		8,470
Property, plant and equipment, net	2,745,509		2,578,834		2,864,040		2,804,059
Other assets	363,186		206,104		568,594		483,004
Liabilities:
Accounts payable	$	37,494	$	35,831	$	48,212	$	47,042
Other current liabilities	70,960		32,242		92,667		133,531
Credit facility borrowings	105,000		—		317,000		180,000
Long-term debt	986,947		985,732
Senior Notes					987,756		987,352
Other liabilities and credits	9,877		9,562		20,880		20,273

The following table summarizes EQGP's Statements of Consolidated Operations and Cash Flows for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ inclusive of affiliate amounts.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Thousands)												(Thousands)
Operating revenues	$	207,193		$	176,772		$	609,585		$	540,600		$	232,842		$	200,072
Operating expenses	62,230			51,138			180,218			150,548			55,727			55,976
Other expenses (income)	2,556			(7,452		)	6,418			(9,900		)
Other expenses													1,108			2,108
Net income	$	142,407		$	133,086		$	422,949		$	399,952		$	176,007		$	141,988

Net cash provided by operating activities	$	159,911		$	102,923		$	479,566		$	378,042		$	181,755		$	160,769
Net cash used in investing activities	(117,637		)	(204,470		)	(324,936		)	(541,369		)	(199,954		)	(81,687		)
Net cash (used in) provided by financing activities	(48,128		)	17,454			(208,150		)	(197,367		)
Net cash provided by (used in) financing activities													24,643			(96,767		)

Table of Contents

EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents summary information of assets and liabilities of RMP included in the Company’s Condensed Consolidated Balance Sheets that are for the use or obligation of RMP as of March 31, 2018 and December 31, 2017.



Classification	March 31, 2018		December 31, 2017
	(Thousands)
Assets:
Cash and cash equivalents	$	46,518	$	10,538
Accounts receivable	7,205		12,246
Prepaid expenses and other	2,208		1,327
Property, plant and equipment, net	1,440,196		1,431,802
Goodwill	1,346,918		1,346,918
Other assets	6,123		—
Liabilities:
Accounts payable	$	22,312	$	24,634
Other current liabilities	4,530		4,200
Credit facility borrowings	325,000		286,000
Other liabilities and credits	9,465		9,360

The following table summarizes RMP’s Statements of Consolidated Operations and Cash Flows for the three months ended March 31, 2018 and 2017, inclusive of affiliate amounts.



	Three Months Ended March 31,
	2018			2017
	(Thousands)
Operating revenues	$	84,464		$	—
Operating expenses	28,999			—
Other expenses	1,948			—
Net income	$	53,517		$	—

Net cash provided by operating activities	$	62,536		$	—
Net cash used in investing activities	(32,712		)	—
Net cash provided by financing activities	6,156			—

The following table presents summary information of assets and liabilities of Strike Force Midstream included in the Company’s Condensed Consolidated Balance Sheets that are for the use or obligation of Strike Force Midstream as of March 31, 2018 and December 31, 2017.



Classification	March 31, 2018		December 31, 2017
	(Thousands)
Assets:
Cash and cash equivalents	$	22,136	$	43,938
Accounts receivable	20,193		12,477
Other current assets	107		—
Property, plant and equipment, net	377,112		356,346
Intangible assets, net	450,291		457,992
Liabilities:
Other current liabilities	12,874		24,341

Table of Contents

EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes Strike Force Midstream’s Statements of Consolidated Operations and Cash Flows the three months ended March 31, 2018 and 2017, inclusive of affiliate amounts.



	Three Months Ended March 31,
	2018			2017
	(Thousands)
Operating revenues	$	22,810		$	—
Operating expenses	12,953			—
Other (income)	(116		)	—
Net income	$	9,973		$	—

Net cash provided by operating activities	$	13,620		$	—
Net cash (used in) investing activities	(32,423		)	—
Net cash (used in) financing activities	(3,000		)	—

F.I. Financial Information by Business Segment

~~Operating segments are revenue-producing components of~~As discussed in Note A, the ~~enterprise for which separate financial information is produced internally and which are subject~~Company adjusted its internal reporting structure following the Rice Merger to ~~evaluation by~~incorporate the ~~Company’s chief operating decision maker in deciding how to allocate resources.~~

newly acquired assets. The Company ~~reports~~now conducts its ~~operations in three segments, which reflect its lines of business:~~business through five business segments: EQT Production, ~~EQT~~EQM Gathering, EQM Transmission, RMP Gathering and EQT Transmission. The EQT Production segment includes the Company’s exploration for, and development and production of, natural gas, natural gas liquids (NGLs) and a limited amount of crude oil, primarily in the Appalachian Basin. The EQT Production segment also includes the marketing activities of the Company. The operations of EQT Gathering include the natural gas gathering activities of the Company, consisting solely of assets that are owned and operated by EQM. The operations of EQT Transmission include the natural gas transmission and storage activities of the Company, consisting solely of assets that are owned and operated by EQM.RMP Water.

Operating segments are evaluated on their contribution to the Company’s consolidated results based on operating income. Other income, interest and income taxes are managed on a consolidated basis. Headquarters’ costs are billed to the operating segments based upon an allocation of the headquarters’ annual operating budget. Differences between budget and actual headquarters’ expenses are not allocated to the operating segments.



Three Months Ended March 31, 2018	EQT Production		EQM Gathering		EQM Transmission		RMP Gathering		RMP Water		Intersegment Eliminations			EQT Corporation
Revenues:	(Thousands)
Sales of natural gas, oil and NGLs	$	1,226,374	$	—	$	—	$	—	$	—	$	—		$	1,226,374
Pipeline, water and net marketing services	59,636		125,908		106,934		61,501		22,963		(232,325		)	144,617
Gain on derivatives not designated as hedges	62,592		—		—		—		—		—			62,592
Total operating revenues	$	1,348,602	$	125,908	$	106,934	$	61,501	$	22,963	$	(232,325	)	$	1,433,583



Three Months Ended March 31, 2017	EQT Production		EQM Gathering		EQM Transmission		Intersegment Eliminations			EQT Corporation
Revenues:	(Thousands)
Sales of natural gas, oil and NGLs	$	673,465	$	—	$	—	$	—		$	673,465
Pipeline and net marketing services	14,455		102,329		97,743		(134,565		)	79,962
Gain on derivatives not designated as hedges	140,742		—		—		—			140,742
Total operating revenues	$	828,662	$	102,329	$	97,743	$	(134,565	)	$	894,169

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

~~Substantially all of the Company’s operating revenues, income from operations and assets are generated or located in the United States.~~

Three Months Ended September 30, 2017 EQT Production EQT Gathering EQT Transmission Intersegment Eliminations EQT Corporation
Revenues: (Thousands)
Sales of natural gas, oil and NGLs $ 552,953
$ —
$ —
$ —
$ 552,953
Pipeline and net marketing services 9,140
116,522
90,671
(144,598 ) 71,735
Gain on derivatives not designated as hedges 35,625
—
—
—
35,625
Total operating revenues $ 597,718
$ 116,522
$ 90,671
$ (144,598 ) $ 660,313

Three Months Ended September 30, 2016 EQT Production EQT Gathering EQT Transmission Intersegment Eliminations EQT Corporation
Revenues: (Thousands)
Sales of natural gas, oil and NGLs $ 403,939
$ —
$ —
$ —
$ 403,939
Pipeline and net marketing services 10,797
99,141
77,631
(128,138 ) 59,431
Gain on derivatives not designated as hedges 93,356
—
—
—
93,356
Total operating revenues $ 508,092
$ 99,141
$ 77,631
$ (128,138 ) $ 556,726

Nine Months Ended September 30, 2017 EQT Production EQT Gathering EQT Transmission Intersegment Eliminations EQT Corporation
Revenues: (Thousands)
Sales of natural gas, oil and NGLs $ 1,803,132
$ —
$ —
$ —
$ 1,803,132
Pipeline and net marketing services 31,656
330,996
278,589
(418,337 ) 222,904
Gain on derivatives not designated as hedges 222,693
—
—
—
222,693
Total operating revenues $ 2,057,481
$ 330,996
$ 278,589
$ (418,337 ) $ 2,248,729

Nine Months Ended September 30, 2016 EQT Production EQT Gathering EQT Transmission Intersegment Eliminations EQT Corporation
Revenues: (Thousands)
Sales of natural gas, oil and NGLs $ 1,072,898
$ —
$ —
$ —
$ 1,072,898
Pipeline and net marketing services 28,196
297,305
243,295
(380,026 ) 188,770
Loss on derivatives not designated as hedges (32,342 ) —
—
—
(32,342 )
Total operating revenues $ 1,068,752
$ 297,305
$ 243,295
$ (380,026 ) $ 1,229,326

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands)
Operating income (loss):

EQT Production $ 12,082
$ (15,465 ) $ 322,277
$ (468,678 )
EQT Gathering 85,817
72,495
242,716
218,274
EQT Transmission 59,689
53,715
188,995
174,085
Unallocated expenses (a) (19,894 ) (2,288 ) (35,856 ) (12,515 )
Total operating income (loss) $ 137,694
$ 108,457
$ 718,132
$ (88,834 )



	Three Months Ended March 31,
	2018			2017
	(Thousands)
Operating (loss) income:
EQT Production (a)	$	(1,893,807	)	$	257,549
EQM Gathering	98,891			73,704
EQM Transmission	79,451			71,604
RMP Gathering	44,095			—
RMP Water	11,370			—
Unallocated expenses and intersegment eliminations (b)	(63,516		)	(11,880		)
Total operating (loss) income	$	(1,723,516	)	$	390,977


(a)	Impairment of long-lived assets of $2.3 billion is included in EQT Production operating income for the three months ended March 31, 2018. See Note Q.


(b)	Unallocated expenses consist primarily of compensation expense and administrative costs, including ~~the Rice Merger (defined in Note~~ N~~) acquisition-related expenses.~~transaction costs of $35.7 million. Intersegment eliminations include water services that are provided to EQT Production and capitalized as part of development costs.

Reconciliation of operating (loss) income to net (loss) income:



	Three Months Ended March 31,
	2018			2017
	(Thousands)
Total operating (loss) income	$	(1,723,516	)	$	390,977
Other income	9,585			3,048
Interest expense	70,013			42,655
Income tax (benefit) expense	(338,965		)	100,665
Net (loss) income	$	(1,444,979	)	$	250,705



	March 31, 2018		December 31, 2017
	(Thousands)
Segment assets:
EQT Production	$	20,633,392	$	22,711,854
EQM Gathering	1,449,871		1,411,857
EQM Transmission	1,475,214		1,462,881
RMP Gathering	2,741,744		2,720,305
RMP Water	163,458		185,079
Total operating segments	26,463,679		28,491,976
Headquarters assets, including cash and short-term investments	1,168,667		1,030,628
Total assets	$	27,632,346	$	29,522,604

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Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

~~Reconciliation of operating income (loss) to net income (loss):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands)
Total operating income (loss) $ 137,694
$ 108,457
$ 718,132
$ (88,834 )
Other income 6,859
10,715
16,878
23,199
Interest expense 50,377
35,984
137,110
108,469
Income tax (benefit) expense (11,281 ) 13,084
119,093
(151,826 )
Net income (loss) $ 105,457
$ 70,104
$ 478,807
$ (22,278 )

As of September 30, 2017 As of December 31, 2016
(Thousands)
Segment assets:

EQT Production $ 12,071,776
$ 10,923,824
EQT Gathering 1,367,487
1,225,686
EQT Transmission 1,442,068
1,399,201
Total operating segments 14,881,331
13,548,711
Headquarters assets, including cash and short-term investments 1,103,317
1,924,211
Total assets $ 15,984,648
$ 15,472,922


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018			2017
	(Thousands)								(Thousands)
Depreciation, depletion and amortization:(c)
EQT Production	$	224,103	$	220,768	$	654,411	$	635,253	$	400,058		$	211,097
EQT Gathering	9,983		7,663		28,398		22,520
EQT Transmission	12,261		6,976		35,793		20,657
EQM Gathering									10,738			8,860
EQM Transmission									12,441			11,687
RMP Gathering									8,124			—
RMP Water									5,771			—
Other	213		1,681		693		4,518		761			274
Total	$	246,560	$	237,088	$	719,295	$	682,948	$	437,893		$	231,918

Expenditures for segment assets (b):
EQT Production (c)	$	449,303	$	622,856	$	1,850,482	$	1,094,747
EQT Gathering	48,182		88,390		150,728		247,755
EQT Transmission	22,312		77,940		73,679		253,957
Other	2,502		4,693		7,097		10,395
Expenditures for segment assets (d):
EQT Production (e)									$	675,028		$	945,458
EQM Gathering									68,933			48,838
EQM Transmission									18,929			21,389
RMP Gathering									20,940			—
RMP Water									2,375			—
Other and intersegment eliminations (f)									(21,223		)	1,628
Total	$	522,299	$	793,879	$	2,081,986	$	1,606,854	$	764,982		$	1,017,313


~~(b)~~(c)	Excludes amortization of intangible assets.


(d)	Includes the capitalized portion of non-cash stock-based compensation ~~expense~~costs, non-cash acquisitions and the impact of capital accruals. These non-cash items are excluded from capital expenditures on the Statements of Condensed Consolidated Cash Flows. Expenditures for segment assets does not include consideration for the Rice Merger.

~~(c)~~(e)

Expenditures for segment assets in the EQT Production segment included ~~$52.1~~$36.8 million and ~~$30.1~~$42.7 million for ~~general leasing activity~~fill-ins and bolt-ons associated with legacy EQT acreage for the three months ended March 31, 2018 and 2017, respectively. Expenditures included $44.3 million associated with retained midstream assets during the three months ended ~~September 30, 2017 and 2016, respectively, and $147.0 million and $98.2 million for general leasing activity during the nine~~March 31, 2018. The three months ended ~~September 30,~~March 31, 2017 ~~and 2016, respectively. The three and nine months ended September 30, 2017 includes $7.8 million and $819.0~~included $669.5 million of cash ~~capital expenditures, respectively, for the acquisitions discussed in Note~~ M~~. The three~~ and ~~nine months ended September 30, 2016 includes $412.3 million of cash capital expenditures for the acquisitions discussed in Note~~ M~~. During the nine months ended September 30, 2017 and 2016, the Company also incurred $7.5 million and $6.2~~$15.4 million of non-cash capital expenditures, for the acquisitions discussed in Note MP.


(f)	Intersegment eliminations include water services that are provided to EQT Production and capitalized as part of development costs.

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Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

G.J. Derivative Instruments

The Company’s primary market risk exposure is the volatility of future prices for natural gas and NGLs, which can affect the operating results of the Company primarily at EQT Production. The Company’s overall objective in its hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices.

The Company uses over the counter (OTC) derivative commodity instruments, primarily swap, collar and ~~collar~~option agreements that are typically placed with financial institutions. The creditworthiness of all counterparties is regularly monitored. Swap agreements involve payments to or receipts from counterparties based on the differential between two prices for the commodity. Collar agreements require the counterparty to pay the Company if the index price falls below the floor price and the Company to pay the counterparty if the index price rises above the cap price. The Company also sells call options that require the Company to pay the counterparty if the index price rises above the strike price. The Company engages in basis swaps to protect earnings from undue exposure to the risk of geographic disparities in commodity prices and interest rate swaps to hedge exposure to fluctuations in interest ~~rate fluctuations on potential debt issuances.~~rates. The Company has also engaged in a limited number of swaptions and power-indexed natural gas sales and swaps that are ~~treated~~accounted for as derivative commodity ~~instruments for accounting purposes.~~instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on a gross basis. These derivative instruments are reported as either current assets or current liabilities due to their highly liquid nature. The Company can net settle its derivative instruments at any time.

The Company discontinued cash flow hedge accounting in 2014; therefore, all changes in fair value of the Company’s derivative instruments are recognized within operating revenues in the Statements of Consolidated Operations.

In ~~prior periods,~~connection with the Rice Merger, the Company assumed all outstanding derivative commodity instruments ~~used~~held by Rice. The assets and liabilities assumed were recognized at fair value at the Company to hedge its exposure to variability in expected future cash flows associated with the fluctuations in the price of natural gas related to the Company’s forecasted sale of EQT Production's produced volumesclosing date and forecasted natural gas purchases and sales were designated and qualified as cash flow hedges. As of September 30, 2017 and December 31, 2016, the forecasted transactions that were hedged as of December 31, 2014 remained probable of occurring and as such, the amounts in accumulated other comprehensive income (OCI) will continue to be reported in accumulated OCI and will be reclassified into earnings in future periods when the underlying hedged transactions occur. The forecasted transactions extend through December 2018. As of September 30, 2017 and December 31, 2016, the Company deferred net gains of $5.6 million and $9.6 million, respectively, in accumulated OCI, net of tax, related to the effective portion of the changesubsequent changes in fair value were recognized within operating revenues in the Statements of ~~its~~Consolidated Operations. The derivative commodity instruments ~~designated as cash flow hedges. The Company estimates that approximately $1.9 million of net gains on its derivative commodity~~assumed were substantially similar to instruments ~~reflected in accumulated OCI, net of tax, as of September 30, 2017 will be recognized in earnings during~~previously held by the ~~next twelve months due to the settlement of hedged transactions.~~Company.

Contracts which result in physical delivery of a commodity expected to be used or sold by the Company in the normal course of business are designated as normal purchases and sales and are exempt from derivative accounting.

OTC arrangements require settlement in cash. Settlements of derivative commodity instruments are reported as a component of cash flows from operations in the accompanying Statements of Condensed Consolidated Cash Flows.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands)
Commodity derivatives designated as cash flow hedges
Amount of gain reclassified from accumulated OCI, net of tax, into operating revenues (effective portion) $ 1,451
$ 14,740
$ 4,011
$ 43,104

Interest rate derivatives designated as cash flow hedges

Amount of loss reclassified from accumulated OCI, net of tax, into interest expense (effective portion) $ (36 ) $ (36 ) $ (108 ) $ (108 )

Derivatives not designated as hedging instruments

Amount of gain (loss) recognized in operating revenues $ 35,625
$ 93,356
$ 222,693
$ (32,342 )

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of equity production and portions of its basis exposure covering approximately ~~470~~2,314 Bcf of natural gas and ~~1,189~~1,238 Mbbls of NGLs as of ~~September 30, 2017,~~March 31, 2018, and ~~646~~2,148 Bcf of natural gas and ~~1,095~~1,460 Mbbls of NGLs as of December 31, ~~2016.~~2017. The open positions at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 had maturities extending through December ~~2020.~~2023 and December 2022, respectively.

The Company has netting agreements with financial institutions and its brokers that permit net settlement of gross commodity derivative assets against gross commodity derivative liabilities. The table below reflects the impact of netting agreements and margin deposits on gross derivative assets and liabilities as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.


As of September 30, 2017	Derivative instruments, recorded in the Condensed Consolidated Balance Sheet, gross		Derivative instruments subject to master netting agreements			Margin deposits remitted to counterparties		Derivative instruments, net
As of March 31, 2018										Derivative instruments, recorded in the Condensed Consolidated Balance Sheet, gross		Derivative instruments subject to master netting agreements			Margin deposits remitted to counterparties			Derivative instruments, net
	(Thousands)									(Thousands)
Asset derivatives:
Derivative instruments, at fair value	$	67,555	$	(42,886	)	$	—	$	24,669	$	262,283	$	(50,056	)	$	(601	)	$	211,626
Liability derivatives:
Derivative instruments, at fair value	$	71,374	$	(42,886	)	$	—	$	28,488	$	59,198	$	(50,056	)	$	—		$	9,142

As of December 31, 2016
Derivative
instruments,
recorded in the
Condensed
Consolidated
Balance
Sheet, gross

Derivative
instruments
subject to
master
netting
agreements

Margin
deposits
remitted to
counterparties

Derivative
instruments, net
(Thousands)
Asset derivatives:

Derivative instruments, at fair value $ 33,053
$ (23,373 ) $ —
$ 9,680
Liability derivatives:

Derivative instruments, at fair value $ 257,943
$ (23,373 ) $ —
$ 234,570
21

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)



As of December 31, 2017	Derivative instruments, recorded in the Condensed Consolidated Balance Sheet, gross		Derivative instruments subject to master netting agreements			Margin deposits remitted to counterparties		Derivative instruments, net
	(Thousands)
Asset derivatives:
Derivative instruments, at fair value	$	241,952	$	(86,856	)	$	—	$	155,096
Liability derivatives:
Derivative instruments, at fair value	$	139,089	$	(86,856	)	$	—	$	52,233

Certain of the Company’s derivative instrument contracts provide that if the Company’s credit ratings by Standard & Poor’s Rating Service (S&P) or Moody’s Investors Service (Moody’s) are lowered below investment grade, additional collateral must be deposited with the counterparty if the amounts outstanding on those contracts exceed certain thresholds. The additional collateral can be up to 100% of the derivative liability. As of ~~September 30, 2017,~~March 31, 2018, the aggregate fair value of all derivative instruments with credit risk-related contingent features that were in a net liability position was ~~$12.8~~$9.0 million, for which the Company had no collateral posted on ~~September 30, 2017.~~March 31, 2018. If the Company’s credit rating by S&P or Moody’s had been downgraded below investment grade on ~~September 30, 2017,~~March 31, 2018, the Company would not have been required to post any additional collateral under the agreements with the respective counterparties. The required margin on the Company’s derivative instruments is subject to significant change as a result of factors other than credit rating, such as gas prices and credit thresholds set forth in agreements between the hedging counterparties and the Company. Investment grade refers to the quality of the Company’s credit as assessed by one or more credit rating agencies. The Company’s senior unsecured debt was rated BBB by S&P and Baa3 by Moody’s at ~~September 30, 2017.~~March 31, 2018. In order to be considered investment grade, the Company must be rated BBB- or higher by S&P and Baa3 or higher by Moody’s. Anything below these ratings is considered non-investment grade. See also "Security Ratings and Financing Triggers" under Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

H.K. Fair Value Measurements

The Company records its financial instruments, principally derivative instruments, at fair value in its Condensed Consolidated Balance Sheets. The Company estimates the fair value using quoted market prices, where available. If quoted market prices are not available, fair value is based upon models that use market-based parameters as inputs, including forward curves, discount rates, volatilities and nonperformance risk. Nonperformance risk considers the effect of the Company’s credit standing on the fair value of liabilities and the effect of the counterparty’s credit standing on the fair value of assets. The Company estimates nonperformance risk by analyzing publicly available market information, including a comparison of the yield on debt instruments with credit ratings similar to the Company’s or counterparty’s credit rating and the yield of a risk-free instrument and credit default swaps rates where available.

