EQT Corporation and ~~propane forward curves, LIBOR-based discount rates, natural gas volatilities and basis forward curves are validated~~Subsidiaries

Notes to ~~external sources at least monthly.~~the Condensed Consolidated Financial Statements (Unaudited)

The ~~following~~table below summarizes assets and liabilities ~~were~~ measured at fair value on a recurring ~~basis during the applicable period:~~basis.

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)
(Thousands)
Assets

Derivative instruments, at fair value $ 67,555
$ —
$ 67,555
$ —
Liabilities
Derivative instruments, at fair value $ 71,374
$ —
$ 71,374
$ —


	Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets		Fair value measurements at reporting date using:
					Quoted prices in active markets for identical assets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
	(Thousands)
September 30, 2020
Asset derivative instruments, at fair value	$	503,648	$	66,840		$	436,808		$	0
Liability derivative instruments, at fair value	894,618		131,364			763,254			0

December 31, 2019
Asset derivative instruments, at fair value	$	812,664	$	95,041		$	717,623		$	0
Liability derivative instruments, at fair value	312,696		71,107			241,589			0

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)
(Thousands)
Assets

Trading securities $ 286,396
$ —
$ 286,396
$ —
Derivative instruments, at fair value $ 33,053
$ —
$ 33,053
$ —
Liabilities

Derivative instruments, at fair value $ 257,943
$ —
$ 257,943
$ —

The carrying values of cash equivalents, ~~restricted cash,~~ accounts receivable and accounts payable approximate fair value due to ~~the~~their short-term ~~maturity~~maturities. The carrying value of the ~~instruments.~~Company's investment in Equitrans Midstream Corporation (Equitrans Midstream) approximates fair value as Equitrans Midstream is a publicly traded company. The carrying values of borrowings ~~under EQM’s~~on the Company's credit ~~facilities~~facility and term loan facility (which was fully repaid in the second quarter of 2020) approximate fair value as the interest rates are based on prevailing market rates. ~~These are~~The Company considered all of these fair values to be Level 1 fair ~~values.~~value measurements.

~~As of December 31, 2016, the~~The Company ~~reflected its~~has an immaterial investment in ~~trading securities~~a fund that invests in companies developing technology and operating solutions for exploration and production companies. The investment is valued using, as ~~Level 2 fair~~a practical expedient, the net asset value ~~measurements. The fair values of trading securities classified as Level 2 are priced using nonbinding market prices that are corroborated by observable~~

~~Table of Contents~~

~~EQT Corporation~~provided in the financial statements received from fund managers and ~~Subsidiaries~~

~~Notes to~~is recorded in other assets in the Condensed Consolidated ~~Financial Statements (Unaudited)~~

Balance Sheets.

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~~Company's senior notes are actively traded, ~~the~~their fair value ~~of the debt~~ is a Level 2 fair value measurement. ~~Fair~~As of September 30, 2020 and December 31, 2019, the Company's senior notes had a fair value ~~for non-traded debt obligations~~of approximately $4.8 billion and $3.9 billion, respectively, and a carrying value of approximately $4.4 billion and $3.9 billion, respectively, inclusive of any current portion. The fair value of the Company's note payable to EQM Midstream Partners, LP (EQM) is estimated using ~~a standard industry~~an income approach model ~~which utilizes~~with a market-based discount rate ~~based on market rates for debt with similar remaining time~~and is a Level 3 fair value measurement. As of September 30, 2020 and December 31, 2019, the Company's note payable to ~~maturity and credit risk. The estimated~~EQM had a fair value of ~~total debt (including EQM’s long-term debt) on the Condensed Consolidated Balance Sheets was~~ approximately ~~$3.5 billion at September 30, 2017~~$131 million and ~~December 31, 2016. The~~$128 million, respectively, and a carrying value of ~~total debt (including EQM’s long-term debt) on~~approximately $106 million and $110 million, respectively, inclusive of any current portion. See Note 6 for further discussion of the ~~Condensed Consolidated Balance Sheets was approximately $3.3 billion at September 30, 2017 and December 31, 2016.~~Company's debt.

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.

See Note 9 for a discussion of the fair value measurement of the Equitrans Share Exchange and Note 10 for a discussion of the fair value measurement of the 2020 Asset Exchange Transactions and 2020 Divestiture (each defined in Note 10). See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the fair value of assets related to the impairment and expiration of leases.