The Company has categorized its assets and liabilities recorded at fair value into a three-level fair value hierarchy, based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities in Level 2 primarily include the Company’s swap, collar and ~~collar~~option agreements.

The fair value of the commodity swaps included in Level 2 is based on standard industry income approach models that use significant observable inputs, including but not limited to New York Mercantile Exchange (NYMEX) natural gas and propane forward curves, LIBOR-based discount rates and basis forward curves. The Company’s collars, options and swaptions are valued using standard industry income approach option models. The significant observable inputs utilized by the option pricing models include NYMEX forward curves, natural gas volatilities and LIBOR-based discount rates. The NYMEX natural gas and propane forward curves, LIBOR-based discount rates, natural gas volatilities and basis forward curves are validated to external sources at least monthly.

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The following assets and liabilities were measured at fair value on a recurring basis during the applicable period:


			Fair value measurements at reporting date using								Fair value measurements at reporting date using
Description	As of September 30, 2017		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		As of March 31, 2018		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(Thousands)								(Thousands)
Assets
Derivative instruments, at fair value	$	67,555	$	—	$	67,555	$	—	$	262,283	$	—	$	262,283	$	—
Liabilities
Derivative instruments, at fair value	$	71,374	$	—	$	71,374	$	—	$	59,198	$	—	$	59,198	$	—


			Fair value measurements at reporting date using								Fair value measurements at reporting date using
Description	As of December 31, 2016		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		As of December 31, 2017		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(Thousands)								(Thousands)
Assets
Trading securities	$	286,396	$	—	$	286,396	$	—
Derivative instruments, at fair value	$	33,053	$	—	$	33,053	$	—	$	241,952	$	—	$	241,952	$	—
Liabilities
Derivative instruments, at fair value	$	257,943	$	—	$	257,943	$	—	$	139,089	$	—	$	139,089	$	—

The carrying values of cash equivalents, ~~restricted cash,~~ accounts receivable and accounts payable approximate fair value due to the short-term maturity of the instruments. The carrying values of borrowings under ~~EQM’s~~the Company's various credit facilities approximate fair value as the interest rates are based on prevailing market rates. ~~These are Level 1 fair values.~~

~~As of December 31, 2016, the Company reflected its~~The company also has an immaterial investment in ~~trading securities as Level 2 fair value measurements. The fair values~~a fund that invests in companies developing technology and operating solutions for exploration and production companies for which it recognized a cumulative effect of ~~trading securities classified as Level 2 are priced using nonbinding market prices that are corroborated by observable~~accounting change in the first quarter 2018.

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

market data. Inputs into these valuation techniques include actual trade data, broker/dealer quotes and other similar data. As of March 31, 2017, the Company closed its positions on all trading securities.

The Company estimates the fair value of its ~~debt~~Senior Notes using its established fair value methodology. Because not all of the Company’s ~~debt is~~Senior Notes are actively traded, the fair value of the ~~debt is~~Senior Notes are a Level 2 fair value measurement. Fair value for non-traded ~~debt obligations is~~Senior Notes are estimated using a standard industry income approach model ~~which~~that utilizes a discount rate based on market rates for debt with similar remaining time to maturity and credit risk. The estimated fair value of ~~total debt~~Senior Notes (including EQM’s ~~long-term debt)~~Senior Notes) on the Condensed Consolidated Balance Sheets was approximately ~~$3.5~~$5.6 billion at ~~September 30, 2017~~March 31, 2018 and $5.7 billion at December 31, ~~2016. The carrying value of total debt (including EQM’s long-term debt) on the Condensed Consolidated Balance Sheets was approximately $3.3 billion at September 30, 2017 and December 31, 2016.~~2017.

The Company recognizes transfers between Levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers between Levels 1, 2 and 3 during the periods presented.

For information on the fair values of assets related to the impairments of proved and unproved oil and gas properties and of other long-lived assets, see Note Q and Note 1 in EQT's Annual Report on Form 10-K for the year ended December 31, 2017. For information on the assets acquired in the Rice Merger and the assets acquired in other acquisition transactions, see Notes B and P.

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EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

I.L. Income Taxes

On December 22, 2017, the U.S. Congress enacted the law known as the Tax Cuts and Jobs Act of 2017 (Tax Reform Legislation), which made significant changes to U.S. federal income tax law, including lowering the federal corporate tax rate to 21% from 35% beginning January 1, 2018. The Company is still analyzing certain aspects of the Tax Reform Legislation and refining calculations, which could potentially impact the measurement of deferred tax balances or potentially give rise to new deferred tax amounts. The Company will refine its estimates to incorporate new or better information as it comes available through the filing date of its 2017 U.S. income tax returns in the fourth quarter of 2018.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, the Company calculated the provision for income taxes by applying the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the quarter. For the nine months ended September 30, 2016, the Company determined small fluctuations in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate and thus an estimated annual effective tax rate would not provide a reliable estimate for that period. As a consequence, the Company used a discrete effective tax rate method to calculate taxes for the nine months ended September 30, 2016.

All of ~~EQGP’s~~EQGP's, RMP’s and Strike Force Midstream’s income is included in the ~~Company’s~~Company's pre-tax ~~income.~~income (loss). However, the Company is not required to record income tax expense with respect to the portion of ~~EQGP’s~~EQGP's and RMP’s income allocated to the noncontrolling public limited partners of EQGP, EQM and ~~EQM,~~RMP or to the portion of Strike Force Midstream’s income allocated to the minority owner, which reduces the ~~Company’s~~Company's effective tax rate in periods when the Company has consolidated pre-tax income and increases the Company's effective tax rate in periods when the Company has consolidated pre-tax loss.

The Company ~~had consolidated pre-tax~~recorded income tax benefit at an effective tax rate of 19.0% for the ~~nine~~three months ended ~~September 30, 2017, compared~~March 31, 2018 and income tax expense at an effective tax rate of 28.6% for the three months ended March 31, 2017. The Company’s forecasted annual effective tax rate for the period ended December 31, 2018 was higher than the statutory rate due to the impact of income allocated to non-controlling limited partners on a forecasted consolidated pre-tax loss ~~for~~and the ~~nine months ended September 30, 2016.~~impact of state taxes. The state taxes increased the forecasted annual effective tax rate as compared to the statutory rate as a result of the pre-tax loss on entities with higher state applicable rates and pre-tax income on entities with lower state applicable rates. The Company’s effective tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 was significantly lowered because the amount of benefit recorded for the quarter is limited to the amount of benefit forecasted for the entire year. The Company’s effective tax rate for the three months ended March 31, 2017 was ~~19.9% compared~~lower than the statutory rate due to ~~87.2% for~~ the ~~nine months ended September 30, 2016.~~impact of income allocated to non-controlling limited partners on forecasted consolidated pre-tax income.

There were no material changes to the Company’s methodology for determining unrecognized tax benefits during the three months ended ~~September 30, 2017.~~March 31, 2018.

J.M. Revolving Credit Facilities

~~In July 2017, the~~The Company ~~amended and restated its $1.5~~has a $2.5 billion revolving credit facility ~~to extend the term to~~that expires in July 2022. ~~In addition, following the closing~~The Company had $1.3 billion in borrowings and no letters of ~~the Rice Merger (defined~~credit outstanding under its credit facility as of March 31, 2018. The Company had $1.3 billion in ~~Note N)~~borrowings and ~~subject to the satisfaction~~$159.4 million of ~~certain conditions, the borrowing capacity~~letters of credit outstanding under its credit facility as of December 31, 2017. The maximum amount of outstanding borrowings at any time under the ~~revolving~~ credit facility ~~will automatically increase to $2.5 billion.~~during the three months ended March 31, 2018 was $1.6 billion, and the average daily balance of borrowings outstanding was approximately $1.4 billion at a weighted average annual interest rate of approximately 3.1%. The Company had no borrowings or letters of credit outstanding under its ~~revolving~~ credit facility ~~as of September 30, 2017 or December 31, 2016 or at~~ any time during the three ~~and nine~~ months ended ~~September 30, 2017 and 2016.~~March 31, 2017.

~~In July 2017,~~ EQM amended and restated its credit facility to increase the borrowing capacity under the facility from $750 million to $1 billion and to extend the term to July 2022. Subject to certain terms and conditions, thehas a $1 billion credit facility ~~has an accordion feature~~ that ~~allows EQM to increase the available borrowings under the facility by up to an additional $500 million.~~expires in July 2022. EQM had ~~$105~~$317 million in borrowings and no letters of credit outstanding under the credit facility as of ~~September 30, 2017.~~March 31, 2018. EQM had no$180 million in borrowings and no letters of credit outstanding under the credit facility as of December 31, ~~2016.~~2017. The maximum amount of outstanding borrowings under EQM’s revolving credit facility at any time during ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 was ~~$177 million.~~$420 million, and the average daily balance of borrowings outstanding was approximately $301 million at a weighted average annual interest rate of approximately 3.0%. EQM had no borrowings or letters of credit outstanding under its revolving credit facility any time during the three months ended March 31, 2017.

Rice Midstream OpCo LLC (RMP OpCo), a direct wholly owned subsidiary of RMP, has an $850 million, secured revolving credit facility that expires in December 2019. RMP OpCo had $325 million in borrowings and $1 million of letters of credit outstanding under the credit facility as of March 31, 2018. RMP had $286 million in borrowings and $1 million of letters of credit outstanding under the credit facility as of December 31, 2017. The maximum amount of ~~EQM's~~ outstanding borrowings under ~~the~~RMP’s revolving credit facility at any time during the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2018 was ~~$91~~$336 million, and ~~$299 million, respectively. The~~the average daily balance of ~~loans~~borrowings outstanding ~~under EQM's credit facility~~ was approximately ~~$95~~$308 million ~~and $32 million during the three and nine months ended September 30, 2017, respectively,~~ at a weighted average annual interest rate of ~~2.7% for both periods. The average daily balance of loans outstanding under EQM's credit facility was~~ approximately ~~$34 million and $67 million at weighted average annual interest rates of 2.0% and 1.9% for the three and nine months ended September 30, 2016, respectively.~~3.6%.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

K.N. Earnings Per Share

Potentially dilutive securities (options and restricted stock awards) included in the calculation of diluted earnings per share totaled 199,376 and 204,080 for the three and nine months ended September 30, 2017, respectively. Options to purchase common stock excluded from potentially dilutive securities because they were anti-dilutive totaled 425,100 and 431,190 for the three and nine months ended September 30, 2017, respectively. In periods when the Company reports a net loss, all options and restricted stock ~~awards~~ are excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on loss per share. ~~Due to the Company's net loss for the three and nine months ended September 30, 2016,~~As a result, all ~~outstanding~~ options and all restricted stock ~~awards~~totaling 1,896,224 were excluded from the calculation of diluted earnings per ~~share. The excluded options~~share for the three months ended March 31, 2018. Potentially dilutive securities (options and restricted stock ~~awards~~awards) included in the calculation of diluted earnings per share totaled ~~1,712,527 and 1,812,142~~298,297 for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2017. Options to purchase common stock excluded from potentially dilutive securities because they were anti-dilutive totaled 440,325 for the three months ended March 31, 2017. The impact of EQM’s, EQGP’s and ~~EQGP’s~~RMP's dilutive units did not have a material impact on the Company’s earnings per share calculations for ~~any~~either of the periods presented.

L.O. Changes in Accumulated Other Comprehensive Income by Component

The following tables explain the changes in accumulated OCI by component during the applicable period:

Three Months Ended September 30, 2017

Natural gas cash
flow hedges, net of tax

Interest rate
cash flow
hedges, net
of tax

Other post-
retirement
benefit liability
adjustment,
net of tax

Accumulated
OCI, net of tax
(Thousands)
Accumulated OCI (loss), net of tax, as of July 1, 2017
$ 7,047
$ (627 ) $ (6,713 ) $ (293 )
(Gains) losses reclassified from accumulated OCI, net of tax (1,451 ) (a) 36
(a) 77
(b) (1,338 )
Accumulated OCI (loss), net of tax, as of September 30, 2017
$ 5,596
$ (591 ) $ (6,636 ) $ (1,631 )



	Three Months Ended March 31, 2018
	Natural gas cash flow hedges, net of tax				Interest rate cash flow hedges, net of tax				Other post- retirement benefit liability adjustment, net of tax				Accumulated OCI, net of tax
	(Thousands)
Accumulated OCI (loss), net of tax, as of January 1, 2018	$	4,625			$	(555	)		$	(6,528	)		$	(2,458	)
(Gains) losses reclassified from accumulated OCI, net of tax	(287		)	(a)	44			(a)	86			(b)	(157		)
Accumulated OCI (loss), net of tax, as of March 31, 2018	$	4,338			$	(511	)		$	(6,442	)		$	(2,615	)

Three Months Ended September 30, 2016
Natural gas cash
flow hedges, net of tax Interest rate
cash flow
hedges, net
of tax
Pension and
other post-
retirement
benefits liability
adjustment,
net of tax
Accumulated
OCI, net of tax
(Thousands)
Accumulated OCI (loss), net of tax, as of July 1, 2016 $ 36,398
$ (771 ) $ (7,706 ) $ 27,921
(Gains) losses reclassified from accumulated OCI, net of tax (14,740 ) (a) 36
(a) 82
(b) (14,622 )
Accumulated OCI (loss), net of tax, as of September 30, 2016 $ 21,658
$ (735 ) $ (7,624 ) $ 13,299



	Three Months Ended March 31, 2017
	Natural gas cash flow hedges, net of tax				Interest rate cash flow hedges, net of tax				Other post- retirement benefit liability adjustment, net of tax				Accumulated OCI, net of tax
	(Thousands)
Accumulated OCI (loss), net of tax, as of January 1, 2017	$	9,607			$	(699	)		$	(6,866	)		$	2,042
(Gains) losses reclassified from accumulated OCI, net of tax	(888		)	(a)	36			(a)	76			(b)	(776		)
Accumulated OCI (loss), net of tax, as of March 31, 2017	$	8,719			$	(663	)		$	(6,790	)		$	1,266

Nine Months Ended September 30, 2017

Natural gas cash
flow hedges, net of tax

Interest rate
cash flow
hedges, net
of tax

Other post-
retirement
benefit liability
adjustment,
net of tax

Accumulated
OCI, net of tax
(Thousands)
Accumulated OCI (loss), net of tax, as of January 1, 2017
$ 9,607
$ (699 ) $ (6,866 ) $ 2,042
(Gains) losses reclassified from accumulated OCI, net of tax (4,011 ) (a) 108
(a) 230
(b) (3,673 )
Accumulated OCI (loss), net of tax, as of September 30, 2017
$ 5,596
$ (591 ) $ (6,636 ) $ (1,631 )

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

Nine Months Ended September 30, 2016

Natural gas cash
flow hedges, net of tax

Interest rate
cash flow
hedges, net
of tax

Pension and
other post-
retirement
benefits liability
adjustment,
net of tax

Accumulated
OCI, net of tax
(Thousands)
Accumulated OCI (loss), net of tax, as of January 1, 2016
$ 64,762
$ (843 ) $ (17,541 ) $ 46,378
(Gains) losses reclassified from accumulated OCI, net of tax (43,104 ) (a) 108
(a) 9,917
(b) (33,079 )
Accumulated OCI (loss), net of tax, as of September 30, 2016
$ 21,658
$ (735 ) $ (7,624 ) $ 13,299

(a) ~~See Note~~ G ~~for additional information.~~Gains (losses) reclassified from accumulated OCI, net of tax related to natural gas cash flow hedges were reclassified into operating revenues. Losses from accumulated OCI, net of tax related to interest rate cash flow hedges were reclassified into interest expense.

(b) The accumulated OCI reclassification ~~for the three and nine months ended September 30, 2017~~ is attributable to the net actuarial loss and net prior service cost related to the Company’s post-retirement benefit plans. The accumulated OCI reclassification for the three and nine months ended September 30, 2016 is attributable to the net actuarial loss and net prior service cost related to the Company’s defined benefit pension plans and other post-retirement benefit plans. See Note 151 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for additional information.

Table of Contents

EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

P. Acquisitions

On February 1, 2017, the Company acquired approximately 14,000 net Marcellus acres located in Marion, Monongalia and Wetzel Counties of West Virginia from a ~~third-party for $132.9 million.~~third-party.

On February 27, 2017, the Company acquired approximately 85,000 net Marcellus acres, including drilling rights on approximately 44,000 net Utica acres and current natural gas production of approximately 110 MMcfe per day, from Stone Energy ~~Corporation for $523.5 million.~~Corporation. The acquired acres are primarily located in Wetzel, Marshall, Tyler and Marion Counties of West Virginia. The acquired assets also ~~include~~included 174 ~~operated~~ Marcellus wells, 120 of which were producing at the time of the acquisition, and 20 miles of gathering pipeline.

~~On June 30,~~During the first quarter 2017, the Company acquired approximately 11,000 net Marcellus acres, and the associated Utica drilling rights, from a third-party for $83.7 million. The acquired acres are primarily located in Allegheny, Washington and Westmoreland Counties of Pennsylvania.

~~The~~ Company paid net cash of ~~$740.1~~$652.5 million ~~for the 2017 acquisitions during the nine months ended September 30, 2017. The purchase prices remain subject to customary post-closing adjustments~~and assumed liabilities estimated at $11.9 million as of ~~September 30,~~March 31, 2017. ~~The preliminary fair value assigned to the acquired property, plant and equipment as of the opening balance sheet dates totaled $750.1 million. In connection with the 2017 acquisitions,~~Furthermore, the Company ~~assumed approximately $5.3~~paid $17.0 million and recorded an additional $3.5 million of net current liabilities and $4.7 million of non-current liabilities. The amounts presented in the financial statements represent the Company's estimates based on preliminary valuations of acquired assets and liabilities and are subject to change based on the Company's finalization of asset and liability valuations.

Asnon-cash capital expenditures as a result of post-closing adjustments on ~~its~~ 2016 acquisitions in the ~~Company paid $78.9 million~~first quarter 2017.

Fair Value Measurement

As these acquisitions qualified as business combinations under GAAP, the fair value of the acquired assets was determined using a market approach for ~~additional~~the undeveloped acreage and ~~recorded other non-cash adjustments which reduced~~a discounted cash flow model under the preliminary fair values assigned to the acquired property, plant and equipment by $2.5 million during the nine months ended September 30, 2017. With the exception of the Company's acquisition of Marcellus acreage and other assets from Statoil USA Onshore Properties, Inc., which closed on July 8, 2016, the purchase pricesincome approach for the ~~Company’s 2016 acquisitions, as well as~~wells. Significant unobservable inputs used in the ~~fair values assigned to~~analysis included the determination of estimated developed reserves and forward pricing estimates. As a result, valuation of the acquired assets was a Level 3 fair value measurement.

Q. Impairment

In the first quarter of 2018, the Company recorded an impairment of $2.3 billion associated with certain non-core production and ~~assumed liabilities, remained preliminary~~related pipeline assets in the Huron and Permian Plays. The impairment of these properties and the related pipeline assets was due to the carrying value of these assets exceeding the expected undiscounted cash flows of the underlying assets and based on management’s determination that it no longer intends to develop the unproved properties. These assets were reduced to their estimated fair value of approximately $1 billion.

The fair value of the impaired assets was based on significant inputs that were not observable in the market and as such are considered to be Level 3 fair value measurements. See Note K for a description of ~~September 30, 2017.~~the fair value hierarchy and Note 1 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for our policy on impairment of proved and unproved properties. Key assumptions included in the calculation of the fair value of the impaired assets included (i) reserves, including risk adjustments for probable and possible reserves; (ii) future commodity prices; (iii) to the extent available, market based indicators of fair value including estimated proceeds which could be realized upon a potential disposition; (iv) production rates based on the Company's experience with similar properties in which it operates; (v) estimated future operating and development costs; and (vi) a market-based weighted average cost of capital. See Note R for additional information related to our expected disposition of Permian assets.

N.R. ~~Rice~~Subsequent Events

EQM-RMP Merger

On ~~June 19, 2017, the Company~~April 25, 2018, EQM and RMP entered into an Agreement and Plan of Merger (the ~~Rice~~Midstream Merger Agreement) with Rice ~~Energy Inc. (Rice) (NYSE: RICE)~~Midstream Management LLC, the general partner of RMP (the RMP General Partner), ~~pursuant~~EQT Midstream Services, LLC, the general partner of EQM (the EQM General Partner), EQM Acquisition Sub, LLC, a wholly owned subsidiary of EQM (Merger Sub), EQM GP Acquisition Sub, LLC, a wholly owned subsidiary of EQM (GP Merger Sub), and, solely for certain limited purposes set forth therein, the Company. Pursuant to ~~which Rice~~the Midstream Merger Agreement, Merger Sub and GP Merger Sub will merge with and into aRMP and the RMP General Partner, respectively, with RMP and the RMP General Partner surviving as wholly owned ~~indirect subsidiary~~subsidiaries of ~~EQT through a series of transactions~~EQM (the ~~Rice Merger)~~Midstream Mergers). IfPursuant to the ~~Rice~~Midstream Merger ~~is completed,~~Agreement, each ~~share of the~~RMP common ~~stock of Rice (Rice Common Stock)~~unit issued and outstanding immediately prior to the effective time ~~(the Effective Time)~~ of the ~~Rice Merger (other than shares excluded by the Rice Merger Agreement)~~Midstream Mergers will be converted into the right to receive ~~0.37 of a share~~0.3319 EQM common units.

The completion of the ~~common stock~~Midstream Mergers is subject to the satisfaction or waiver of certain customary closing conditions, including, but not limited to: (i) approval of the ~~Company (EQT Common Stock) and $5.30 in cash (collectively,~~Midstream Merger Agreement by a majority of RMP’s unitholders, (ii) expiration or termination of any applicable waiting period under the ~~Merger Consideration).~~

~~Based on~~Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the ~~closing price of EQT Common Stock on the New York Stock Exchange on June 16, 2017, the last trading day before the public announcement~~completion of the ~~Rice Merger,~~Drop-Down Transactions (as defined below), and (iv) the ~~aggregate value~~completion of the ~~Merger Consideration payable to Rice stockholders was~~IDR Transaction (as defined below). The

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Notes to Condensed Consolidated Financial Statements (Unaudited)

approximately $6.7 billion. The Company will also assume or refinance approximately $2.2 billion of net debt and preferred equity (based on anticipated balances as of the expected closing date) of Rice and its subsidiaries and will assume other assets and liabilities of Rice and its subsidiaries at the Effective Time. Based on the estimated number of shares of EQT Common Stock and Rice Common Stock that will be outstanding immediately prior to the Effective Time, the Company estimates that, upon the closing of the Rice Merger, existing EQT shareholders and former Rice stockholders will own approximately 65% and 35%, respectively, of the Company’s outstanding shares.

The waiting period applicable to the Rice Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 was terminated by the Federal Trade Commission on July 18, 2017. The Rice Merger is expected to close in mid-November 2017 following the satisfaction of certain customary closing conditions, including the approval by the Company’s shareholders of the issuance of shares of EQT Common Stock as Merger Consideration and the adoption of the Rice Merger Agreement by Rice stockholders. The special meetings of the shareholders of EQT and the stockholders of Rice are scheduled to be held for these purposes on November 9, 2017.

On June 19, 2017, in connection with its entry into the Rice Merger Agreement, the Company entered into a commitment letter (the Commitment Letter) with Citigroup Global Markets Inc. (Citi), pursuant to which Citi and its affiliates committed to provide, subject to the terms and conditions set forth therein, up to $1.4 billion of senior unsecured bridge loans (the Bridge Facility). On July 14, 2017, the Company entered into a joinder letter to the Commitment Letter, pursuant to which 16 additional banks assumed a portion of Citi’s commitment under the Bridge Facility. The lenders’ commitments under the Bridge Facility terminated upon the closing of the 2017 Notes Offering (as defined in Note O). The Company expensed $7.6 million in debt issuance costs related to the Bridge Facility during the nine months ended September 30, 2017.

~~The Rice~~Midstream Merger Agreement provides for certain termination rights for both the Company and Rice, including the right of either party to terminate the Rice Merger Agreement if the Rice Merger is not consummated by February 19, 2018 (which may be extended by either party to May 19, 2018 under certain circumstances). Uponthat, upon termination of the ~~Rice~~Midstream Merger Agreement under certain ~~specified~~ circumstances, ~~the Company~~RMP may be required to pay ~~Rice, or Rice may be required to pay the Company,~~EQM a termination fee ~~of $255.0 million. In addition, if the Rice~~equal to $63.4 million less any previous reimbursements by RMP. The Midstream Merger Agreement ~~is terminated because~~also provides that, upon termination of ~~a failure of a party’s shareholders to approve~~ the ~~proposals required to complete the Rice~~Midstream Merger ~~that party~~Agreement under certain circumstances, EQM may be required to reimburse RMP's expenses up to $5.0 million, and RMP may be required to reimburse EQM's expenses up to $5.0 million. As a result of the ~~other party~~Midstream Mergers, RMP’s common units will no longer be publicly traded. EQM and RMP expect to complete the Midstream Mergers during the third quarter of 2018.

RMP IDR Purchase and Sale Agreement

On April 25, 2018, the Company, Rice Midstream GP Holdings LP, a wholly owned subsidiary of the Company that owns the RMP IDRs, and EQGP entered into an Incentive Distribution Rights Purchase and Sale Agreement pursuant to which EQGP will acquire all of the issued and outstanding RMP IDRs in exchange for ~~its transaction expenses in~~36,293,766 EQGP common units (the IDR Transaction). If the unit consideration is issued and the Midstream Mergers are not consummated on or prior to December 31, 2018 or the Midstream Merger Agreement is earlier terminated, 8,539,710 of the EQGP common units issued to the Company will be canceled and the Company will pay to EQGP an amount in cash equal to ~~$67.0 million.~~the aggregate amount of any distributions paid by EQGP to the Company related to the forfeited EQGP common units. The completion of the IDR Transaction is subject to certain customary closing conditions. Pursuant to the terms of the Midstream Merger Agreement, the RMP IDRs will be canceled effective at the time of the Midstream Mergers. The Company expects to complete the IDR Transaction during the second quarter of 2018.

Drop-Down Transactions and Gulfport Transaction

On April 25, 2018, the Company, Rice Midstream Holdings LLC, a wholly owned subsidiary of the Company, EQM and EQM Gathering Holdings, LLC, a wholly owned subsidiary of EQM (EQM Gathering), entered into a Contribution and Sale Agreement (the Drop-Down Agreement) pursuant to which EQM Gathering will acquire, in one or more transactions, from the Company all of the Company’s interests in Rice Olympus Midstream LLC, Rice West Virginia Midstream LLC and Strike Force Midstream Holdings in exchange for an aggregate of 5,889,282 EQM common units and aggregate cash consideration of $1.15 billion, subject to customary post-closing purchase price adjustments (collectively, the Drop-Down Transactions). Strike Force Midstream Holdings owns a 75% limited liability company interest in Strike Force Midstream. The completion of the Drop-Down Transactions is subject to certain customary closing conditions.

Also on April 25, 2018, EQM, EQM Gathering, Gulfport Energy Corporation (Gulfport), and an affiliate of Gulfport, entered into a Purchase and Sale Agreement pursuant to which EQM will acquire the remaining 25% limited liability company interest in Strike Force Midstream not owned by the Company for $175 million (the Gulfport Transaction). The completion of the Gulfport Transaction is subject to certain customary closing conditions.

The Company expects to ~~finance~~complete the ~~cash portion of the Merger Consideration~~Drop-Down Transactions and the ~~transactions related to~~Gulfport Transaction during the ~~Rice Merger with cash on hand (including from the proceeds~~second quarter of ~~the 2017 Notes Offering) and borrowings under the Company’s revolving credit facility.~~2018.

O.~~Subsequent Event~~EQM Term Loan

On ~~October 4, 2017, the Company completed the public offering~~April 25, 2018, EQM entered into a $2.5 billion unsecured multi-draw 364-day term loan facility with a syndicate of lenders (the 2017 Notes Offering) of $500 million aggregate principal amount of Floating Rate Notes due 2020 (the Floating Rate Notes), $500 million aggregate principal amount of 2.50% Senior Notes due 2020 (the 2020 Notes), $750 million aggregate principal amount of 3.00% Senior Notes due 2022 (the 2022 Notes) and $1.25 billion aggregate principal amount of 3.90% Senior Notes due 2027 (the 2027 Notes and, together with the Floating Rate Notes, the 2020 Notes and the 2023 Notes, the 2017 Notes)EQM Term Loan Facility). The ~~Company received net proceeds from~~EQM Term Loan Facility is available to fund the ~~2017 Notes Offering of approximately $2,974.3 million, which~~cash consideration for the ~~Company expects~~Drop-Down Transactions, to ~~use, together with other cash on hand and~~repay borrowings under EQM’s $1 billion revolving credit facility and, following the ~~Company’s~~Midstream Mergers, under RMP’s $850 million revolving credit facility, to fund the cash portion of the Merger Consideration, to pay expenses related to the Rice Merger and other transactions contemplated by the Rice Merger Agreement (including the refinancing of certain indebtedness of Rice and its subsidiaries), to redeem or repay certain Company senior notes and medium term notes due in 2018ongoing working capital requirements and for other general ~~corporate~~partnership purposes. ~~In October 2017,~~Unused commitments under the ~~Company delivered redemption notices pursuant to which the Company expects to redeem all of its outstanding $200 million aggregate principal amount 5.15% Senior Notes due 2018~~EQM Term Loan Facility will terminate automatically on December 31, 2018. The EQM Term Loan Facility matures on April 24, 2019 and $500 million aggregate principal amount 6.50% Senior Notes due 2018 in November 2017. Upon redemption, the Company will pay make whole call premiums based upon prevailing rates on U.S. government securities at the time of redemption.

~~The indentures~~includes mandatory prepayment and commitment reduction requirements related to the ~~2017 Notes contain covenants that limit~~receipt by EQM of net cash proceeds from certain debt transactions, equity issuances, asset sales and joint venture distributions.

Permian Sale

EQT entered into an agreement to sell its Permian Basin assets located in Texas for $64 million. The sale, expected to close by end of June 2018, will reduce the Company’s ~~ability to, among other things, incur certain liens securing indebtedness, engage in certain sale and leaseback transactions and enter into certain consolidations, mergers or~~2018 production sales other than for cash or leases of the Company’s assets substantially as an entirety. In addition, if the Rice Merger does not occur on or before May 19, 2018 or the Company notifies the trustee under the indenture governing the 2017 Notes that the Company will not pursue the consummation of the Rice Merger, the Company will be required to redeem the Floating Rate Notes, the 2020 Notes and the 2027 Notes (but not the 2022 Notes) then outstanding at a redemption price equal to 101% of the principal amount of the notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.volume guidance by 5 Bcfe.

2027

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EQT Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

P.S. Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard requires an entity to recognize revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ~~In August 2015, the FASB issued ASU No. 2015-14,~~ ~~Revenue from Contracts with Customers - Deferral of the Effective Date~~ ~~which approved a one year deferral of ASU No. 2014-09 for annual reporting periods beginning after December 15, 2017.~~ The Company ~~expects to adopt the ASUs~~adopted this standard on January 1, 2018 using the modified retrospective method of ~~adoption on January 1, 2018. During the third quarter of 2017, the Company substantially completed its detailed review~~adoption. Adoption of the ~~impact~~ASU did not require an adjustment to the opening balance of ~~the standard on each of its contracts. Based on this review, the~~equity. The Company does not expect the standard to have a significant ~~impact~~effect on ~~net income.~~its results of operations, liquidity or financial position in 2018. The Company ~~is currently evaluating~~implemented processes and controls to ensure new contracts are reviewed for the ~~impact~~appropriate accounting treatment and to generate the disclosures required under the new standard in the first quarter of 2018. For the ~~standard on its internal controls and disclosures.~~disclosures required by this ASU, see Note F.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The ~~changes~~standard primarily ~~affect the~~affects accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial ~~instruments. This standard will eliminate~~instruments, and eliminates the cost method of accounting for equity investments. The ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, with early adoption of certain provisions permitted. The Company ~~will adopt~~adopted this standard in the first quarter of 2018 ~~and does not expect that~~which resulted in a cumulative effect adjustment of $4.1 million shown on the ~~adoption will have a material impact on its financial statements and related disclosures.~~Statement of Condensed Consolidated Equity.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The ~~primary effect of adopting the new~~ standard ~~will be~~requires an entity to record assets and obligations for contracts currently recognized as operating leases. Lessees and lessors must apply a modified retrospective transition ~~approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.~~approach. The ASU will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The Company has completed a ~~high level~~high-level identification of agreements covered by this standard and will continue to evaluate the ~~impact~~effect this standard will have on its financial statements, internal controls and related ~~disclosures.~~

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting~~. This ASU is part of the FASB initiative to reduce complexity in accounting standards. The areas for simplification in this ASU involve several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted this standard in the first quarter of 2017 with no significant impact on its reported results or disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASU amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this ASU eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The ASU will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently evaluating the ~~impact~~effect this standard will have on its financial statements and related disclosures.

In ~~August~~November 2016, the FASB issued ASU No. ~~2016-15,~~2016-18, Statement of Cash ~~Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~Flows: Restricted Cash. . This ASU ~~addresses~~requires that a statement of cash flows explain the ~~presentation and classification of eight specific cash flow issues. The amendments~~change during the period in the ~~ASU will~~total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be ~~effective for public business entities for annual reporting periods~~included with cash and cash equivalents when reconciling the beginning ~~after December 15, 2017, including interim periods within that reporting~~of period ~~with early adoption permitted.~~and end of period total amounts shown on the statement of cash flows. The Company adopted this standard in the ~~second~~first quarter of 2018. The Company had $75 million restricted cash at December 31, 2016. In accordance with ASU 2016-18, restricted cash is included in the beginning of period cash balance and excluded from investing activities on the Statements of Condensed Consolidated Cash Flows for the three months ended March 31, 2017. The Company had no restricted cash on the Condensed Consolidated Balance Sheet from March 31, 2017 ~~with no material impact on its financial statements and related disclosures.~~through the current period.

In January 2017, the FASB issued ASU No. 2017-01, Business ~~Combinations (Topic 805):~~Combinations: Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU will be effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The Company ~~anticipates~~adopted this standard ~~will not have a material impact~~in the first quarter of 2018 with no significant effect on its financial statements ~~and~~or related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test of Goodwill Impairment. This ASU simplifies the quantitative goodwill impairment test requirements by eliminating the requirement to calculate the implied fair value of goodwill (Step 2 of the current goodwill impairment test). Instead, a company would record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value (measured in Step 1 of the current goodwill impairment test). Entities will apply the standard’s provisions prospectively. The Company adopted this standard in the first quarter of 2018 with no significant effect on its financial statements or related disclosures.

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU provides additional guidance on the presentation

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Notes to Condensed Consolidated Financial Statements (Unaudited)

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU provides additional guidance on the presentation~~ of net benefit cost in the income statement and on the components eligible for capitalization in assets. The ASU will be effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The Company ~~anticipates~~adopted this standard ~~will not have a material impact~~in the first quarter of 2018 with no significant effect on its financial statements ~~and~~or related disclosures.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock ~~Compensation (Topic 718):~~Compensation: Scope of Modification Accounting. This ASU provides guidance regarding which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company adopted this standard in the first quarter of 2018 with no significant effect on its financial statements or related disclosures. This ASU will be applied prospectively to awards modified on or after the adoption date.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement—Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows companies to reclassify stranded tax effects resulting from the Tax Reform Legislation from accumulated other comprehensive income to retained earnings. The ASU is effective for ~~annual reporting periods~~fiscal years beginning after December 15, ~~2017, including interim periods within that reporting period, with~~2018 and early adoption is permitted. The reclassification permitted under this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Legislation is recognized. The Company is currently evaluating the ~~impact~~effect this standard will have on its financial statements and related disclosures.

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EQT Corporation and Subsidiaries

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

CAUTIONARY STATEMENTS

Disclosures in this Quarterly Report on Form 10-Q contain 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 Quarterly Report on Form 10-Q include the matters discussed in the section captioned “Outlook” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the 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, average lateral lengths and location of wells to be drilled and the availability of capital to complete these plans and programs); production sales volumes (including liquids volumes) and growth rates; gathering and transmission volumes; infrastructure programs (including the timing, cost and capacity of the gathering and transmission expansion projects); the cost, capacity, timing of regulatory approvals ~~for,~~ and anticipated in-service date of the Mountain Valley Pipeline (MVP) project; the ultimate terms, partners and structure of Mountain Valley Pipeline, LLC (the MVP Joint Venture); monetization transactions, including asset sales, joint ventures or other transactions involving the Company’s assets; acquisition transactions; whether any of the ~~Company's ability~~Company’s sale of the Rice Energy Inc. (Rice) retained midstream assets to ~~complete~~EQT Midstream Partners, LP (EQM), the Company’s sale of the Rice Midstream Partners LP (RMP) incentive distribution rights (IDRs) to EQT GP Holdings, LP (EQGP) and the merger of EQM and RMP (collectively, the Midstream Streamlining Transactions) will be completed and the timing of each transaction or transactions; the risk that EQM or RMP may be unable to obtain governmental and regulatory approvals required for the proposed merger of EQM and RMP, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger; the risk that a condition to closing of the merger may not be satisfied, including approval of the merger by RMP’s unitholders; the possible diversion of management’s time on issues related to the merger; the impact and outcome of pending and future litigation, including litigation, if any, relating to the merger; whether the separation of the Company’s production and midstream businesses (the Separation) will be completed and the timing of the ~~Rice Merger (as defined in Note~~ NSeparation; the Company’s ability to achieve the ~~Condensed Consolidated Financial Statements), including whether the Company will sell Rice Energy Inc.'s (Rice) retained midstream assets to EQM; the amount~~anticipated synergies, operational efficiencies and returns from its acquisition of ~~net debt and preferred equity of Rice and its subsidiaries the Company will assume or refinance; the timing of the Company's redemption of its senior notes due in 2018;~~Rice; natural gas prices, changes in basis and the impact of commodity prices on the Company's business; reserves, including potential future ~~impairments of the Company's assets;~~downward adjustments; projected capital expenditures and capital contributions; the amount and timing of any repurchases under the Company’s share repurchase authorization; 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; and tax position. The forward-looking statements included in this Quarterly Report on Form 10-Q 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. 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 the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, as updated by Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q.

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.

In reviewing any agreements incorporated by reference in or filed with this Quarterly Report on Form 10-Q, 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 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

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EQT Corporation and Subsidiaries

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

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.

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

CORPORATE OVERVIEW

Three Months Ended ~~September 30, 2017~~March 31, 2018 vs. Three Months Ended ~~September 30, 2016~~March 31, 2017

Net ~~income~~loss attributable to EQT Corporation for the three months ended ~~September 30, 2017~~March 31, 2018 was ~~$23.3~~$1,586.0 million, ~~$0.13~~a loss of $5.99 per diluted share, compared ~~with~~to net ~~loss~~income attributable to EQT Corporation of ~~$8.0~~$164.0 million, ~~a loss of $0.05~~$0.95 per diluted share, for the three months ended ~~September 30, 2016.~~March 31, 2017. The ~~increase~~decrease was primarily attributable to an impairment charge of $2.3 billion associated with certain non-core production and related pipeline assets in the Huron and Permian Plays. Net income was also negatively impacted by increases in other operating costs, lower gains on derivatives not designated as hedges, a ~~$0.56 increase~~$0.17 decrease in the average realized price, ~~a 5%~~higher net income attributable to noncontrolling interests and higher interest expense. These decreases were partly offset by revenues from an 88% increase in production sales volumes, an income tax benefit for the three months ended ~~September 30, 2017~~March 31, 2018 compared to income tax expense for the three months ended ~~September 30, 2016~~March 31, 2017 and higher pipeline and net marketing services ~~revenue, partly offset by higher~~revenue.