5. Income Taxes

For the nine months ended September 30, ~~2017,~~2020, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to ~~“ordinary”~~"ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the ~~quarter.~~period. For the nine months ended September 30, ~~2016,~~2019, the Company determined that this method of applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss did not provide a reliable estimate of the provision for income taxes because small fluctuations in estimated ~~“ordinary”~~ income ~~would result~~resulted 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,~~rate. Therefore, the Company instead used a discrete effective tax rate method to ~~calculate taxes for the nine months ended September 30, 2016.~~

All of EQGP’s income is included in the Company’s pre-tax income. However, the Company is not required to record income tax expense with respect to the portion of EQGP’s income allocated to the noncontrolling public limited partners of EQGP and EQM, 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 had consolidated pre-tax income for the nine months ended September 30, 2017, compared to a consolidated pre-tax loss for the nine months ended September 30, 2016. The Company’s effective tax rate for the nine months ended September 30, 2017 was 19.9% compared to 87.2% for the nine months ended September 30, 2016.

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

J.~~Revolving Credit Facilities~~

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 (defined in Note N) 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 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.

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, 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 had $105 million in borrowings and no letters of credit outstanding under the credit facility as of September 30, 2017. EQM had no borrowings and no letters of credit outstanding under the credit facility as of December 31, 2016. 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 was $177 million. The maximum amount of EQM's outstanding borrowings under the credit facility at any time during the three and nine months ended September 30, 2016 was $91 million and $299 million, respectively. The average daily balance of loans outstanding under EQM's credit facility was approximately $95 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.

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

K.~~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~~calculate taxes for the ~~three and~~ nine months ended September 30, ~~2017, respectively. Options~~2019. There were no material changes to ~~purchase common stock excluded from potentially dilutive securities because they were anti-dilutive totaled 425,100 and 431,190~~the Company's methodology for determining unrecognized tax benefits during the ~~three and~~ nine months ended September 30, ~~2017,~~2020.

The Company recorded income tax benefit at an effective tax rate of 22.3% and 17.1% for the nine months ended September 30, 2020 and 2019, respectively. The Company's effective tax rate for the nine months ended September 30, 2020 was higher compared to the U.S. federal statutory rate due primarily to state taxes, including valuation allowances that limit certain state tax benefits, and the benefit related to the settlement of the Company's 2010, 2011 and 2012 audit with the Internal Revenue Service (IRS). These items were partly offset by valuation allowances provided against federal and state deferred tax assets for the additional unrealized losses on the Company's investment in Equitrans Midstream incurred through September 30, 2020 that, if such investment is sold, would become capital losses. The Company believes it is more likely than not that such additional unrealized losses will not be realized for tax purposes.

The Company's effective tax rate for the nine months ended September 30, 2019 was lower compared to the U.S. federal statutory rate due primarily to state valuation allowances that limit certain state tax benefits as well as the Company's recognition of executive compensation and transaction costs, which are not deductible for tax purposes, partly offset by state taxes recorded in 2019 and the Company's reversal of its valuation allowances related to state net operating losses utilization against future taxable income and Alternative Minimum Tax (AMT) refund sequestration. The Company's reversal of its AMT refund valuation allowance resulted from a first quarter 2019 IRS announcement that reversed the IRS's prior position that 6.2% of AMT refunds are subject to sequestration by the U.S. federal government.

On March 27, 2020, the U.S. Congress enacted the Coronavirus Aid, Relief and Economic Security Act (the CARES Act). The CARES Act accelerated the Company's ability to claim federal refunds of AMT credits, increasing the Company's expected collectable refund in 2020 by $94.8 million to $379.3 million, all of which, plus interest of $12.1 million, was received during the nine months ended September 30, 2020. The CARES Act also increased the interest expense limitation from 30% to 50% of adjusted taxable income (ATI) and provides the Company the option to use its 2019 ATI in 2020. Further, the CARES Act modified certain net operating loss (NOL) rules, including allowing five year carrybacks for NOLs arising in 2018, 2019 and 2020 and temporarily removing the 80% taxable income NOL utilization limit for those periods. The Company does not expect any other tax-related provisions of the CARES Act to have a material impact on its financial statements and related disclosures.

6. Debt

Credit facility. The Company has a $2.5 billion credit facility that expires in July 2022.

The Company had $0.8 billion of letters of credit outstanding under its credit facility as of September 30, 2020 and 0 letters of credit outstanding under its credit facility as of December 31, 2019.