During the three months ended March 31, 2018, the Company recorded transaction costs of approximately $35.7 million. Transaction costs include $19.8 million for the sum-of-the-parts review and Midstream Streamlining Transactions and $15.9 million for the Rice Merger (as defined in Note B). Transaction costs are reflected in unallocated expenses as they are not allocated to any operating ~~expenses, lower gains on derivatives~~segment.

In connection with the Rice Merger, the Company obtained intangible assets composed of customer relationships and non-compete agreements with former Rice executives. Amortization expense for the three months ended March 31, 2018 related to customer relationships is approximately $10.4 million and is shown in EQT Production's operating expense. Amortization expense for the three months ended March 31, 2018 related to non-compete agreements with former Rice executives is approximately $10.3 million and is not ~~designated as hedges, higher interest expense and higher net income attributable~~allocated to ~~noncontrolling interests of EQGP and EQM.~~any operating segment.

EQT Production ~~received $13.3~~paid $38.6 million and ~~$27.3~~$9.0 million of net cash settlements for derivatives not designated as hedges for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, that are included in the average realized price but are not in GAAP operating revenues.

Net income attributable to noncontrolling interests ~~of EQGP and EQM~~ was ~~$82.1~~$141.0 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$78.1~~$86.7 million for the three months ended ~~September 30, 2016.~~March 31, 2017. The ~~$4.0~~$54.3 million increase was primarily the result of the noncontrolling interests in RMP and Strike Force Midstream LLC (Strike Force Midstream) as well as increased net income at EQM.

In connection with the Rice Merger, the Company recorded $10.8 million in acquisition-related expenses during the three months ended September 30, 2017 that are included in selling, general and administrative expenses. The Company also expensed approximately $6.8 million of the Bridge Facility debt issuance costs during the three months ended September 30, 2017.

~~Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016~~

Net income attributable to EQT Corporation for the nine months ended September 30, 2017 was $228.5 million, $1.32 per diluted share, compared with net loss attributable to EQT Corporation of $261.0 million, a loss of $1.58 per diluted share, for the nine months ended September 30, 2016. The increase was primarily attributable to a $0.72 increase in the average realized price, gains on derivatives not designated as hedges for the nine months ended September 30, 2017 compared to losses on derivatives not designated as hedges for the nine months ended September 30, 2016, a 6% increase in production sales volumes and higher pipeline and net marketing services revenue, partly offset by income tax expense for the nine months ended September 30, 2017 compared to a benefit for the nine months ended September 30, 2016, higher operating expenses, higher interest expense and higher net income attributable to noncontrolling interests of EQGP and EQM.

EQT Production paid $6.8 million and received $222.5 million of net cash settlements for derivatives not designated as hedges for the nine months ended September 30, 2017 and 2016, respectively, that are included in the average realized price but are not in GAAP operating revenues.

Net income attributable to noncontrolling interests of EQGP and EQM was $250.3 million for the nine months ended September 30, 2017 compared to $238.7 million for the nine months ended September 30, 2016. The $11.6 million increase was primarily the result of increased net income at EQM and increased ownership of EQM common units by third-parties.

In connection with the Rice Merger, the Company recorded $15.0 million in acquisition-related expenses during the nine months ended September 30, 2017 that are included in selling, general and administrative expenses. The Company also expensed $7.6 million in debt issuance costs related to the Bridge Facility during the nine months ended September 30, 2017.

See “Business Segment Results of Operations” for a discussion of segment operating expenses, production sales volumes and gathering and transmission revenues.

See “Investing Activities” under the caption “Capital Resources and Liquidity” for a discussion of capital expenditures.

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Consolidated Operational Data

The following table presents detailed natural gas and liquids operational information to assist in the understanding of the Company’s consolidated operations, including the calculation of the Company's average realized price ($/Mcfe), which is based on EQT Production adjusted operating revenues, a non-GAAP supplemental financial measure. EQT Production adjusted operating revenues is presented because it is an important measure used by the Company’s management to evaluate period-to-period comparisons of earnings trends. EQT Production adjusted operating revenues should not be considered as an alternative to EQT Production total operating revenues. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of EQT Production adjusted operating revenues to EQT Production total operating revenues and Note I to the Condensed Consolidated Financial Statements for a reconciliation of EQT Production total operating revenues to EQT Corporation total operating revenues.

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


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended March 31,
in thousands (unless noted)	2017			2016			%		2017			2016			%		2018 (e)			2017			%
NATURAL GAS
Sales volume (MMcf)	176,311			175,191			0.6		508,457			508,206			—		329,404			164,464			100.3
NYMEX price ($/MMBtu) (a)	$	3.00		$	2.81		6.8		$	3.16		$	2.29		38.0		$	2.98		$	3.31		(10.0	)
Btu uplift	0.30			0.27			11.1		0.28			0.21			33.3		0.20			0.28			(28.6	)
Natural gas price ($/Mcf)	$	3.30		$	3.08		7.1		$	3.44		$	2.50		37.6		$	3.18		$	3.59		(11.4	)

Basis ($/Mcf) (b)	$	(0.81	)	$	(1.21	)	(33.1	)	$	(0.53	)	$	(0.80	)	(33.8	)	$	0.13		$	(0.16	)	(181.3	)
Cash settled basis swaps (not designated as hedges) ($/Mcf)	(0.04		)	—			(100.0	)	(0.02		)	0.05			(140.0	)	(0.15		)	0.03			(600.0	)
Average differential, including cash settled basis swaps ($/Mcf)	$	(0.85	)	$	(1.21	)	(29.8	)	$	(0.55	)	$	(0.75	)	(26.7	)	$	(0.02	)	$	(0.13	)	(84.6	)

Average adjusted price ($/Mcf)	$	2.45		$	1.87		31.0		$	2.89		$	1.75		65.1		$	3.16		$	3.46		(8.7	)
Cash settled derivatives (cash flow hedges) ($/Mcf)	0.01			0.14			(92.9	)	0.01			0.14			(92.9	)	—			0.01			(100.0	)
Cash settled derivatives (not designated as hedges) ($/Mcf)	0.13			0.15			(13.3	)	0.01			0.38			(97.4	)	0.04			(0.07		)	(157.1	)
Average natural gas price, including cash settled derivatives ($/Mcf)	$	2.59		$	2.16		19.9		$	2.91		$	2.27		28.2		$	3.20		$	3.40		(5.9	)

Natural gas sales, including cash settled derivatives	$	456,347		$	378,484		20.6		$	1,484,711		$	1,155,898		28.4		$	1,055,065		$	559,199		88.7

LIQUIDS
NGLs (excluding ethane):
Sales volume (MMcfe) (c)	19,054			16,803			13.4		55,089			44,897			22.7		18,391			17,140			7.3
Sales volume (Mbbls)	3,176			2,799			13.5		9,182			7,482			22.7		3,065			2,857			7.3
Price ($/Bbl)	$	29.81		$	14.82		101.1		$	28.33		$	15.26		85.6		$	37.50		$	31.41		19.4
Cash settled derivatives (not designated as hedges) ($/Bbl)	(0.44		)	—			(100.0	)	(0.43		)	—			(100.0	)	(1.21		)	(0.54		)	124.1
Average NGL price, including cash settled derivatives ($/Bbl)	$	29.37		$	14.82		98.2		$	27.90		$	15.26		82.8		$	36.29		$	30.87		17.6

NGL sales	$	93,273		$	41,508		124.7		$	256,123		$	114,188		124.3		$	111,236		$	88,197		26.1
Ethane:
Sales volume (MMcfe) (c)	8,226			2,967			177.2		24,970			4,144			502.6		7,997			6,973			14.7
Sales volume (Mbbls)	1,371			495			177.0		4,162			691			502.3		1,333			1,162			14.7
Price ($/Bbl)	$	5.92		$	8.02		(26.2	)	$	6.45		$	8.09		(20.3	)	$	7.90		$	6.65		18.8
Ethane sales	$	8,119		$	3,966		104.7		$	26,858		$	5,590		380.5		$	10,532		$	7,732		36.2
Oil:
Sales volume (MMcfe) (c)	1,476			1,124			31.3		4,565			3,321			37.5		1,213			1,357			(10.6	)
Sales volume (Mbbls)	246			188			30.9		761			554			37.4		202			226			(10.6	)
Price ($/Bbl)	$	36.86		$	35.81		2.9		$	39.69		$	32.81		21.0		$	55.15		$	43.75		26.1
Oil sales	$	9,072		$	6,710		35.2		$	30,198		$	18,164		66.3		$	11,146		$	9,896		12.6

Total liquids sales volume (MMcfe) (c)	28,756			20,894			37.6		84,624			52,362			61.6		27,601			25,470			8.4
Total liquids sales volume (Mbbls)	4,793			3,482			37.7		14,105			8,727			61.6		4,600			4,245			8.4

Liquids sales	$	110,464		$	52,184		111.7		$	313,179		$	137,942		127.0		$	132,914		$	105,825		25.6

TOTAL PRODUCTION
Total natural gas & liquids sales, including cash settled derivatives (d)	$	566,811		$	430,668		31.6		$	1,797,890		$	1,293,840		39.0		$	1,187,979		$	665,024		78.6
Total sales volume (MMcfe)	205,067			196,085			4.6		593,081			560,568			5.8		357,005			189,934			88.0

Average realized price ($/Mcfe)	$	2.76		$	2.20		25.5		$	3.03		$	2.31		31.2		$	3.33		$	3.50		(4.9	)


(a)	The Company’s volume weighted NYMEX natural gas price (actual average NYMEX natural gas price ($/MMBtu) was $3.00 and ~~$2.81~~$3.32 for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively, and $3.17 and $2.29 for the nine months ended September 30, 2017 and 2016,~~ respectively).


(b)	Basis represents the difference between the ultimate sales price for natural gas and the NYMEX natural gas price.


(c)	NGLs, ethane and crude oil were converted to Mcfe at the rate of six Mcfe per barrel for all periods.


(d)	Also referred to in this report as EQT Production adjusted operating revenues, a non-GAAP supplemental financial measure.


(e)	EQT Production includes the results of production operations acquired in the Rice Merger, which occurred on November 13, 2017.

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

Reconciliation of Non-GAAP Financial Measures

The table below reconciles EQT Production adjusted operating revenues, a non-GAAP supplemental financial measure, to EQT Production total operating revenues as reported under EQT Production Results of Operations, its most directly comparable financial measure calculated in accordance with GAAP. See Note FI to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a reconciliation of EQT Production operating revenues to EQT Corporation total operating revenues as reported in the Statements of Consolidated Operations.

EQT Production adjusted operating revenues (also referred to as total natural gas & liquids sales, including cash settled derivatives) is presented because it is an important measure used by the Company’s management to evaluate period-over-period comparisons of earnings trends. EQT Production adjusted operating revenues ~~as presented~~ excludes the revenue impact of changes in the fair value of derivative instruments prior to settlement and the revenue impact of certain pipeline and net marketing services. Management utilizes EQT Production adjusted operating revenues to evaluate earnings trends because the measure reflects only the impact of settled derivative contracts and thus does not impact the revenue from natural gas sales with the often volatile fluctuations in the fair value of derivatives prior to settlement. EQT Production adjusted operating revenues also excludes "Pipeline and net marketing services" because management considers these revenues to be unrelated to the revenues for its natural gas and liquids production. "Pipeline and net marketing services" primarily includes revenues for gathering services provided to third-parties as well as both the cost of and recoveries on third-party pipeline capacity not used for EQT Production sales volumes. Management further believes that EQT Production adjusted operating revenues as presented provides useful information to investors for evaluating period-over-period earnings trends.


Calculation of EQT Production adjusted operating revenues	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
$ in thousands (unless noted)	2017			2016			2017			2016			2018			2017
EQT Production total operating revenues	$	597,718		$	508,092		$	2,057,481		$	1,068,752		$	1,348,602		$	828,662
(Deduct) add back:
(Gain) loss on derivatives not designated as hedges	(35,625		)	(93,356		)	(222,693		)	32,342
Net cash settlements received (paid) on derivatives not designated as hedges	13,321			27,287			(6,837		)	222,516
Premiums received (paid) for derivatives that settled during the period	537			(558		)	1,595			(1,574		)
Gain on derivatives not designated as hedges													(62,592		)	(140,742		)
Net cash settlements paid on derivatives not designated as hedges													(38,629		)	(8,967		)
Premiums received for derivatives that settled during the period													234			526
Pipeline and net marketing services	(9,140		)	(10,797		)	(31,656		)	(28,196		)	(59,636		)	(14,455		)
EQT Production adjusted operating revenues, a non-GAAP financial measure	$	566,811		$	430,668		$	1,797,890		$	1,293,840		$	1,187,979		$	665,024

Total sales volumes (MMcfe)	205,067			196,085			593,081			560,568			357,005			189,934

Average realized price ($/Mcfe)	$	2.76		$	2.20		$	3.03		$	2.31		$	3.33		$	3.50

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

Business Segment Results of Operations

Business segment operating results are presented in the segment discussions and financial tables on the following pages. Operating segments are evaluated on their contribution to the Company’s consolidated results based on operating income. Other income, interest and income taxes are managed on a consolidated basis. Headquarters’ costs are billed to the operating segments based upon a fixed allocation of the headquarters’ annual operating budget. Unallocated expenses incurred in 2018 consist primarily of incentive compensation ~~expense~~ and administrative costs, ~~including~~which included transaction costs associated with the Company's sum-of-the-parts review, Midstream Streamlining Transactions and Rice ~~Merger acquisition-related expenses.~~Merger.

The Company has reported the components of each segment’s operating income and various operational measures in the sections below, and where appropriate, has provided information describing how a measure was derived. EQT’s management believes that presentation of this information provides useful information to management and investors regarding the financial condition, operations and trends of each of EQT’s business segments without being obscured by the financial condition, operations and trends for the other segments or by the effects of corporate allocations of interest, income taxes and other income. In addition, management uses these measures for budget planning purposes. The Company has reconciled each segment’s operating income to the Company’s consolidated operating income and net income in Note FI to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

~~As of December 31, 2016,~~Prior to the Rice Merger, the Company ~~reports~~reported its results of operations through three business segments: EQT Production, EQT Gathering and EQT Transmission. ~~The segment disclosures~~These reporting segments reflected the Company's lines of business and ~~discussions contained~~were reported in ~~this Quarterly Report on Form 10-Q have been recast to reflect~~ the ~~current~~same manner in which the Company evaluated its operating performance through September 30, 2017. Following the Rice Merger, the Company adjusted its internal reporting structure ~~for all periods presented. Certain previously reported amounts have been reclassified~~ to ~~conform to~~incorporate the ~~current year presentation under the current segment reporting structure.~~newly acquired assets. The Company now conducts its business through five business segments: EQT Production, EQM Gathering (formerly known as EQT Gathering), EQM Transmission (formerly known as EQT Transmission), RMP Gathering and RMP Water.

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

EQT PRODUCTION

RESULTS OF OPERATIONS


	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended March 31,
	2017		2016			%		2017		2016			%		2018 (a)			2017		%
OPERATIONAL DATA

Sales volume detail (MMcfe):
Marcellus ~~(a)~~(b)	181,650		171,468			5.9		523,122		486,439			7.5		288,773			166,369		73.6
Other (b)	23,417		24,617			(4.9	)	69,959		74,129			(5.6	)
Ohio Utica															47,510			130		36,446.2
Other															20,722			23,435		(11.6	)
Total production sales volumes (c)	205,067		196,085			4.6		593,081		560,568			5.8		357,005			189,934		88.0

Average daily sales volumes (MMcfe/d)	2,229		2,131			4.6		2,172		2,046			6.2		3,967			2,110		88.0

Average realized price ($/Mcfe)	$	2.76	$	2.20		25.5		$	3.03	$	2.31		31.2		$	3.33		$	3.50	(4.9	)

Gathering to EQT Gathering ($/Mcfe)	$	0.47	$	0.46		2.2		$	0.48	$	0.49		(2.0	)
Transmission to EQT Transmission ($/Mcfe)	$	0.23	$	0.19		21.1		$	0.23	$	0.19		21.1
Gathering to EQM Gathering and RMP Gathering ($/Mcfe)															$	0.46		$	0.48	(4.2	)
Transmission to EQM Transmission ($/Mcfe)															$	0.13		$	0.23	(43.5	)
Third-party gathering and transmission ($/Mcfe)	$	0.45	$	0.29		55.2		$	0.46	$	0.29		58.6		$	0.41		$	0.48	(14.6	)
Processing ($/Mcfe)	$	0.22	$	0.17		29.4		$	0.23	$	0.16		43.8		$	0.13		$	0.23	(43.5	)
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)	$	0.13	$	0.14		(7.1	)	$	0.13	$	0.15		(13.3	)	$	0.10		$	0.13	(23.1	)
Production taxes ($/Mcfe)	$	0.07	$	0.05		40.0		$	0.09	$	0.07		28.6		$	0.07		$	0.11	(36.4	)
Production depletion ($/Mcfe)	$	1.03	$	1.06		(2.8	)	$	1.03	$	1.06		(2.8	)	$	1.07		$	1.04	2.9

Depreciation, depletion and amortization (DD&A) (thousands):
Production depletion	$	210,393	$	207,120		1.6		$	613,379	$	594,408		3.2		$	380,464		$	197,462	92.7
Other DD&A	13,710		13,648			0.5		41,032		40,845			0.5		19,594			13,635		43.7
Total DD&A	$	224,103	$	220,768		1.5		$	654,411	$	635,253		3.0		$	400,058		$	211,097	89.5

Capital expenditures (thousands) (d)	$	449,303	$	622,856		(27.9	)	$	1,850,482	$	1,094,747		69.0		$	675,028		$	945,458	(28.6	)

FINANCIAL DATA (thousands)

Revenues:
Sales of natural gas, oil and NGLs	$	552,953	$	403,939		36.9		$	1,803,132	$	1,072,898		68.1		$	1,226,374		$	673,465	82.1
Pipeline and net marketing services	9,140		10,797			(15.3	)	31,656		28,196			12.3		59,636			14,455		312.6
Gain (loss) on derivatives not designated as hedges	35,625		93,356			(61.8	)	222,693		(32,342		)	(788.6	)
Gain on derivatives not designated as hedges															62,592			140,742		(55.5	)
Total operating revenues	597,718		508,092			17.6		2,057,481		1,068,752			92.5		1,348,602			828,662		62.7

Operating expenses:
Gathering	116,921		103,231			13.3		334,801		307,682			8.8		176,465			106,915		65.1
Transmission	119,729		81,456			47.0		354,534		235,196			50.7		178,016			118,596		50.1
Processing	44,166		33,332			32.5		133,745		88,429			51.2		45,023			42,760		5.3
LOE, excluding production taxes	26,177		28,303			(7.5	)	77,522		84,510			(8.3	)	35,415			25,194		40.6
Production taxes	13,453		10,696			25.8		52,290		41,582			25.8		24,520			20,478		19.7
Exploration	2,437		2,670			(8.7	)	9,040		9,384			(3.7	)	5,104			3,122		63.5
Selling, general and administrative (SG&A)	38,650		43,101			(10.3	)	118,861		135,394			(12.2	)	38,376			42,951		(10.7	)
DD&A	224,103		220,768			1.5		654,411		635,253			3.0		400,058			211,097		89.5
Amortization of intangible assets															10,387			—		100.0
Impairment of long-lived assets															2,329,045			—		100.0
Total operating expenses	585,636		523,557			11.9		1,735,204		1,537,430			12.9		3,242,409			571,113		467.7
Operating income (loss)	$	12,082	$	(15,465	)	(178.1	)	$	322,277	$	(468,678	)	(168.8	)
Operating (loss) income															$	(1,893,807	)	$	257,549	(835.3	)


(a)	~~Includes Upper Devonian wells.~~Operational Data for EQT Production includes results of operations for production operations and retained midstream operations acquired in the Rice Merger, which occurred on November 13, 2017.


(b)	Includes 2,267 and 3,847 MMcfe of Utica sales volume for the three months ended September 30, 2017 and 2016, respectively, and 7,239 and 11,641 MMcfe of Utica sales volume for the nine months ended September 30, 2017 and 2016, respectively.Upper Devonian wells.


(c)	NGLs, ethane and crude oil were converted to Mcfe at the rate of six Mcfe per barrel for all periods.

(d)

Expenditures for segment assets in the EQT Production segment included ~~$52.1~~$36.8 million and ~~$30.1~~$42.7 million for ~~general leasing activity~~fill-ins and bolt-ons associated with legacy EQT acreage for three months ended March 31, 2018 and 2017, respectively. Expenditures included $44.3 million associated with retained midstream assets during the three months ended ~~September 30, 2017 and 2016, respectively, and $147.0 million and $98.2 million for general leasing activity during the nine~~March 31, 2018. The three months ended ~~September 30,~~March 31, 2017 ~~and 2016, respectively. The three and nine months ended September 30, 2017 includes $7.8 million and $819.0~~included $669.5 million of cash ~~capital expenditures, respectively, for the acquisitions discussed in Note~~ M ~~to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The three~~ and ~~nine months ended September 30, 2016 includes $412.3 million of cash capital expenditures for the acquisitions discussed in Note~~ M~~. During the nine months ended September 30, 2017 and 2016, the Company also incurred $7.5 million and $6.2~~$15.4 million of non-cash capital expenditures for the acquisitions discussed in Note MP.

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

Three Months Ended ~~September 30, 2017~~March 31, 2018 vs. Three Months Ended ~~September 30, 2016~~March 31, 2017

EQT Production’s operating ~~income~~loss was ~~$12.1~~$1,893.8 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to an operating ~~loss~~income of ~~$15.5~~$257.5 million for the three months ended ~~September 30, 2016.~~March 31, 2017. The ~~increase~~decrease was primarily due to an impairment charge recorded in the first quarter of 2018 associated with certain non-core production and related pipeline assets in the Huron and Permian Plays, higher other operating expenses, lower gains on derivatives not designated as hedges and a ~~higher~~lower average realized price, ~~and~~partially offset by increased sales volumes of produced natural gas and ~~NGLs, partly offset by increased operating expenses and lower gains on derivatives not designated~~NGLs. These variances include the impact of operations of Rice for the three months ended March 31, 2018, as ~~hedges.~~the Rice Merger was completed in the fourth quarter of 2017.

Total operating revenues were ~~$597.7~~$1,348.6 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$508.1~~$828.7 million for the three months ended ~~September 30, 2016.~~March 31, 2017. Sales of natural gas, oil and NGLs increased as a result of ~~a higher average realized price and a 5%~~an 88% increase in production sales volumes in the current ~~period.~~period which was primarily a result of the Rice Merger as well as increased production from the 2016 and 2017 drilling programs, partly offset by the normal production decline in the Company’s producing wells. The increase in production sales volumes was partly offset by a lower average realized price. EQT Production ~~received $13.3~~paid $38.6 million and ~~$27.3~~$9.0 million of net cash settlements for derivatives not designated as hedges ~~for~~during the three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017, respectively, that are included in the average realized price but are not in GAAP operating revenues. Changes in the fair market value of derivative instruments prior to settlement are recognized in gain on derivatives not designated as hedges. The increase in production sales volumes was primarily the result of increased production from the 2015 and 2016 drilling programs, primarily in the Marcellus play, as well as recent acquisition activity, partially offset by the normal production decline in the Company's producing wells in 2017.

The ~~$0.56~~$0.17 per Mcfe ~~increase~~decrease in the average realized price for the three months ended ~~September 30, 2017~~March 31, 2018 was primarily due to ~~an increase in the average natural gas differential of $0.36 per Mcf, higher liquids prices and an increase~~a decrease in the average NYMEX natural gas price net of cash settled ~~derivatives.~~derivatives of $0.30 per Mcf, partly offset by an $0.11 per Mcf increase in the average natural gas differential and higher liquids prices. The improvement in the average differential primarily related to higher ~~basis. Basis improved in the Appalachian Basin and~~prices at sales points reached through the Company’s transportation ~~portfolio. The Company started flowing its produced volumes~~portfolio, particularly in the United States Northeast where colder weather led to ~~its Rockies Express~~increased demand.

Pipeline and net marketing services primarily includes gathering revenues from gathering services provided to third parties and both the cost of, and recoveries on, third-party pipeline capacity ~~and Texas Eastern Transmission Gulf Markets pipeline capacity~~not used to transport EQT Production’s produced volumes. The increase in these revenues primarily related to increased gathering revenues for services provided to third parties on gathering lines acquired in the ~~fourth quarter of 2016, which resulted in a favorable impact to basis for~~Rice Merger and increased recoveries on the ~~three months ended September 30, 2017 compared to the three months ended September 30, 2016.~~Company’s Tennessee Gas Pipeline capacity.

EQT Production total operating revenues for the three months ended ~~September 30,~~March 31, 2018 and 2017 included a ~~$35.6~~$62.6 million and $140.7 million gain on derivatives not designated as hedges, ~~compared to a $93.4 million gain for the three months ended September 30, 2016.~~respectively. The gains for the three months ended ~~September 30, 2017~~March 31, 2018 primarily related to ~~a gain on a physical contract treated as a derivative for accounting purposes and~~ an increase ~~in the fair value of EQT Production’s basis swaps due to decreased basis prices. The gains for the three months ended September 30, 2016 primarily related to favorable changes~~ in the fair market value of EQT Production’s NYMEX swaps, NYMEX options and basis swaps due to a decrease in ~~forward~~ prices during the ~~third~~first quarter of ~~2016.~~2018.

~~Operating expenses totaled $585.6 million for the three months ended September 30, 2017 compared to $523.6 million for the three months ended September 30, 2016.~~ Gathering expense increased ~~primarily due to increased third-party volumetric charges and increased affiliate firm~~consistent with production sales volumes, partly offset by a lower gathering ~~capacity.~~rate per unit on gathering capacity acquired in the Rice acquisition. Transmission expense increased due to ~~higher third-party costs and~~ increased ~~firm~~third party capacity ~~on contracts with affiliates~~ incurred to move EQT Production’s natural gas out of the Appalachian ~~Basin. During~~Basin, primarily due to firm capacity acquired in connection with the ~~fourth~~Rice Merger. Additionally, a portion of the Company’s capacity on the Rover pipeline started in the first quarter of ~~2016~~2018. Processing costs increased consistent with the ~~Ohio Valley Connector (OVC)~~increase in NGL volumes.

The increase in LOE was placed into service and as a result, the Company started flowing its produced volumes to its Rockies Express pipeline capacity. Additionally, in the fourth quarter of 2016, the Company started flowing its produced volumes to its Texas Eastern Transmission Gulf Markets pipeline capacity. Processing expense increased as a result of ~~increased processing capacity acquired through recent acquisitions and higher~~the growth in volumes ~~processed.~~

~~The decrease~~as reflected in the lower per unit cost. On an absolute basis, LOE ~~was~~increased primarily due to ~~lower~~increased salt water disposal costs in ~~2017.~~2018 related to increased activity from the Rice Merger and higher personnel costs. Production taxes increased as a result of ~~higher severance taxes associated with~~ increased ~~production volumes resulting from recent acquisitions and an increase~~development activity in ~~the Pennsylvania impact fee, primarily as a result of higher NYMEX prices during the three months ended September 30, 2017.~~

Pennsylvania. SG&A expense decreased primarily due to decreased legal reserves, partly offset by higher personnel ~~costs.~~ costs including corporate overhead allocations.

DD&A expense increased as a result of higher produced volumes ~~partly offset by~~and a ~~lower~~higher overall depletion rate in the ~~third~~first quarter of ~~2017.~~2018 primarily due to recording the properties acquired in the Rice Merger at fair value. EQT Production recognized an intangible asset related to the Rice Merger, which resulted in amortization of intangible assets during the first quarter of 2018.

See Note Q to the Condensed Consolidated Financial Statements for a discussion of the asset impairment.

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016~~

EQT Production’s operating income totaled $322.3 million for the nine months ended September 30, 2017 compared to an operating loss of $468.7 million for the nine months ended September 30, 2016. The $791.0 million increase was primarily due to higher average realized price, gains on derivatives not designated as hedges for the nine months ended September 30, 2017 compared to losses on derivatives not designated as hedges for the nine months ended September 30, 2016 and increased sales volumes of produced natural gas and NGLs, partly offset by increased operating expenses.

Total operating revenues were $2,057.5 million for the nine months ended September 30, 2017 compared to $1,068.8 million for the nine months ended September 30, 2016. Sales of natural gas, oil and NGLs increased as a result of a higher average realized price and a 6% increase in production sales volumes. EQT Production paid $6.8 million and received $222.5 million of net cash settlements for derivatives not designated as hedges for the nine months ended September 30, 2017 and ~~2016~~, respectively, that are included in the average realized price but are not in GAAP operating revenues. The increase in production sales volumes was primarily the result of increased production from the 2015 and 2016 drilling programs, primarily in the Marcellus play, as well as recent acquisition activity, partially offset by the normal production decline in the Company's producing wells in 2017.

The $0.72 per Mcfe increase in the average realized price for the nine months ended September 30, 2017 was primarily due to the increase in the average NYMEX natural gas price net of cash settled derivatives of $0.44 per Mcf, an increase in the average natural gas differential of $0.20 per Mcf and an increase in liquids prices. The improvement in the average differential primarily related to higher basis partly offset by unfavorable cash settled basis swaps for the first nine months of 2017 as compared to the first nine months of 2016. The Company started flowing its produced volumes to its Rockies Express pipeline capacity and Texas Eastern Transmission Gulf Markets pipeline capacity in the fourth quarter of 2016, which resulted in a favorable impact to basis for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. In addition, for the first nine months of 2017, basis improved in the Appalachian Basin and at sales points reached through the Company’s transportation portfolio, particularly in the United States Northeast.

EQT Production total operating revenues for the nine months ended September 30, 2017 included a $222.7 million gain on derivatives not designated as hedges compared to a $32.3 million loss for the nine months ended September 30, 2016. The gains for the nine months ended September 30, 2017 primarily related to increases in the fair market value of EQT Production’s NYMEX swaps due to decreased NYMEX prices.

Operating expenses totaled $1,735.2 million for the nine months ended September 30, 2017 compared to $1,537.4 million for the nine months ended September 30, 2016. Gathering expense increased primarily due to increased third-party volumetric charges and increased affiliate firm gathering capacity. Transmission expense increased due to higher third-party costs and increased firm capacity on contracts with affiliates incurred to move EQT Production’s natural gas out of the Appalachian Basin. During the fourth quarter of 2016, the OVC was placed into service and as a result, the Company started flowing its produced volumes to its Rockies Express pipeline capacity. Additionally, in the fourth quarter of 2016, the Company started flowing its produced volumes to its Texas Eastern Transmission Gulf Markets pipeline capacity. Processing expense increased as a result of increased processing capacity acquired through recent acquisitions and higher volumes processed.

The decrease in LOE was primarily due to decreased personnel costs driven by the consolidation of the Company’s Huron operations in 2016 and lower well operating expenses, partly offset by higher operational costs related to the Company’s recent acquisitions during the nine months ended September 30, 2017. Production taxes increased as a result of higher severance taxes associated with increased production volumes and on higher market sales prices partly offset by the expiration of the West Virginia volume based tax in 2016. Production taxes also increased due to an increase in the Pennsylvania impact fee, primarily as a result of an increase in the number of wells drilled in Pennsylvania and higher NYMEX prices during the nine months ended September 30, 2017.

SG&A expense decreased primarily due to lower pension expense of $9.4 million related to the termination of the EQT Corporation Retirement Plan for Employees in the second quarter of 2016, lower legal reserves in 2017, a reduction to the reserve for uncollectible accounts, and the absence of costs related to the consolidation of the Company’s Huron operations in 2016. This was partly offset by higher professional service fees driven primarily by recent acquisitions. DD&A expense increased on higher production depletion as a result of higher produced volumes partly offset by a lower overall depletion rate in 2017.

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

~~EQT~~EQM GATHERING

RESULTS OF OPERATIONS


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017		2016		% Change		2017		2016		% Change		2018		2017		%
	(Thousands, other than per day amounts)												(Thousands, other than per day amounts)
FINANCIAL DATA
Firm reservation fee revenues	$	104,772	$	83,560	25.4		$	300,901	$	249,127	20.8		$	109,933	$	94,271	16.6
Volumetric based fee revenues:
Usage fees under firm contracts (a)	7,873		10,024		(21.5	)	19,173		31,515		(39.2	)	12,108		4,821		151.2
Usage fees under interruptible contracts	3,877		5,557		(30.2	)	10,922		16,663		(34.5	)	3,867		3,237		19.5
Total volumetric based fee revenues	11,750		15,581		(24.6	)	30,095		48,178		(37.5	)	15,975		8,058		98.3
Total operating revenues	116,522		99,141		17.5		330,996		297,305		11.3		125,908		102,329		23.0

Operating expenses:
Operating and maintenance	10,219		9,672		5.7		31,082		27,740		12.0		10,625		10,340		2.8
SG&A	10,503		9,311		12.8		28,800		28,771		0.1		5,654		9,425		(40.0	)
Depreciation and amortization	9,983		7,663		30.3		28,398		22,520		26.1		10,738		8,860		21.2
Total operating expenses	30,705		26,646		15.2		88,280		79,031		11.7		27,017		28,625		(5.6	)

Operating income	$	85,817	$	72,495	18.4		$	242,716	$	218,274	11.2		$	98,891	$	73,704	34.2

OPERATIONAL DATA
Gathered volumes (BBtu per day)
Firm capacity reservation	1,838		1,563		17.6		1,783		1,506		18.4		1,964		1,728		13.7
Volumetric based services (b)	370		451		(18.0	)	292		463		(36.9	)	600		224		167.9
Total gathered volumes	2,208		2,014		9.6		2,075		1,969		5.4		2,564		1,952		31.4

Capital expenditures	$	48,182	$	88,390	(45.5	)	$	150,728	$	247,755	(39.2	)	$	68,933	$	48,838	41.1


(a)	Includes fees on volumes gathered in excess of firm contracted capacity.


(b)	Includes volumes gathered under interruptible contracts and volumes gathered in excess of firm contracted capacity.

Three Months Ended ~~September 30, 2017~~March 31, 2018 vs. Three Months Ended ~~September 30, 2016~~March 31, 2017

EQM Gathering revenues increased by ~~$17.4~~$23.6 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016~~March 31, 2017, driven by affiliate and third party ~~and affiliate~~ production development in the Marcellus Shale. ~~EQT Gathering increased firm~~Firm reservation fee revenues increased primarily as a result of ~~third parties and affiliates contracting for additional firm gathering capacity on~~the completion of the Range Resources Corporation (Range Resources) ~~Header Pipeline~~header pipeline project and increased affiliate contracted gathering capacity and rates on various ~~affiliate~~ wellhead ~~gathering~~ expansion ~~projects. The decrease~~projects in ~~usage~~the current period. Usage fees under firm contracts ~~was~~increased due to ~~lower~~increased affiliate volumes gathered in excess of firm contracted capacity. ~~The decrease in usage~~Usage fees under interruptible contracts ~~was~~increased primarily due to an additional affiliate contract for interruptible capacity, partly offset by the additional contracts for firm capacity.

Operating expenses ~~increased~~decreased by ~~$4.1~~$1.6 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016 primarily~~March 31, 2017. Selling, general and administrative expense decreased due to a shift in the strategic focus, which continued the trend of lower allocated costs. Depreciation and amortization expense increased as a result of ~~increased depreciation and amortization expense of $2.3 million due to~~ additional assets placed in-service, including those associated with the Range Resources ~~Header Pipeline~~header pipeline project and ~~a Northern West Virginia Marcellus gathering system (NWV Gathering) expansion project and higher personnel costs.~~

~~Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016~~

Gathering revenues increased by $33.7 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 driven by third party and affiliate production development in the Marcellus Shale. EQT Gathering increased firm reservation fee revenues primarily as a result of affiliates and third parties contracting for additional firm gathering capacity on various affiliate wellhead gathering expansion projects and the Range Resources Header Pipeline project. The decrease in usage fees under firm contracts was due to lower affiliate volumes in excess of firm contracted capacity. The decrease in usage fees under interruptible contracts was primarily due to the additional contracts for firm capacity.projects.

Operating expenses increased by $9.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily as a result of increased depreciation and amortization expense of $5.9 million due to additional

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~~assets placed in-service including those associated with the Range Resources Header Pipeline project and a NWV Gathering expansion project and higher personnel costs.~~

~~EQT~~EQM TRANSMISSION

RESULTS OF OPERATIONS


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017		2016		% Change		2017		2016		% Change		2018		2017		%
	(Thousands, other than per day amounts)												(Thousands, other than per day amounts)
FINANCIAL DATA
Firm reservation fee revenues	$	84,438	$	59,610	41.7		$	256,224	$	190,003	34.9		$	97,775	$	92,274	6.0
Volumetric based fee revenues:
Usage fees under firm contracts (a)	3,427		14,600		(76.5	)	9,787		42,274		(76.8	)	3,822		2,857		33.8
Usage fees under interruptible contracts	2,806		3,421		(18.0	)	12,578		11,018		14.2		5,337		2,612		104.3
Total volumetric based fee revenues	6,233		18,021		(65.4	)	22,365		53,292		(58.0	)	9,159		5,469		67.5
Total operating revenues	90,671		77,631		16.8		278,589		243,295		14.5		106,934		97,743		9.4

Operating expenses:
Operating and maintenance	10,385		8,526		21.8		30,389		23,947		26.9		7,551		6,477		16.6
SG&A	8,336		8,414		(0.9	)	23,412		24,606		(4.9	)	7,491		7,975		(6.1	)
Depreciation and amortization	12,261		6,976		75.8		35,793		20,657		73.3		12,441		11,687		6.5
Total operating expenses	30,982		23,916		29.5		89,594		69,210		29.5		27,483		26,139		5.1

Operating income	$	59,689	$	53,715	11.1		$	188,995	$	174,085	8.6		$	79,451	$	71,604	11.0

OPERATIONAL DATA
Transmission pipeline throughput (BBtu per day)
Firm capacity reservation	2,517		1,440		74.8		2,288		1,515		51.0		2,815		2,119		32.8
Volumetric based services (b)	21		610		(96.6	)	22		556		(96.0	)	42		31		35.5
Total transmission pipeline throughput	2,538		2,050		23.8		2,310		2,071		11.5		2,857		2,150		32.9

Average contracted firm transmission reservation commitments (BBtu per day)	3,474		2,365		46.9		3,519		2,591		35.8		4,140		3,743		10.6

Capital expenditures	$	22,312	$	77,940	(71.4	)	$	73,679	$	253,957	(71.0	)	$	18,929	$	21,389	(11.5	)


(a)	Includes fees on volumes transported in excess of firm contracted capacity as well as commodity charges and fees on all volumes transported under firm ~~contracts as well as transmission fees on volumes in excess of firm contracted capacity.~~contracts.


(b)	Includes volumes transported under interruptible contracts and volumes transported in excess of firm contracted capacity.

Three Months Ended ~~September 30, 2017~~March 31, 2018 vs. Three Months Ended ~~September 30, 2016~~March 31, 2017

EQM Transmission and storage revenues increased by ~~$13.0~~$9.2 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016.~~March 31, 2017. Firm reservation fee revenues increased due to higher contractual rates on existing contracts with third parties and affiliates in the current period and third parties contracting for additional firm ~~capacity on the OVC. Approximately $3.4 million of the~~capacity. Usage fees under firm contracts increased primarily due to higher affiliate and third party volumes. The increase ~~was related to a FERC-approved retroactive negotiated rate adjustment for the period October 1, 2016 through June 30, 2017. The firm capacity on the OVC resulted~~ in ~~lower affiliate~~ usage fees under ~~firm contracts.~~interruptible contracts primarily relates to higher storage and parking revenue, which does not have associated pipeline throughput.

Operating expenses increased by ~~$7.1~~$1.3 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016. The increases in~~March 31, 2017 primarily driven by increased operating and maintenance expense and depreciation and amortization expense were the result of the OVC project placed in-service in the fourth quarter of 2016. Operating and maintenance expense increased primarily due to property taxes on the OVC.personnel expense.

~~Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016~~

Transmission and storage revenues increased by $35.3 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Firm reservation fee revenues increased due to affiliates and third parties contracting for

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

RMP GATHERING

RESULTS OF OPERATIONS



	Three Months Ended March 31,
	2018		2017(a)		%
FINANCIAL DATA (in thousands)
Operating revenues:
Gathering revenues	$	52,730	$	—	100.0
Compression revenues	8,771		—		100.0
Total operating revenues	61,501		—		100.0

Operating expenses:
Operation and maintenance expense	3,189		—		100.0
General and administrative expense	6,093		—		100.0
Depreciation expense	8,124		—		100.0
Total operating expenses	17,406		—		100.0

Operating income (loss)	$	44,095	$	—	100.0

OPERATIONAL DATA
Gathered volumes (BBtu/d)	1,697		—		100.0
Compression volumes (BBtu/d)	1,248		—		100.0

Capital expenditures (in thousands)	$	20,940	$	—	100.0


(a)	This table sets forth selected financial and operational data for RMP Gathering. The Company acquired RMP Gathering on November 13, 2017 as part of the Rice Merger.