Under the Company's credit facility, for the three months ended September 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $399 million and $319 million, respectively, the average daily balances were approximately $149 million and $105 million, respectively, and interest was incurred at weighted average annual interest rates of 2.2% and 3.6%, respectively. Under the Company's credit facility, for the nine months ended September 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $399 million and $1,108 million, respectively, the average daily balances were approximately $90 million and $340 million, respectively, and interest was incurred at weighted average annual interest rates of 2.5% and 4.0%, respectively. Based on the Company's senior notes credit rating as of September 30, 2020, the margin on base rate loans under the Company's credit facility was 1.00% and the margin on Eurodollar rate loans was 2.00%.

Term loan facility. The Company had a $1.0 billion term loan facility that was scheduled to mature in May 2021. During the second quarter 2020, the Company used proceeds from the offering of its Convertible Notes (see below), income tax refunds received during the quarter (see Note 5) and proceeds from the 2020 Divestiture (see Note 10) to fully repay its term loan facility on June 30, 2020. Under the Company's term loan facility, from January 1, 2020 through June 30, 2020, the average daily balance was approximately $692 million and interest was incurred at a weighted average annual interest rate of 2.6%. As of September 30, 2019, the Company had $1.0 billion of outstanding borrowings under its term loan facility. For the period May 31, 2019 through September 30, 2019, interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 3.3%.

Adjustable Rate Notes. On January 21, 2020, the Company issued $1.0 billion aggregate principal amount of 6.125% senior notes due February 1, 2025 and $750 million aggregate principal amount of 7.000% senior notes due February 1, 2030 (together, the Adjustable Rate Notes). The Company used the net proceeds from the Adjustable Rate Notes to repay $500 million aggregate

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

principal amount of the Company's floating rate notes, $500 million aggregate principal amount of the Company's 2.50% senior notes, $500 million aggregate principal amount of the Company's 4.875% senior notes and $200 million of the Company's term loan facility borrowings. The Company fully redeemed its floating rate notes and 2.50% senior notes at a price of 100% and 100.446% (inclusive of a make whole call premium), respectively, of each note's principal amount plus accrued but unpaid interest of $1.2 million and $4.2 million, respectively. This resulted in the payment of make whole call premiums of $2.2 million related to the Company's 2.50% senior notes. The $500 million aggregate principal amount of the Company's 4.875% senior notes was redeemed at a total cost of $517.4 million, inclusive of a tender premium of $10.0 million and accrued but unpaid interest of $7.4 million.

As a result of downgrades of the Company's senior notes credit rating that occurred subsequent to the issuance of the Adjustable Rate Notes, the interest rate on the 6.125% senior notes increased to 7.875% and the interest rate on the 7.000% senior notes increased to 8.750% beginning with the interest payment period that started on August 1, 2020. The adjusted interest rate under the Adjustable Rate Notes cannot exceed 2% of the original interest rate first set forth on the face of the senior notes.

4.875% Senior Notes. In April 2020, the Company repurchased $4.6 million aggregate principal amount of its 4.875% senior notes pursuant to open market purchases. In August 2020, the Company repurchased $101.5 million aggregate principal amount of the Company's 4.875% senior notes at a total cost of $105.9 million, inclusive of a tender premium of $3.3 million and accrued but unpaid interest of $1.1 million.

Convertible Notes. On April 28, 2020, the Company issued $500 million aggregate principal amount of 1.75% convertible senior notes (the Convertible Notes) due May 1, 2026 unless earlier redeemed, repurchased or converted. The Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. After deducting offering costs of $16.9 million and Capped Call Transactions (defined and described below) costs of $32.5 million, the net proceeds from the offering of $450.6 million were used to repay $450 million of the Company's term loan facility borrowings as well as for general corporate purposes.

Interest under the Convertible Notes is payable semiannually in arrears on May 1 and November 1 of each year beginning on November 1, 2020.

Holders of the Convertible Notes may convert their Convertible Notes, at their option, at any time prior to the close of business on January 30, 2026 under the following circumstances:

•during any quarter commencing after the quarter ended June 30, 2020 as long as the last reported price of EQT common stock for at least 20 trading days (consecutive or otherwise) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding quarter is greater than or equal to 130% of the conversion price on each such trading day;

•during the 5-business-day period after any five-consecutive-trading-day period (the measurement period) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period is less than 98% of the product of the last reported price of EQT common stock and the conversion rate for the Convertible Notes on each such trading day;

•if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding such redemption date; and

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

On or after February 1, 2026, holders of the Convertible Notes may convert their Convertible Notes, at their option, at any time until the close of business on the second scheduled trading date immediately preceding May 1, 2026.

Upon conversion of the Convertible Notes, the Company intends to use a combined settlement approach to satisfy its obligation by paying or delivering to holders of the Convertible Notes cash equal to the principal amount of the obligation and EQT common stock for amounts that exceed the principal amount of the obligation.

The Company may not redeem the Convertible Notes prior to May 5, 2023. On or after May 5, 2023 and prior to February 1, 2026, the Company may redeem for cash all or any portion of the Convertible Notes, at its option, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest up to the redemption date as long as the last reported price per share of EQT common stock has been at least 130% of the conversion price in effect for at least 20 trading days (consecutive or otherwise) during any 30-consecutive-trading-day period ending on the trading day immediately preceding the date on which the Company delivers notice of redemption. A sinking fund is not provided for the Convertible Notes.

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The initial conversion rate for the Convertible Notes is 66.6667 shares of EQT common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of $15.00 per share of EQT common stock. The initial conversion price represents a premium of 20% to the $12.50 per share closing price of EQT common stock on April 23, 2020. The conversion rate is subject to adjustment under certain circumstances. In addition, following certain corporate events that occur prior to May 1, 2026 or if the Company delivers notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or notice of redemption.

In connection with the Convertible Notes offering, the Company entered into privately negotiated capped call transactions (the Capped Call Transactions), the purpose of which is to reduce the potential dilution to EQT common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such obligation, with such reduction and offset subject to a cap. The Capped Call Transactions have an initial strike price of $15.00 per share of EQT common stock and an initial capped price of $18.75 per share of EQT common stock, each of which are subject to certain customary adjustments.

For accounting purposes, the Company separated the Convertible Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have associated convertible features. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the principal value of the Convertible Notes. The equity component is not remeasured as long as it continues to meet the condition for equity classification. The excess of the principal amount of the liability component over its carrying amount (the debt discount) will be amortized to interest expense over the term of the Convertible Notes, which is approximately 6 years, at an effective interest rate of 8.4%. At inception, the Company recorded the Convertible Notes at fair value of approximately $358.1 million, a net deferred tax liability of $41.0 million and an equity component of $100.9 million.

Issuance costs were allocated to the liability and equity components of the Convertible Notes based on their relative fair values. Issuance costs attributable to the liability component of $12.1 million were recorded as a reduction to the liability component of the Convertible Notes and will be amortized to interest expense over the term of the Convertible Notes at an effective interest rate of 8.4%. Issuance costs attributable to the equity component of $4.8 million, representing the conversion option, were netted with the equity component.

The Capped Call Transactions are separate from the Convertible Notes. The Capped Call Transactions were recorded in shareholders' equity and were not accounted for as derivatives. The cost to purchase the Capped Call Transactions were recorded as a reduction to equity and will not be remeasured.

For the nine months ended September 30, 2020, the Convertible Notes had a net shareholders' equity impact of $63.6 million, which consisted of the conversion option equity component of $100.9 million less the Capped Call Transactions costs of $32.5 million and issuance costs attributable to the equity component of $4.8 million.

As of September 30, 2020, the net carrying amount of the Convertible Notes liability component consisted of principal of $500 million less the unamortized debt discount of $134.0 million and unamortized issuance costs of $11.6 million. The table below summarizes the components of interest expense related to the Convertible Notes.


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	(Thousands)
Contractual interest expense	$	2,188	$	3,695
Amortization of debt discount	4,767		7,998
Amortization of issuance costs	315		524
Total Convertible Notes interest expense	$	7,270	$	12,217

Surety Bonds. During the nine months ended September 30, 2020, the Company issued approximately $93 million in surety bonds in response to its credit downgrades by Moody's, S&P and Fitch.

Table of Contents

EQT Corporation and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

7. Earnings Per Share

In periods when the Company reports a net loss, all options, ~~and~~ restricted stock, performance awards and stock appreciation rights 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~~As a result, for the three and nine months ended September 30, ~~2016,~~2020, all ~~outstanding options~~securities, totaling 6,671,532 and ~~restricted stock awards~~6,715,083, respectively, were excluded from ~~the calculation~~potentially dilutive securities because of ~~diluted earnings per share. The excluded options and restricted stock awards totaled 1,712,527 and 1,812,142~~their anti-dilutive effect on EPS. Likewise, for the three and nine months ended September 30, ~~2016, respectively. The impact~~2019, all securities, totaling 2,998,033 and 3,070,567, respectively, were excluded from potentially dilutive securities because of ~~EQM’s~~their anti-dilutive effect on EPS.