The majority of RMP Gathering revenues are from contracts with EQT Production to gather gas in Washington and Greene Counties, Pennsylvania. RMP Gathering provides all services under long-term contracts that are supported in most cases by acreage dedications. RMP Gathering charges separate rates for gathering and compression services based on the actual volumes gathered and compressed. During the three months ended March 31, 2018, operating expenses are composed of customary expenses for a gathering business.

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

~~additional firm capacity, primarily on the OVC,~~RMP WATER

RESULTS OF OPERATIONS



	Three Months Ended March 31,
	2018		2017(a)		%
FINANCIAL DATA (in thousands)	(Thousands, other than per day amounts)
Water services revenues	22,963		—		100.0

Operating expenses:
Operation and maintenance expense	4,711		—		100.0
General and administrative expense	1,111		—		100.0
Depreciation expense	5,771		—		100.0
Total operating expenses	11,593		—		100.0

Operating income	$	11,370	$	—	100.0

OPERATIONAL DATA
Water services volumes (in MMgal)	434		—		100.0

Capital expenditures (in thousands)	$	2,375	$	—	100.0


(a)	This table sets forth selected financial and operational data for RMP Water. The Company acquired RMP Water on November 13, 2017 as part of the Rice Merger.

RMP Water provides fresh water for well ~~as higher contractual rates on existing contracts~~completions operations in the ~~current year.~~Marcellus and Utica Shales and collects and recycles or disposes of flowback and produced water. The ~~firm capacity~~majority of RMP Water's services are provided to EQT Production. RMP Water offers its services on a volumetric basis, supported by an acreage dedication from EQT Production for certain drilling areas. RMP Water charges customers a fee per gallon of water; this fee is tiered and thus is lower on a per gallon basis once the ~~OVC resulted in lower affiliate usage fees under firm contracts.~~customer meets certain volumetric thresholds. During the three months ended March 31, 2018, operating expenses are composed of customary expenses for a water business.

~~Operating expenses increased by $20.4 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The increases in operating~~

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Management’s Discussion and ~~depreciation~~Analysis of Financial Condition and ~~amortization expense were the result~~Results of ~~the OVC project placed in-service in the fourth quarter of 2016. Operating and maintenance expense increased primarily due to property taxes on the OVC and higher personnel costs.~~Operations

Other Income Statement Items

Other Income

For the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the Company recorded equity in earnings of nonconsolidated investments of ~~$6.0~~$8.8 million and ~~$2.7~~$4.3 million, respectively, related to EQM's portion of the MVP Joint Venture's Allowance for Funds Used During Construction (AFUDC) on the MVP project. For the nine months ended September 30, 2017 and 2016, the Company recorded equity in earnings of nonconsolidated investments of $15.4 million and $6.1 million, respectively, related to EQM's portion of the MVP Joint Venture's AFUDC on the MVP project.

For the three months ended September 30, 2017 and 2016, the Company recorded AFUDC of $0.8 million and $8.0 million, respectively, on regulated construction projects. For the nine months ended September 30, 2017 and 2016, the Company recorded AFUDC of $4.1 million and $16.7 million, respectively, on regulated construction projects. These decreases were mainly attributable to completion of the OVC project in 2016.

~~For the nine months ended September 30,~~March 31, 2017, other income was partly offset by losses on the sale of trading securities. As of March 31, 2017, the Company closed its positions on all trading securities.

Other income also decreased by $0.6 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 primarily driven by decreased AFUDC - equity.

Interest Expense

Interest expense increased by ~~$14.4~~$27.4 million for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016~~March 31, 2017, which was primarily driven by ~~$6.8 million of expense for the Bridge Facility, $5.2~~$24.0 million of interest incurred on ~~EQM's long-term debt~~Senior Notes issued in ~~November 2016, lower interest income earned on short-term investments~~October 2017 and ~~lower AFUDC - debt associated with decreased spending on EQM's regulated projects.~~

~~Interest expense increased by $28.6 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily driven by $15.5~~$16.4 million of interest incurred on ~~EQM's long-term debt issued in November 2016, $7.6~~credit facility borrowings partly offset by a $10.7 million ~~of expense for the Bridge Facility, lower capitalized interest~~decrease due to the ~~timing~~early extinguishment of ~~drilling completions, lower AFUDC - debt associated with decreased spending on EQM's regulated projects, and lower interest income earned on short-term investments.~~certain EQT Senior Notes.

Income Tax Expense

On December 22, 2017, the U.S. Congress enacted the law known as the Tax Cuts and Jobs Act of 2017 (the Tax Reform Legislation), which made significant changes to U.S. federal income tax law, including lowering the federal corporate tax rate to 21% from 35% beginning January 1, 2018.

All of EQGP's, RMP's and Strike Force Midstream's income is included in the Company's pre-tax (loss) income. However, the Company is not required to record income tax expense with respect to the portions of EQGP's and RMP's income allocated to the noncontrolling public limited partners of EQGP, EQM, and RMP or to the minority owner of Strike Force Midstream, which reduces the Company's effective tax rate in periods when the Company has consolidated pre-tax income and increases the Company's effective tax rate in periods when the Company has consolidated pre-tax loss.

The Company recorded income tax benefit at an effective tax rate of 19.0% for the three months ended ~~September 30, 2017,~~March 31, 2018, compared to income tax expense at an effective rate rate of 28.6% for the three months ended ~~September 30, 2016.~~March 31, 2017. The Company’s forecasted annual effective tax rate for the period ended December 31, 2018 is higher than the statutory rate due to the impact of income allocated to non-controlling limited partners on a forecasted consolidated pre-tax loss and the impact of state taxes. The state taxes increased the forecasted annual effective tax ~~benefit~~rate at a higher rate than the statutory rate as a result of the mix of earnings. The Company generated pre-tax losses on entities with higher state rates and pre-tax income on entities with lower state rates. The Company’s effective tax rate for the three months ended ~~September 30, 2017~~March 31, 2018 was ~~attributable to a decrease in~~significantly lower than the ~~estimated~~forecasted annual effective tax rate ~~from~~because the ~~prior~~amount of benefit recorded for the quarter ~~and a discrete~~is limited to the amount of benefit forecasted for the entire year. The Company’s effective tax ~~benefit of $12.4 million~~rate for the three months ended ~~September 30, 2017 related to refining estimates on the 2016 return. The decrease in the estimated annual effective tax rate at September 30, 2017 compared to June 30,~~March 31, 2017 was ~~primarily~~lower than the ~~result~~statutory rate due to the impact of ~~lower forecast~~income allocated to non-controlling limited partners on forecasted consolidated pre-tax ~~book~~income.

Net Income Attributable to Noncontrolling Interests

The increase in net income ~~for EQT Production which resulted in a higher percentage of pre-tax income being~~ attributable to noncontrolling interests ~~as well~~for the three months ended March 31, 2018 was the result of higher net income at EQM and noncontrolling interests in RMP and Strike Force Midstream as a ~~decrease in state valuation allowances.~~

The Company recorded income tax expense for the nine months ended September 30, 2017, compared to income tax benefit for the nine months ended September 30, 2016. The increase in 2017 was primarily attributable to the increase in EQT Production segment operating income for the nine month period ended September 30, 2017 compared to the nine month period ended September 30, 2016.

~~The Company’s effective income tax rate differed from the U.S. Federal statutory rate of 35% for all periods primarily because the Company consolidates 100%~~result of the pre-tax income related to the noncontrolling public limited partners’ share of EQGP income, but is not required to record an income tax provision with respect to the portion of the income allocated to EQGP and EQM noncontrolling public limited partners.Rice Merger on November 13, 2017.

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OUTLOOK

On February 21, 2018, the Company announced a plan to separate its upstream and midstream businesses, creating a standalone publicly traded corporation (NewCo) that will focus on midstream operations. The separation is intended to qualify as tax-free to EQT shareholders for U.S. federal income tax purposes and is expected to be completed by the end of the third quarter 2018. Under the separation plan, EQT shareholders will retain their shares of EQT stock and receive a pro-rata share of the new independent midstream company.

The Company had also announced a plan of action for the Midstream Streamlining Transactions as discussed in Note R to the Condensed Consolidated Financial Statements.

The Company’s plan to separate the midstream business is not contingent on the EQM/RMP merger.

The Company is committed to profitably and safely developing its Appalachian Basin natural gas and ~~NGL~~NGLs reserves through environmentally responsible, cost-effective and technologically advanced horizontal drilling. The Company believes the long-term outlook for its business is favorable due to the Company’s substantial resource base, low cost structure, financial strength, risk management, including its commodity hedging strategy, and disciplined investment of capital. The Company believes the combination of these factors provide it with an opportunity to exploit and develop its positions and maximize efficiency through economies of scale in its strategic operating area.

The Company monitors current and expected market conditions, including the commodity price environment, and its liquidity needs and may adjust its capital investment plan accordingly. While the tactics continue to evolve based on market conditions, the Company periodically considers arrangements to monetize the value of certain mature assets for re-deployment into the highest value development opportunities. Upon the closing of the Rice Merger, the Company’s consolidation goals were largely met and the Company plans to focus on integrating the Rice assets and realizing higher returns through longer laterals and achieving an even lower operating cost structure. The Company will also continue to pursue tactical acquisitions of fill-in acreage to extend laterals.

EQT Production expects to spend approximately $2.2 billion for well development (primarily drilling and completion) in 2018. Estimated sales volumes are expected to be 1,520 - 1,550 Bcfe for 2018.

To support continued growth in production, the Company plans to invest approximately $1.5 billion on midstream infrastructure through EQM in 2018, including capital contributions to the MVP Joint Venture of $1.1 billion. RMP investments in organic projects are expected to total approximately $260 million in 2018, including $215 million for gathering and compression and $45 million for water infrastructure.

The 2018 capital investment plan for EQT Production is expected to be funded by cash generated from operations and cash on hand. EQM expects to fund future capital expenditures primarily through cash generated from operations, availability under its credit facilities, debt offerings and issuances of additional EQM partnership units. RMP expects its future cash requirements relating to working capital, maintenance capital expenditures and quarterly cash distributions to its partners will be funded from cash flows internally generated from its operations. RMP’s growth or expansion capital expenditures will be funded by borrowings under its revolving credit facility or from potential capital market transactions.

The Company’s revenues, earnings, liquidity and ability to grow are substantially dependent on the prices it receives for, and the Company’s ability to develop its reserves of, natural gas and NGLs. Due to the volatility of commodity prices, the Company is unable to predict future potential movements in the market prices for natural gas, including Appalachian and other market point basis, and NGLs and thus cannot predict the ultimate impact of prices on its operations. ~~However,~~

Changes in natural gas, NGLs and oil prices could affect, among other things, the ~~Company believes~~Company's development plans, which would increase or decrease the ~~long-term outlook for its business is favorable due~~pace of the development and the level of the Company's reserves, as well as the Company's revenues, earnings or liquidity. Lower prices could also result in non-cash impairments in the book value of the Company’s oil and gas properties, goodwill or other long lived intangible assets or downward adjustments to the Company’s substantial resource base, strategically located midstream assets, low cost structure, financial strength, risk management, including its commodity hedging strategy, and disciplined investment of capital. The Company believes the combination of these factors provide it with an opportunity to exploit and develop its positions and maximize efficiency through economies of scale in its strategic operating area.

On June 19, 2017, the Company entered into the Rice Merger Agreement with Rice, pursuant to which the Company will acquire Rice. The waiting period applicable to the Rice Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 was terminated by the Federal Trade Commission on July 18, 2017. The Rice Merger is expected to close in mid-November 2017 following the satisfaction of certain customary closing conditions, including the approval by the Company’s shareholders of the issuance of shares of EQT Common Stock as Merger Consideration and the adoption of the Rice Merger Agreement by Rice stockholders. The special meetings of the shareholders of EQT and the stockholders of Rice are scheduled to be held for these purposes on November 9, 2017. As part of this transaction, the Company will acquire the retained midstream assets that are currently held at Rice, which the Company intends to sell to EQM through one estimated proved reserves. Any such impairment and/or ~~more drop-down transactions. See Note~~ Ndownward adjustment to the Company’s ~~Condensed Consolidated Financial Statements for further discussion of~~estimated reserves could potentially be material to the ~~Rice Merger and related transactions.~~

On September 13, 2017, the Company announced that it would establish a committee of its board of directors to evaluate options for addressing its sum-of-the-parts discount. The committee will include select independent directors. The Company’s board will announce a decision by the end of the first quarter 2018, after considering the committee’s recommendation.

The Company continues to focus on creating and maximizing shareholder value by profitably developing its reserves and making midstream investments in projects that support EQT Production and third parties while maintaining a strong balance sheet. The Company monitors current and expected market conditions, including the commodity price environment, and its liquidity needs and may adjust its capital investment plan accordingly. While the tactics continue to evolve based on market conditions, the Company periodically considers arrangements to monetize the value of certain mature assets for re-deployment into the highest value development opportunities. Upon the closing of the Rice Merger, the Company’s consolidation goals will largely be met and the Company plans to focus on integrating the Rice assets and realizing higher returns through longer laterals and achieving an even lower operating cost structure. The Company will also continue to pursue tactical acquisitions of fill-in acreage to extend laterals.

Total capital investment by EQT in 2017, excluding the Rice Merger and other acquisitions, is expected to be approximately $2.0 billion (including EQM). Capital spending for well development (primarily drilling and completion) of approximately $1.3 billion in 2017 is expected to support the drilling of approximately 178 gross wells, which includes 121 Marcellus wells, 56 Upper Devonian wells and one deep Utica well. To support continued growth in production, the Company plans to invest approximately $0.5 billion on midstream infrastructure through EQM in 2017. Excluding the Rice Merger, the 2017 capital investment plan for EQT Production is expected to be funded by cash generated from operations and cash on hand. EQM's available sources of liquidity include cash generated from operations, borrowings under its credit facilities, cash on hand, debt offerings and issuances of additional EQM partnership interests.Company.

See "Impairment of Oil and Gas ~~Properties"~~Properties and Goodwill" and “Critical Accounting Policies and Estimates” included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for a discussion of the Company’s accounting

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

policies and significant assumptions related to accounting for oil and gas producing activities, and the Company's policies and processes with respect to impairment reviews for proved and unproved ~~property.~~property and goodwill. As a result of its ~~third~~first quarter ~~2017~~2018 evaluations, the Company ~~did not recognize~~recognized an impairment charge ~~for proved properties. However, a further decline in the average five-year forward realized prices in a future period may cause the Company to recognize a significant impairment on the~~of $2.3 billion associated with certain non-core production and related pipeline assets in the Huron ~~play, which had a carrying value~~and Permian Plays. The Company did not identify an impairment indicator related to goodwill during the first quarter of ~~approximately $3 billion at September 30, 2017.~~2018.

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~~EQT Corporation and Subsidiaries~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

CAPITAL RESOURCES AND LIQUIDITY

~~Overview~~

During the nine months ended September 30, 2017, the Company’s cash on hand decreased by $620.0 million primarily as a result of capital expenditures, expenditures for acquisitions, and capital contributions to the MVP Joint Venture exceeding the net cash provided by operating activities and proceeds from sales of trading securities.

Operating Activities

Net cash flows provided by operating activities totaled ~~$1,211.4~~$904.4 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$767.7~~$514.8 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2017. The ~~$443.7~~$389.6 million increase in cash flows provided by operating activities was primarily the result of an 88% increase in production sales volume and higher ~~operating income, the reasons for which are discussed in the section captioned "Corporate Overview" in Item 2, "Management's Discussion~~pipeline, water and ~~Analysis of Financial Condition and Results of Operations," partly~~net marketing services revenue, offset by lower prices and higher cash ~~settlements paid in 2017 compared to cash received in 2016 on derivatives not designated as hedges.~~operating expenses.

The Company's cash flows from operating activities will be impacted by future movements in the market price for commodities. The Company is unable to predict these future price movements outside of the current market view as reflected in forward strip pricing. Refer to "Natural gas, NGLs and oil price volatility, or a prolonged period of low natural gas, NGLs and oil prices, may have an adverse effect upon our revenue, profitability, future rate of growth, liquidity and financial position" under Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for further information.

Investing Activities

Net cash flows used in investing activities totaled ~~$1,716.5~~$849.4 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to ~~$1,669.4~~$716.9 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2017. The ~~$47.1~~$132.6 million increase was primarily due to the Company's ~~acquisitions and~~capital expenditures, primarily increased drilling and completions spending, and higher contributions to the MVP JV during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018. These increases were partly offset by ~~cash received from~~capital expenditures for acquisitions during the ~~sale of trading securities and lower EQM capital expenditures.~~three months ended March 31, 2017. The Company spud ~~149~~37 gross wells in the first ~~nine~~three months of 2018, including 24 horizontal Marcellus wells, two horizontal Upper Devonian wells and 11 horizontal Utica wells. The Company spud 48 gross wells in the first three months of 2017, including ~~100~~28 horizontal Marcellus wells, 4819 horizontal Upper Devonian wells and one horizontal Utica well. The Company ~~spud 68 gross wells~~completed approximately 485,000 feet of pay in the first ~~nine~~three months of ~~2016, including 65 horizontal Marcellus wells and~~2018, approximately three ~~horizontal Utica wells. The increase in drilling and completions spending was offset by decreased spending on~~times the ~~following projects:~~122,000 feet of pay completed during the ~~OVC, the Range Resources Header Pipeline project and the NWV Gathering expansion. The OVC project, part~~same period of ~~the Range Resources Header Pipeline project and a prior expansion project in the NWV Gathering development area were placed into service in the fourth quarter of 2016.~~2017.

Capital expenditures as reported on the ~~Statement~~Statements of Condensed Consolidated Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ excluded capitalized non-cash stock-based compensation expense and accruals. The impact of accrued capital expenditures includes the reversal of the prior period accrual as well as the current period estimate, both of which are non-cash items. The net impact of these non-cash items was ~~$102.7~~$32.6 million and ~~$1.2~~$21.0 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. ~~Capital~~There were no non-cash capital expenditures excluded for acquisitions as reported on the ~~Statement~~Statements of Condensed Consolidated Cash Flows for the ~~nine~~three months ended ~~September 30, 2017 also~~March 31, 2018. The Company excluded non-cash capital expenditures as reported on the Statements of ~~$7.5~~Condensed Consolidated Cash Flows of $15.4 million related to the Company's ~~acquisitions.~~acquisitions for the three months ended March 31, 2017.

Financing Activities

Net cash flows used in financing activities totaled ~~$114.8~~$8.1 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to net cash flows ~~provided by~~used in financing activities of ~~$1,057.9~~$77.1 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2017. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, the primary financing uses of cash were distributions to noncontrolling interests, cash paid for taxes on share-based incentive awards, repayments of Senior Notes and dividends paid. The primary financing source of cash was a net increase in EQT, EQM, and RMP credit facility borrowings. During the ~~nine~~three months ended ~~September 30, 2016, the primary sources of financing cash flows were net proceeds from public offerings of EQT common stock and EQM common units, and~~March 31, 2017, the primary financing uses of cash were ~~net credit facility repayments under the EQM credit facility,~~ distributions to noncontrolling interests and payment of taxes related to the vesting or exercise of equity awards. There was no cash provided by financing activities during the period.

~~On October 4, 2017, the Company completed the 2017 Notes Offering described in Note O to the Condensed Consolidated Financial Statements.~~ The Company ~~received net proceeds~~may from time to time seek to repurchase its outstanding debt securities. Such repurchases, if any, will depend on prevailing market conditions, the ~~2017 Notes Offering of approximately $2,974.3 million, which the Company expects to use, together with~~Company's liquidity requirements, contractual and legal restrictions and other ~~cash on hand and borrowings under the Company’s revolving credit facility, to fund~~factors.

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EQT Corporation and Subsidiaries

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

the cash portion of the Merger Consideration, to pay expenses related to the Rice Merger and other transactions contemplated by the Rice Merger Agreement (including the refinancing of certain indebtedness of Rice and its subsidiaries), to redeem or repay certain Company senior notes and medium term notes due in 2018 and for other general corporate purposes. In October 2017, the Company delivered redemption notices pursuant to which the Company expects to redeem all of its outstanding $200 million aggregate principal amount 5.15% Senior Notes due 2018 and $500 million aggregate principal amount 6.50% Senior Notes due 2018 in November 2017. Upon redemption, the Company will pay make whole call premiums based upon prevailing rates on U.S. government securities at the time of redemption. If the Rice Merger does not occur on or before May 19, 2018 or the Company notifies the trustee that the Company will not pursue the consummation of the Rice Merger, the Company will be required to redeem the Floating Rate Notes, the 2020 Notes and the 2027 Notes (but not the 2022 Notes) then outstanding at a redemption price equal to 101% of the principal amount of the notes to be redeemed plus accrued and unpaid interest to, but excluding, the special mandatory redemption date. The Company accrued $6.1 million of expenses related to the 2017 Notes Offering in other assets at September 30, 2017. In addition, the Company expensed $7.6 million of commitment fees on the Bridge Facility during the nine months ended September 30, 2017.

Security Ratings and Financing Triggers

The table below reflects the credit ratings for debt instruments of the Company at ~~September 30, 2017.~~March 31, 2018. Changes in credit ratings may affect the ~~Company’s cost of short-term debt through~~ interest rates on the Company’s short-term and floating rate long-term debt and the fees it pays under its lines of credit. These ratings may also affect collateral requirements on derivative instruments, pipeline capacity contracts, joint venture arrangements and subsidiary construction contracts, as well as the rates available on new long-term debt and access to the credit markets.



Rating Service	Senior Notes	Outlook
Moody's Investors Service (Moody's)	Baa3	Stable
~~S&P~~Standard & Poor's Rating Service (S&P)	BBB	Negative
Fitch Ratings Service (Fitch)	BBB-	Stable

The table below reflects the credit ratings for debt instruments of EQM at ~~September 30, 2017.~~March 31, 2018. Changes in credit ratings may affect EQM’s cost of short-term debt through interest rates and fees under its lines of credit. These ratings may also affect collateral requirements under joint venture arrangements and subsidiary construction contracts, as well as the rates available on new long-term debt and access to the credit markets.



Rating Service	Senior Notes	Outlook
Moody’s	Ba1	Stable
S&P	BBB-	Stable
Fitch	BBB-	Stable

EQGP and RMP have no long-term debt and are not currently rated by Moody’s, S&P, or Fitch.

The Company’s and EQM’s credit ratings are subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. The Company and EQM 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 credit rating agency if, in its judgment, circumstances so warrant. If any credit rating agency downgrades the ratings, particularly below investment grade, the Company’s or EQM’s access to the capital markets may be limited, borrowing costs and margin deposits on the Company’s derivative contracts would increase, counterparties may request additional assurances, including collateral, and the potential pool of investors and funding sources may decrease. ~~Investment grade refers~~ The required margin on the Company’s derivative instruments is also subject to significant change as a result of factors other than credit rating, such as gas prices and credit thresholds set forth in agreements between the hedging counterparties and the Company. See Note Jto the ~~quality of a company's credit as assessed by one or more credit rating agencies. In order to be considered~~Condensed Consolidated Financial Statements for further discussion on what is deemed 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. Anything below these ratings is considered non-investment~~ grade.

In July 2017, the Company amended and restated its $1.5 billion revolving credit facility to extend the term to July 2022. In addition, following the closing of the Rice Merger and subject to the satisfaction of certain conditions, the borrowing capacity under the revolving credit facility will automatically increase to $2.5 billion. The Company had no amounts outstanding under the facility as of September 30, 2017. The Company’s debt agreements and other financial obligations contain various provisions that ~~if not complied with,~~ could result in termination of the agreements, require early payment of amounts outstanding or similar ~~actions.~~actions in the event of noncompliance. The most significant covenants and events of default under the debt agreements relate to maintenance of a debt-to-total capitalization ratio, limitations on transactions with affiliates, insolvency events, nonpayment of scheduled principal or interest payments, acceleration of other financial obligations and change of control provisions. The Company’s credit facility contains financial

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~~EQT Corporation and Subsidiaries~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

covenants that require a total debt-to-total capitalization ratio of no greater than 65%. The calculation of this ratio excludes the effects of accumulated other comprehensive income (OCI). As of ~~September 30, 2017,~~March 31, 2018, the Company was in compliance with all debt provisions and covenants.

In July 2017, EQM amended and restated its credit facility to increase the borrowing capacity under the facility from $750 million to $1 billion and extend the term to July 2022. EQM had $105 million in borrowings outstanding under the facility as of September 30, 2017. Subject to certain terms and conditions, the $1 billion credit facility has an accordion feature that allows EQM to increase the available borrowings under the facility by up to an additional $500 million. EQM’s debt agreements and other financial obligations contain various provisions that ~~if not complied with,~~ could result in termination of the agreements, require early payment of amounts outstanding or similar ~~actions.~~actions in the event of noncompliance. The most significant covenants and events of default under the debt agreements relate to maintenance of a permitted leverage ratio, limitations on transactions with affiliates, limitations on restricted payments, insolvency events, nonpayment of scheduled principal or interest payments, acceleration of and certain other defaults under other financial obligations and change of control provisions. Under EQM’s $1 billion credit facility, EQM is required to maintain a consolidated leverage ratio of not more than 5.00 to 1.00 (or not more than 5.50 to 1.00 for certain measurement periods following the consummation of certain acquisitions). As of ~~September 30, 2017,~~March 31, 2018, EQM was in compliance with all debt provisions and covenants.

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EQT Corporation and Subsidiaries

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

EQM has a $500 million, 364-day, uncommitted revolving loan agreement with EQT (the 364-Day Facility) that matures on October 24, 2018 and will automatically renew for successive 364-day periods unless EQT delivers a non-renewal notice at least 60 days prior to the then current maturity date. Interest accrues on any outstanding borrowings at an interest rate equal to the rate then applicable to similar loans under EQM's $1 billion credit facility, or a successor revolving credit facility, less the sum of (i) the then applicable commitment fee under EQM's $1 billion credit facility and (ii) 10 basis points. EQM had no borrowings outstanding on the 364-Day Facility as of March 31, 2018 and December 31, 2017. There were no borrowings outstanding at any time during the three months ended March 31, 2018. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017, the maximum amount of ~~EQM’s~~EQM's outstanding borrowings under the credit facility at any time was ~~$40 million and $100~~$50 million and the average daily ~~balances were~~balance was approximately ~~$11 million~~$26 million. EQM incurred interest at a weighted average annual interest rate of approximately 2.0% for the three months ended March 31, 2017.

The RMP credit facility contains various provisions that, if not complied with, could result in termination of the agreement, require early payment of amounts outstanding or similar actions. The most significant covenants and ~~$30 million, respectively. EQM had no borrowings outstanding~~events of default under the ~~364-Day Facility~~RMP credit facility relate to maintenance of certain financial ratios, as described below, limitations on certain investments and acquisitions, limitations on transactions with affiliates, limitations on restricted payments, limitations on the incurrence of ~~September 30, 2017~~additional indebtedness, insolvency events, nonpayment of scheduled principal or interest payments, acceleration of and ~~December~~certain other defaults under other financial obligations and change of control provisions. The RMP credit facility requires RMP to maintain the following financial ratios:

an interest coverage ratio of at least 2.50 to 1.0;

a consolidated total leverage ratio of not more than 4.75 to 1.0, and after electing to issue senior unsecured notes, a consolidated total leverage ratio of not more than 5.25 to 1.0 (with certain increases for measurement periods following the completion of certain acquisitions); and

if RMP elects to issue senior unsecured notes, a consolidated senior secured leverage ratio of not more than 3.50 to 1.0.

As of March 31, ~~2016.~~2018, RMP and Rice Midstream OpCo LLC were in compliance with all credit facility provisions and covenants.

EQM ATM Program

During 2015, EQM entered into an equity distribution agreement that established an “At the Market” (ATM) common unit offering program, pursuant to which a group of managers acting as EQM’s sales agents may sell EQM common units having an aggregate offering price of up to $750 million. EQM had approximately $443 million in remaining capacity under the program as of ~~October~~April 26, ~~2017.~~ 2018.

RMP ATM Program

During 2016, RMP entered into an equity distribution agreement that established an ATM common unit offering program, pursuant to which a group of managers acting as RMP's sales agents may sell RMP common units having an aggregate offering price of up to $100 million. RMP had approximately $83.7 million in remaining capacity under the program as of April 26, 2018.

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EQT Corporation and Subsidiaries

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

Commodity Risk Management

The substantial majority of the Company’s commodity risk management program is related to hedging sales of the Company’s produced natural gas. The Company’s overall objective in this hedging program is to protect cash flow from undue exposure to the risk of changing commodity prices. The derivative commodity instruments currently utilized by the Company are primarily NYMEX swaps, collars and ~~collars.~~options.

As of ~~October~~April 24, ~~2017,~~2018, the approximate volumes and prices of the Company’s derivative commodity instruments hedging sales of produced gas for ~~2017~~2018 through ~~2019~~2020 were:


NYMEX Swaps	2017 (a)(b)(c)		2018 (b)(c)		2019		2018 (a)(b)(c)		2019 (b)(c)		2020 (b)
Total Volume (Bcf)	120		189		19		496		445		313
Average Price per Mcf (NYMEX) (d)	$	3.35	$	3.18	$	3.12	$	3.08	$	2.99	$	3.01
Collars
Total Volume (Bcf)	6		18		—		85		74		—
Average Floor Price per Mcf (NYMEX) (d)	$	3.06	$	3.16	$	—	$	3.28	$	3.12	$	—
Average Cap Price per Mcf (NYMEX) (d)	$	3.93	$	3.63	$	—	$	3.79	$	3.60	$	—
Puts (Long)
Total Volume (Bcf)							5		3		—
Average Floor Price per Mcf (NYMEX)							$	2.98	$	3.15	$	—

(a) ~~October~~April through December 31.

(b) The Company also sold calendar year ~~2017~~2018, 2019 and ~~2018 calls/swaptions~~2020 calls for approximately 876 Bcf, 97 Bcf and 33103 Bcf, respectively, at strike prices of ~~$3.53~~$3.47 per Mcf, $3.55 per Mcf and $3.47 per Mcf, respectively. The Company also purchased calendar year 2018, 2019 and 2020 calls for approximately 26 Bcf, 42 Bcf, and 35 Bcf at strike prices of $3.34 per Mcf, $3.36 per Mcf, and $3.36 per Mcf, respectively.


(c)	~~For 2017~~The Company sold calendar year 2018 and ~~2018, the Company also sold~~2019 puts for approximately ~~1 Bcf and~~ 3 Bcf ~~respectively,~~ at a strike ~~price~~prices of ~~$2.63~~$2.66 and $3.15 per ~~Mcf.~~Mcf, respectively.

(d) The average price is based on a conversion rate of 1.05 MMBtu/Mcf.

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~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The Company also enters into fixed price natural gas sales agreements that ~~are satisfied by physical delivery.~~can be physically or financially settled. The difference between these sales prices and NYMEX are included in average differential on the Company's price reconciliation under "Consolidated Operational ~~Data."~~Data". The Company has fixed price ~~physical~~natural gas sales agreements for the remainder of ~~2017~~2018 and ~~2018~~2019 of 2587 Bcf and 1842 Bcf, respectively, at average NYMEX prices of ~~$3.31~~$2.95 per Mcf and ~~$3.23 per Mcf,~~$2.99, respectively. For ~~2017 and~~ 2018, the Company has a natural gas sales agreement for approximately 35 Bcf ~~per year~~ that includes a NYMEX ceiling price of $4.88 per Mcf. For the remainder of 2018, 2019 and ~~2019, the Company has a natural gas sales agreement for approximately 49 Bcf per year that includes a NYMEX ceiling price of $3.36 per Mcf. For 2018 and 2019,~~2020, the Company also has a natural gas sales agreement for approximately 5 Bcf, 7 Bcf ~~per year~~and 6 Bcf, respectively, that includes a NYMEX floor price of $2.16 per Mcf and a NYMEX ceiling price of $4.47 per Mcf. Currently, the Company has also entered into derivative instruments to hedge basis and a limited number of contracts to hedge its ~~NGL~~NGLs exposure. The Company may also use other contractual agreements in implementing its commodity hedging strategy.

See Item 3, “Quantitative and Qualitative Disclosures About Market Risk,” and Note GJ to the Company’s Condensed Consolidated Financial Statements for further discussion of the Company’s hedging program.

Commitments and Contingencies

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against the Company. While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings. The Company accrues legal and other direct costs related to loss contingencies when actually incurred. The Company has established reserves it believes to be appropriate for pending matters and, after consultation with counsel and giving appropriate consideration to available insurance, the Company believes that the ultimate outcome of any matter currently pending against the Company will not materially affect the Company’s financial position, results of operations or liquidity.

Off-Balance Sheet Arrangements

See Note DG to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion of the ~~MVP~~Mountain Valley Pipeline, LLC (MVP Joint ~~Venture~~Venture) guarantee.

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EQT Corporation and Subsidiaries

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

Dividend

On ~~October 11, 2017,~~April 18, 2018, the Board of Directors of the Company declared a regular quarterly cash dividend of three cents per share, payable ~~December~~June 1, ~~2017,~~2018, to the Company’s shareholders of record at the close of business on ~~November 10, 2017.~~May 11, 2018.

See Notes BC, D and CE to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for discussion of ~~EQGP's and EQM's distributions, respectively.~~partnership distributions.

Critical Accounting Policies

The Company’s significant accounting policies are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in the notes to the Company’s Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The application of the Company’s critical accounting policies may require management to make judgments and estimates about the amounts reflected in the Condensed Consolidated Financial Statements. Management uses historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk and Derivative Instruments

The Company’s primary market risk exposure is the volatility of future prices for natural gas and NGLs. The market price for natural gas in the Appalachian Basin continues to be lower relative to NYMEX Henry Hub as a result of the significant increases in the supply of natural gas in the Northeast region in recent years. Due to the volatility of commodity prices, the Company is unable to predict future potential movements in the market prices for natural gas, including Appalachian and other market point basis, and NGLs and thus cannot predict the ultimate impact of prices on its operations. Prolonged low, and/or significant or extended declines in, natural gas and ~~NGL~~NGLs prices could adversely affect, among other things, the Company’s development plans, which would decrease the pace of development and the level of the Company’s proved reserves. Such changes or similar impacts on third-party shippers on the Company's midstream assets could also impact the Company’s revenues, earnings or liquidity and could result in material non-cash impairments to the recorded value of the Company’s property, plant and equipment.

The Company uses derivatives to reduce the ~~effects~~effect of commodity price volatility. The Company’s use of derivatives is further described in Note GJ to the Condensed Consolidated Financial Statements and under the caption “Commodity Risk Management” in the “Capital Resources and Liquidity” section of Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. The Company uses derivative commodity instruments that are ~~typically~~ placed primarily with financial institutions and the creditworthiness of these institutions is regularly monitored. The Company primarily enters into derivative instruments to hedge forecasted sales of production. The Company also enters into derivative instruments to hedge basis and exposure to fluctuations in interest rates. The Company’s use of derivative instruments is implemented under a set of policies approved by the Company’s Hedge and Financial Risk Committee and reviewed by the Audit Committee of the Company’s Board of Directors.

For the derivative commodity instruments used to hedge the Company’s forecasted sales of production, most of which are hedged at NYMEX natural gas prices, the Company sets policy limits relative to the expected production and sales levels which are exposed to price risk. The Company has an insignificant amount of financial natural gas derivative commodity instruments for trading purposes.

The derivative commodity instruments currently utilized by the Company are primarily fixed price swap agreements, collar agreements and ~~collar~~option agreements which may require payments to or receipt of payments from counterparties based on the differential between two prices for the commodity. The Company may also use other contractual agreements in implementing its commodity hedging strategy.

The Company monitors price and production levels on a continuous basis and makes adjustments to quantities hedged as warranted. The Company’s overall objective in its hedging program is to protect a portion of cash flows from undue exposure to the risk of changing commodity prices.

~~With respect to~~For information on the quantity of derivative commodity instruments held by the Company, see Note J to the ~~Company hedged portions of expected sales of equity production~~Condensed Consolidated Financial Statements and portions of its basis exposure covering approximately 470 Bcf of natural gas and 1,189 Mbbls of NGLs as of September 30, 2017, and 646 Bcf of natural gas and 1,095 Mbbls of NGLs as of December 31, 2016. See the “Commodity Risk Management” section in the “Capital Resources and Liquidity” section of Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q for further discussion.

A hypothetical decrease of 10% in the market price of natural gas from the ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 levels would have increased the fair value of these natural gas derivative instruments by approximately ~~$103.1~~$370.6 million and ~~$179.0~~$386.2 million, respectively. A hypothetical increase of 10% in the market price of natural gas from the ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 levels would have decreased the fair value of these natural gas derivative instruments by approximately ~~$105.3~~$370.1 million and ~~$181.8~~$384.9 million, respectively. The Company determined the change in the fair value of the derivative commodity instruments using a method similar to its normal determination of fair value as described in Note HK to the Condensed Consolidated Financial Statements. The Company assumed a 10% change in the price of natural gas from its levels at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. The price change was then applied to these natural gas derivative commodity instruments recorded on the Company’s Consolidated Balance Sheets, resulting in the hypothetical change in fair value.

The above analysis of the derivative commodity instruments held by the Company does not include the offsetting impact that the same hypothetical price movement may have on the Company’s physical sales of natural gas. The portfolio of derivative commodity instruments held to hedge the Company’s forecasted produced gas approximates a portion of the Company’s expected physical sales of natural gas. Therefore, an adverse impact to the fair value of the portfolio of derivative commodity instruments held to hedge the Company’s forecasted production associated with the hypothetical changes in commodity prices referenced above should be offset by a favorable impact on the Company’s physical sales of natural gas, assuming the derivative commodity instruments

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are not closed out in advance of their expected term, and the derivative commodity instruments continue to function effectively as hedges of the underlying risk.

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If the underlying physical transactions or positions are liquidated prior to the maturity of the derivative commodity instruments, a loss on the financial instruments may occur or the derivative commodity instruments might be worthless as determined by the prevailing market value on their termination or maturity date, whichever comes first.

Interest Rate Risk

Changes in interest rates affect the amount of interest the Company, EQGP, EQM and ~~EQM~~RMP earn on cash, cash equivalents and short-term investments and the interest rates the Company, EQM and ~~EQM~~RMP pay on borrowings under their respective revolving credit facilities and the ~~interest~~Company's floating rate ~~the Company pays on its Floating Rate Notes.~~notes. All of the Company’s and EQM’s ~~long-term borrowings,~~Senior Notes, other than ~~borrowings on~~ the ~~Company's Floating Rate Notes,~~floating rate notes, are fixed rate and thus do not expose the Company to fluctuations in its results of operations or liquidity from changes in market interest rates. Changes in interest rates do affect the fair value of the Company’s and EQM’s fixed rate debt. See Note JM to the Condensed Consolidated Financial Statements for further discussion of the Company’s, EQM’s and ~~EQM’s revolving~~RMP's credit ~~facilities~~facility borrowings, as applicable, and Note HK to the Condensed Consolidated Financial Statements for a discussion of fair value measurements, including the fair value of long-term debt.

Other Market Risks

The Company is exposed to credit loss in the event of nonperformance by counterparties to derivative contracts. This credit exposure is limited to derivative contracts with a positive fair value, which may change as market prices change. The Company’s over-the-counter (OTC) derivative instruments are primarily with financial institutions and, thus, are subject to events that would impact those companies individually as well as that industry as a whole. The Company utilizes various processes and analyses to monitor and evaluate its credit risk exposures. These include closely monitoring current market conditions, counterparty credit fundamentals and credit default swap rates. Credit exposure is controlled through credit approvals and limits based on counterparty credit fundamentals. To manage the level of credit risk, the Company enters into transactions with financial counterparties that are of investment grade, ~~or better,~~ enters into netting agreements whenever possible and may obtain collateral or other security.

Approximately ~~49%~~82%, or ~~$67.6~~$262.3 million, of the Company’s OTC derivative contracts outstanding at ~~September 30, 2017~~March 31, 2018 had a positive fair value. Approximately ~~11%~~63%, or ~~$33.1~~$242.0 million, of the Company’s OTC derivative contracts outstanding at December 31, ~~2016~~2017 had a positive fair value.

As of ~~September 30, 2017,~~March 31, 2018, the Company was not in default under any derivative contracts and had no knowledge of default by any counterparty to its derivative contracts. The Company made no adjustments to the fair value of derivative contracts due to credit related concerns outside of the normal non-performance risk adjustment included in the Company’s established fair value procedure. The Company monitors market conditions that may impact the fair value of derivative contracts reported in the Condensed Consolidated Balance Sheets.

The Company is also exposed to the risk of nonperformance by credit customers on physical sales or transportation of natural gas. A significant amount of revenues and related accounts receivable are generated from the sale of produced natural gas and NGLs to certain marketers, utility and industrial customers located mainly in the Appalachian Basin and ~~the northeastern United States as well as the Permian Basin of Texas and a gas processor~~ in ~~Kentucky and West Virginia. The~~markets available through the Company's current transportation portfolio, ~~also enables the Company to reach~~which includes markets ~~along~~in the Gulf Coast, Midwest and ~~Midwestern portions~~Northeast United States. The Company also contracts with certain processors to market a portion of NGLs on behalf of the ~~United States.~~Company. Similarly, revenues and related accounts receivable are generated from the gathering, transmission and storage of natural gas in the Appalachian Basin for independent producers, local distribution companies and marketers.