As discussed in Note 6, the Company issued the Convertible Notes during the second quarter of 2020 and, ~~EQGP’s dilutive units did not have a material impact on the Company’s earnings per share calculations for any~~upon conversion of the ~~periods presented.~~Convertible Notes, intends to use a combined settlement approach to satisfy its obligation under the Convertible Notes. As such, there is no adjustment to the diluted EPS numerator for the cash-settled portion of the instrument. In addition, for the three and nine months ended September 30, 2020, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS.

L.8. Changes in Accumulated ~~Other Comprehensive Income~~OCI (Loss) by Component

The following ~~tables explain~~table summarizes the changes in accumulated OCI (loss) by ~~component during~~component.


	Interest rate cash flow hedges, net of tax			Other postretirement benefits liability adjustment, net of tax			Accumulated OCI (loss), net of tax
	(Thousands)

July 1, 2019	$	(303)		$	(5,363)		$	(5,666)
Losses reclassified from accumulated OCI, net of tax	43		(a)	77		(b)	120
September 30, 2019	$	(260)		$	(5,286)		$	(5,546)

July 1, 2020	$	0		$	(5,115)		$	(5,115)
Losses reclassified from accumulated OCI, net of tax	0			72		(b)	72
September 30, 2020	$	0		$	(5,043)		$	(5,043)

January 1, 2019	$	(387)		$	(5,019)		$	(5,406)
Losses reclassified from accumulated OCI, net of tax	127		(a)	229		(b)	356
Change in accounting principle	0			(496)		(c)	(496)
September 30, 2019	$	(260)		$	(5,286)		$	(5,546)

January 1, 2020	$	0		$	(5,199)		$	(5,199)
Losses reclassified from accumulated OCI, net of tax	0			156		(b)	156
September 30, 2020	$	0		$	(5,043)		$	(5,043)

(a)Losses, net of tax, related to interest rate cash flow hedges were reclassified from accumulated OCI into interest expense.

(b)Losses, net of tax, related to other postretirement benefits liability adjustments are attributable to net actuarial losses and net prior service costs.

(c)Related to adoption of ASU 2018-02.

9. Equitrans Share Exchange

On February 26, 2020, the ~~applicable period:~~Company entered into 2 share purchase agreements (the Share Purchase Agreements) with Equitrans Midstream, pursuant to which, among other things, the Company sold to Equitrans Midstream a total of 25,299,752 shares, or 50% of its ownership, of Equitrans Midstream's common stock in exchange for approximately $52 million in cash and rate relief under certain of the Company's gathering contracts with EQM, an affiliate of Equitrans Midstream (the Equitrans Share Exchange). The transactions contemplated by the Share Purchase Agreements closed on March 5, 2020 (the Share Purchase

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 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

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 )

Three Months Ended September 30, Nine Months Ended September 30,
in thousands (unless noted) 2017 2016 % 2017 2016 %
NATURAL GAS

Sales volume (MMcf) 176,311
175,191
0.6
508,457
508,206
—
NYMEX price ($/MMBtu) (a) $ 3.00
$ 2.81
6.8
$ 3.16
$ 2.29
38.0
Btu uplift 0.30
0.27
11.1
0.28
0.21
33.3
Natural gas price ($/Mcf) $ 3.30
$ 3.08
7.1
$ 3.44
$ 2.50
37.6

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

Average adjusted price ($/Mcf) $ 2.45
$ 1.87
31.0
$ 2.89
$ 1.75
65.1
Cash settled derivatives (cash flow hedges) ($/Mcf) 0.01
0.14
(92.9 ) 0.01
0.14
(92.9 )
Cash settled derivatives (not designated as hedges) ($/Mcf) 0.13
0.15
(13.3 ) 0.01
0.38
(97.4 )
Average natural gas price, including cash settled derivatives ($/Mcf) $ 2.59
$ 2.16
19.9
$ 2.91
$ 2.27
28.2

Natural gas sales, including cash settled derivatives $ 456,347
$ 378,484
20.6
$ 1,484,711
$ 1,155,898
28.4

LIQUIDS

NGLs (excluding ethane):