The Company has a revolving credit facility that expires in July 2022. The credit facility is underwritten by a syndicate of financial institutions, each of which is obligated to fund its pro-rata portion of any borrowings by the Company. As of September 30, 2017, the Company had no borrowings or letters of credit outstanding under the facility. No one lender of the large group of financial institutions in the ~~syndicate~~syndicates for the EQT, EQM or RMP credit facilities holds more than ~~10%~~15% of the respective facility. The ~~Company’s~~ large syndicate ~~group~~groups and relatively low percentage of participation by each lender isare expected to limit the Company’s, EQM's and RMP's exposure to problems or consolidation in the banking industry.

EQM has a revolving credit facility that expires in July 2022. The credit facility is underwritten by a syndicate of financial institutions, each of which is obligated to fund its pro-rata portion of any borrowings by EQM. As of September 30, 2017, EQM had $105 million of borrowings and no letters of credit outstanding under the credit facility. No one lender of the large group of financial institutions in the syndicate holds more than 10% of the facility. EQM’s large syndicate group and relatively low percentage of participation by each lender is expected to limit EQM’s exposure to problems or consolidation in the banking industry.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including the Company’s Principal Executive Officer and Principal Financial Officer, an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), was conducted as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

~~There were no changes~~As noted under Item 9A, “Controls and Procedures,” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, management’s assessment of, and conclusion on, the effectiveness of internal control over financial reporting ~~(as such term~~did not include the internal controls of the entities acquired in the Rice Merger on November 13, 2017. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting for a period of up to one year following an acquisition while integrating the acquired company. The Company is ~~defined~~ in ~~Rule 13a-15(f) under~~ the ~~Exchange Act)~~process of integrating Rice’s and the Company’s internal controls over financial reporting. As a result of these integration activities, certain controls will be evaluated and may be changed. Except as noted above, there were no changes in the Company’s internal control over financial reporting that occurred during the ~~third~~first quarter of ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against the Company. While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings. The Company accrues legal and other direct costs related to loss contingencies when actually incurred. The Company has established reserves it believes to be appropriate for pending matters and, after consultation with counsel and giving appropriate consideration to available insurance, the Company believes that the ultimate outcome of any matter currently pending against the Company will not materially affect the financial position, results of operations or liquidity of the Company.

Environmental Proceedings

Phoenix S Impoundment, Tioga County, Pennsylvania

In June and August 2012, the Company received three Notices of Violation (NOVs) from the Pennsylvania Department of Environmental Protection (the PADEP). The NOVs alleged violations of the Pennsylvania Oil and Gas Act and Clean Streams Law in connection with the unintentional release in May 2012, by a Company vendor, of water from an impaired water pit at a Company well location in Tioga County, Pennsylvania. Since confirming a release, the Company has cooperated with the PADEP in remediating the affected areas.

During the second quarter of 2014, the Company received a proposed consent assessment of civil penalty from the PADEP that proposed a civil penalty related to the NOVs. On September 19, 2014, the Company filed a declaratory judgment action in the Commonwealth Court of Pennsylvania against the PADEP seeking a court ruling on the PADEP’s legal interpretation of the penalty provisions of the Clean Streams Law, which interpretation the Company believed was legally flawed and unsupportable. On October 7, 2014, based on its interpretation of the penalty provisions, the PADEP filed a complaint against the Company before the Pennsylvania Environmental Hearing Board (the EHB) seeking $4.53 million in civil penalties. In January 2017, the Commonwealth Court ruled in favor of the Company, finding the PADEP’s interpretation of the penalty provisions of the Clean Streams Law erroneous. The PADEP appealed that decision to the Pennsylvania Supreme Court. Following a July 2016 hearing before the EHB, in May 2017, the EHB ruled that the Company should pay $1.1 million in civil penalties. In June 2017, both the Company and the PADEP appealed the EHB’s decision to the Commonwealth Court. In March 2018, the Pennsylvania Supreme Court upheld the Commonwealth Court’s decision that the PADEP’s interpretation of the penalty provisions of the Clean Streams Law is erroneous. While the Company expects the PADEP’s claims to result in penalties that exceed $100,000, the Company expects the resolution of this matter will not have a material impact on the financial condition, results of operations or liquidity of the Company.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, other than the risks described below ~~relating~~related to the ~~proposed Rice Merger.~~pending Midstream Streamlining Transactions and the pending separation of the Company's upstream and midstream businesses.

Our plan to separate into two independent publicly-traded companies is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect our business.

On February 21, 2018, we announced plans to separate into two independent publicly-traded companies. The Separation, which is expected to be completed by the end of the third quarter 2018, is subject to approval by our Board of Directors of the final terms of the Separation and market, regulatory and certain other conditions. Unanticipated developments, including changes in the competitive conditions of our upstream and midstream businesses, possible delays in obtaining various tax opinions or rulings, regulatory approvals or clearances, the uncertainty of the financial markets and challenges in executing the Separation, could delay or prevent the completion of the proposed Separation, or cause the proposed Separation to occur on terms or conditions that are different or less favorable than expected.

We expect that the process of completing the proposed Separation will be time-consuming and involve significant costs and expenses, which may be significantly higher than what we currently anticipate and may not yield a discernible benefit if the Separation is not completed. Executing the proposed Separation will require significant time and attention from our senior management and employees, which could adversely affect our business, financial results and results of operations. We may also

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experience increased difficulties in attracting, retaining and motivating employees during the pendency of the Separation and following its completion, which could harm our businesses.

The Separation may not achieve some or all of the anticipated benefits.

We may not realize some or all of the anticipated strategic, financial, operational or other benefits from the Separation. As independent publicly-traded companies, our upstream and midstream businesses will be smaller, less diversified companies with a narrower business focus and may be more vulnerable to changing market conditions, which could materially and adversely affect their respective business, financial condition and results of operations. Further, there can be no assurance that the combined value of the common stock of the two publicly-traded companies will be equal to or greater than what the value of our common stock would have been had the proposed Separation not occurred.

The Separation could result in substantial tax liability.

The Separation will be effected by a pro rata distribution to our shareholders of the stock of a newly-formed corporation that conducts our midstream business and certain related transactions. We intend to obtain (i) a private letter ruling from the U.S. Internal Revenue Service (the IRS) and/or (ii) one or more opinions of outside counsel regarding the qualification of the distribution, together with certain related transactions, as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the U.S. Internal Revenue Code (the Code) and certain other U.S. federal income tax matters relating to the distribution and certain related transactions. The IRS private letter ruling and/or the opinion of counsel will be based upon and rely on, among other things, various facts and assumptions, as well as certain representations, statements and undertakings of us and NewCo, including those relating to the past and future conduct of us and NewCo. If any of these representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if we or NewCo breach any representations or covenants contained in any of the separation-related agreements and documents or in any documents relating to the IRS private letter ruling and/or the opinion of counsel, the IRS private letter ruling and/or the opinion of counsel may be invalid and the conclusions reached therein could be jeopardized.

Notwithstanding receipt of the IRS private letter ruling and/or the opinion of counsel, the IRS could determine that the distribution and/or certain related transactions should be treated as taxable transactions for U.S. federal income tax purposes if it determines that any of the representations, assumptions or undertakings upon which the IRS private letter ruling or the opinion of counsel was based are false or have been violated. In addition, any opinion of counsel will represent the judgment of such counsel and is not binding on the IRS or any court and the IRS or a court may disagree with the conclusions in such opinion of counsel. Accordingly, notwithstanding receipt of the IRS private letter ruling and/or any opinion of counsel, there can be no assurance that the IRS will not assert that the distribution and/or certain related transactions do not qualify for the intended tax treatment or that a court would not sustain such a challenge. In the event the IRS were to prevail with such challenge, we, NewCo and our shareholders could be subject to material U.S. federal income tax liability.

Even if the distribution otherwise qualifies as generally tax-free under Section 355 and Section 368(a)(1)(D) of the Code, it would result in a material U.S. federal income tax liability to us (but not to our shareholders) under Section 355(e) of the Code if one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by either vote or value) in our stock or in the stock of NewCo (excluding, for this purpose, the acquisition of ~~Rice Energy Inc. (Rice)~~stock of NewCo by holders of our stock in the distribution) as part of a plan or series of related transactions that includes the distribution. Any acquisition of our stock or stock of NewCo (or any predecessor or successor corporation) within two years before or after the distribution generally would be presumed to be part of a plan that includes the distribution, although the parties may be able to rebut that presumption under certain circumstances. The process for determining whether an acquisition is part of a plan under these rules is complex, inherently factual in nature and subject to a comprehensive analysis of the facts and circumstances of the particular case. Notwithstanding the IRS private letter ruling or any opinion of counsel described above, we or NewCo may cause or permit a change in ownership of our stock or stock of NewCo sufficient to result in a material tax liability to us.

In connection with the distribution and to effect the separation, we expect to effect certain restructuring transactions that are expected to be taxable to us (but not our shareholders) and to result in a material tax liability, which we expect to be offset in part by certain tax attributes.

We may determine to forgo certain transactions in order to avoid the risk of incurring material tax-related liabilities.

As a result of requirements of Section 355 of the Code and/or other applicable tax laws, we may determine to forgo certain transactions that would otherwise be advantageous. In particular, we may determine to continue to operate certain of our business operations for the foreseeable future even if a sale or discontinuance of such business would otherwise be advantageous. Moreover,

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in light of the requirements of Section 355(e) of the Code, we may determine to forgo certain transactions, including share repurchases, stock issuances, certain asset dispositions and other strategic transactions, for some period of time following the separation.

The pending Midstream Streamlining Transactions are subject to conditions, including certain conditions that may not be satisfied or completed on a timely basis, if at all. Failure to complete ~~the acquisition of Rice~~these transactions could have a material and adverse effect on ~~us.~~us and, even if completed, these transactions may not achieve some or all of the anticipated benefits.

On April 26, 2018, we, together with EQM, EQGP and RMP, announced the Midstream Streamlining Transactions. Completion of ~~our acquisition of Rice~~the Midstream Streamlining Transactions is subject to a number of conditions set forth in ~~our merger agreement with Rice,~~the agreements governing these transactions, including, in the case of EQM’s acquisition of RMP, approval by ~~our shareholders~~a majority of ~~the issuance of shares of our common stock as acquisition consideration and approval by Rice stockholders of the adoption of the merger agreement,~~RMP’s unitholders, which make the completion and timing of the ~~completion of the~~ transactions uncertain. Also, either EQT or Rice may terminate the merger agreement if the merger has not been consummated by February 19, 2018 (or, at either party’s discretion, if the only conditions to closing that have not been satisfied or waived by that date are those related to the termination or expiration of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or the issuance of an order, decree, ruling, injunction or other action that is in effect and is restraining, enjoining or otherwise prohibiting the consummation of the merger by May 19, 2018) except that this right to terminate the merger agreement will not be available to any party whose material breach of a representation, warranty, covenant or other agreement of such party under the merger agreement resulted in the failure of the transactions to be consummated on or before that date.

If the ~~transactions contemplated by the merger agreement~~Midstream Streamlining Transactions are not completed, our ongoing ~~business~~businesses may be adversely affected and, without realizing any of the benefits of having completed the transactions, we will be subject to a number of risks, including the following:

we will be required to pay our costs relating to the transactions, such as legal, accounting and financial advisory ~~and printing fees,~~expenses, whether or not the transactions are completed;

time and resources committed by our management to matters relating to the transactions could otherwise have been devoted to pursuing other beneficial opportunities;

and

the market price of our common stock could decline to the extent that the current market price reflects a market assumption that the transactions will be ~~completed; and~~completed.

In addition, even if the merger agreement is terminated and our board of directors seeks another acquisition, our shareholders cannot be certain that we will be able to find a party willing to enter into a transaction as attractive to us as the acquisition of Rice.

~~If the acquisition of Rice is~~ completed, ~~we may not achieve the intended benefits and the acquisition may disrupt our current plans or operations.~~

~~There~~there can be no assurance that ~~we will be able to successfully integrate Rice’s~~the combination of EQM and RMP, the acquisition by EQM of the Rice retained midstream assets, or ~~otherwise realize~~ the ~~expected benefits~~sale of the ~~acquisition. In addition,~~RMP IDRs o EQGP, will deliver the strategic, financial and operational benefits anticipated by the parties.

The proposed separation of our production and midstream businesses into two independent publicly-traded companies and/or the Midstream Streamlining Transactions may result in disruptions to, and negatively impact our relationships with, our customers and other business partners.

Uncertainty related to the proposed separation of our production and midstream businesses and/or the Midstream Streamlining Transactions may lead customers and other parties with which we currently do business or may do business in the future to terminate or attempt to negotiate changes in existing business relationships, or consider entering into business relationships with parties other than us. These disruptions could have a material and adverse effect on our business, ~~may~~financial condition, results of operations and prospects. The effect of such disruptions could be ~~negatively impacted following~~exacerbated by any delays in the ~~acquisition if we are unable to effectively manage our expanded operations. The integration will require significant time and focus from management following~~completion of the ~~acquisition. Additionally, consummating the acquisition could disrupt current plans and operations, which could delay the achievement of our strategic objectives.~~Separation and/or Midstream Streamlining Transactions.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth the Company’s repurchases of equity securities registered under Section 12 of the Exchange Act that have occurred during the three months ended ~~September 30, 2017:~~March 31, 2018:

Period
Total
number
of shares
purchased (a)

Average
price
paid per
share

Total number of
shares purchased
as part of publicly
announced plans
or programs

Maximum number
of shares that may
yet be purchased
under the plans or
programs (b)
July 2017 (July 1 – July 31) 231
$ 59.90
—
700,000
August 2017 (August 1 – August 31) 7,261
61.05
—
700,000
September 2017 (September 1 – September 30) —
—
—
700,000
Total 7,492
$ 61.01
—



Period	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs (b)
January 2018 (January 1 – January 31)	96,446	$	62.72	—	700,000
February 2018 (February 1 – February 28)	54,357	50.21		—	700,000
March 2018 (March 1 – March 31)	1,571	50.56		—	700,000
Total	152,374	$	58.13	—


(a)	Reflects shares withheld by the Company to pay taxes upon vesting of restricted stock.

(b)

During 2014, the Company’s Board of Directors approved a share repurchase authorization of up to 1,000,000 shares of the Company’s outstanding common stock. The Company may repurchase shares from time to time in open market or in privately negotiated transactions. The share repurchase authorization does not obligate the Company to acquire any specific number of shares, has no pre-established end date and may be discontinued by the Company at any time. As of ~~September 30, 2017,~~March 31, 2018, the Company had repurchased 300,000 shares under this authorization since its inception.

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Item 6. Exhibits



Exhibit No.	Description	Method of Filing

~~4.01~~2.01	~~Fifth Supplemental Indenture~~Agreement and Plan of Merger, dated as of ~~October 4, 2017 between~~April 25, 2018, by and among EQT Midstream Partners, LP, EQT Midstream Services, LLC, EQM Acquisition Sub, LLC, EQM GP Acquisition Sub, LLC, Rice Midstream Partners LP, Rice Midstream Management LLC and, solely for the purposes of certain provisions therein, the Company. The Company will furnish supplementally a copy of any omitted schedule and ~~The Bank of New York Mellon, as Trustee, pursuant~~similar attachment to ~~which~~ the ~~Floating Rate Notes due 2020 were issued~~SEC upon request.	Incorporated herein by reference to Exhibit ~~4.3~~2.1 to Form 8-K (#001-3551) filed on ~~October 4, 2017~~April 26, 2018.

~~4.02~~2.02	~~Sixth Supplemental Indenture~~Incentive Distribution Rights Purchase and Sale Agreement, dated as of ~~October 4, 2017 between~~April 25, 2018, by and among EQT GP Holdings, LP, Rice Midstream GP Holdings LP and the ~~Company and The Bank of New York Mellon, as Trustee, pursuant to which the 2.50% Senior Notes due 2020 were issued~~Company.	Incorporated ~~herein~~ by reference herein to Exhibit ~~4.5~~2.3 to Form 8-K (#001-3551) filed on ~~October 4, 2017~~April 26, 2018.

~~4.03~~2.03	~~Seventh Supplemental Indenture~~Contribution and Sale Agreement, dated as of ~~October 4, 2017 between~~April 25, 2018, by and among the Company, Rice Midstream Holdings LLC, EQT Midstream Partners, LP and EQM Gathering Holdings, LLC. The ~~Bank~~Company will furnish supplementally a copy of ~~New York Mellon, as Trustee, pursuant~~any omitted schedule and similar attachment to ~~which~~ the ~~3.00% Senior Notes due 2022 were issued~~SEC upon request.	Incorporated herein by reference to Exhibit ~~4.7~~2.2 to Form 8-K (#001-3551) filed on ~~October 4, 2017~~April 26, 2018.

~~4.04~~	~~Eighth Supplemental Indenture dated as of October 4, 2017 between the Company and The Bank of New York Mellon, as Trustee, pursuant to which the 3.90% Senior Notes due 2027 were issued~~	~~Incorporated herein by reference to Exhibit 4.9 to Form 8-K filed on October 4, 2017~~

~~10.01~~	First Amendment to Voting and Support Agreement effective as of October 9, 2017 among the Company, Rice Energy 2016 Irrevocable Trust, Rice Energy Holdings LLC, Daniel J. Rice III, Daniel J. Rice IV, Derek A. Rice and Toby Z. Rice	~~Filed herewith as Exhibit 10.01~~

~~10.02~~	Second Amended and Restated Credit Amendment dated as of July 31, 2017 among the Company, PNC Bank, National Association, as Administrative Agent, Swing Line Lender and an L/C Issuer and the other lenders party thereto	~~Incorporated herein by reference to Exhibit 10.1 to Form 8-K filed on August 3, 2017~~

31.01	Rule 13(a)-14(a) Certification of Principal Executive Officer	Filed herewith as Exhibit 31.01

31.02	Rule 13(a)-14(a) Certification of Principal Financial Officer	Filed herewith as Exhibit 31.02

32	Section 1350 Certification of Principal Executive Officer and Principal Financial Officer	Furnished herewith as Exhibit 32

101	Interactive Data File	Filed herewith as Exhibit 101

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		EQT CORPORATION
		(Registrant)


	By:	/s/ Robert J. McNally
		Robert J. McNally
		Senior Vice President and Chief Financial Officer

Date: ~~October~~April 26, ~~2017~~2018

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Three Months Ended September 30, 2017	EQT Production		EQT Gathering		EQT Transmission		Intersegment Eliminations			EQT Corporation
Revenues:	(Thousands)
Sales of natural gas, oil and NGLs	$	552,953	$	—	$	—	$	—		$	552,953
Pipeline and net marketing services	9,140		116,522		90,671		(144,598		)	71,735
Gain on derivatives not designated as hedges	35,625		—		—		—			35,625
Total operating revenues	$	597,718	$	116,522	$	90,671	$	(144,598	)	$	660,313



Three Months Ended September 30, 2016	EQT Production		EQT Gathering		EQT Transmission		Intersegment Eliminations			EQT Corporation
Revenues:	(Thousands)
Sales of natural gas, oil and NGLs	$	403,939	$	—	$	—	$	—		$	403,939
Pipeline and net marketing services	10,797		99,141		77,631		(128,138		)	59,431
Gain on derivatives not designated as hedges	93,356		—		—		—			93,356
Total operating revenues	$	508,092	$	99,141	$	77,631	$	(128,138	)	$	556,726



Nine Months Ended September 30, 2017	EQT Production		EQT Gathering		EQT Transmission		Intersegment Eliminations			EQT Corporation
Revenues:	(Thousands)
Sales of natural gas, oil and NGLs	$	1,803,132	$	—	$	—	$	—		$	1,803,132
Pipeline and net marketing services	31,656		330,996		278,589		(418,337		)	222,904
Gain on derivatives not designated as hedges	222,693		—		—		—			222,693
Total operating revenues	$	2,057,481	$	330,996	$	278,589	$	(418,337	)	$	2,248,729



Nine Months Ended September 30, 2016	EQT Production			EQT Gathering		EQT Transmission		Intersegment Eliminations			EQT Corporation
Revenues:	(Thousands)
Sales of natural gas, oil and NGLs	$	1,072,898		$	—	$	—	$	—		$	1,072,898
Pipeline and net marketing services	28,196			297,305		243,295		(380,026		)	188,770
Loss on derivatives not designated as hedges	(32,342		)	—		—		—			(32,342		)
Total operating revenues	$	1,068,752		$	297,305	$	243,295	$	(380,026	)	$	1,229,326