Sales volume (MMcfe) (c) 19,054
16,803
13.4
55,089
44,897
22.7
Sales volume (Mbbls) 3,176
2,799
13.5
9,182
7,482
22.7
Price ($/Bbl) $ 29.81
$ 14.82
101.1
$ 28.33
$ 15.26
85.6
Cash settled derivatives (not designated as hedges) ($/Bbl) (0.44 ) —
(100.0 ) (0.43 ) —
(100.0 )
Average NGL price, including cash settled derivatives ($/Bbl) $ 29.37
$ 14.82
98.2
$ 27.90
$ 15.26
82.8

NGL sales $ 93,273
$ 41,508
124.7
$ 256,123
$ 114,188
124.3
Ethane:
Sales volume (MMcfe) (c) 8,226
2,967
177.2
24,970
4,144
502.6
Sales volume (Mbbls) 1,371
495
177.0
4,162
691
502.3
Price ($/Bbl) $ 5.92
$ 8.02
(26.2 ) $ 6.45
$ 8.09
(20.3 )
Ethane sales $ 8,119
$ 3,966
104.7
$ 26,858
$ 5,590
380.5
Oil:

Sales volume (MMcfe) (c) 1,476
1,124
31.3
4,565
3,321
37.5
Sales volume (Mbbls) 246
188
30.9
761
554
37.4
Price ($/Bbl) $ 36.86
$ 35.81
2.9
$ 39.69
$ 32.81
21.0
Oil sales $ 9,072
$ 6,710
35.2
$ 30,198
$ 18,164
66.3

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

Liquids sales $ 110,464
$ 52,184
111.7
$ 313,179
$ 137,942
127.0

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
Total sales volume (MMcfe) 205,067
196,085
4.6
593,081
560,568
5.8

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


~~(a)~~	The Company’s volume weighted NYMEX natural gas price (actual average NYMEX natural gas price ($/MMBtu) was $3.00 and $2.81 for the three months ended September 30, 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.~~

Table of Contents

EQT Corporation and Subsidiaries

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

~~Reconciliation of~~ Non-GAAP Financial Measures Reconciliation

The table below reconciles ~~EQT Production~~ adjusted operating revenues, a non-GAAP supplemental financial measure, ~~to EQT Production~~with total operating revenues, ~~as reported under EQT Production Results of Operations,~~ its most directly comparable financial measure calculated in accordance with GAAP. ~~See Note~~ F 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~~Adjusted operating revenues (also referred to in this report as total natural gas &and liquids sales, including cash settled derivatives) is presented because it is an important measure used by the ~~Company’s~~Company's management to evaluate ~~period-over-period~~period-to-period comparisons of earnings trends. ~~EQT Production adjusted~~Adjusted operating revenues ~~as presented~~ excludes the revenue ~~impact~~impacts of changes in the fair value of derivative instruments prior to settlement and ~~the revenue impact of certain pipeline and~~ net marketing ~~services.~~services and other. Management ~~utilizes EQT Production~~uses adjusted operating revenues to evaluate earnings trends because, as a result of the measure's exclusion of the often-volatile changes in the fair value of derivative instruments prior to settlement, the measure reflects only the impact of settled derivative ~~contracts~~contracts. Net marketing services and ~~thus does not impact~~other primarily includes the ~~revenue from natural gas sales with the often volatile fluctuations in the fair value~~costs of, ~~derivatives prior to settlement. EQT Production adjusted operating revenues also excludes "Pipeline~~ and recoveries on, pipeline capacity releases. Because management considers net marketing ~~services" because management considers these revenues~~services and other to be unrelated to the ~~revenues for its~~Company's 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 Productionproduction activities, adjusted operating revenues ~~as presented~~excludes net marketing services and other. Management believes that adjusted operating revenues provides useful information to investors for evaluating ~~period-over-period~~period-to-period comparisons of earnings trends.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(Thousands, unless otherwise noted)
Total operating revenues	$	172,127	$	951,576	$	1,806,258	$	3,405,001
Deduct (add):
Loss (gain) on derivatives not designated as hedges	427,182		(180,313)		11,320		(455,952)
Net cash settlements received on derivatives not designated as hedges	252,089		162,639		813,218		152,149
Premiums received for derivatives that settled during the period	2,083		9,405		604		16,611
Net marketing services and other	(317)		(1,636)		(4,613)		(7,282)
Adjusted operating revenues, a non-GAAP financial measure	$	853,164	$	941,671	$	2,626,787	$	3,110,527

Total sales volumes (MMcfe)	366,138		380,823		1,096,855		1,134,407
Average realized price ($/Mcfe)	$	2.33	$	2.47	$	2.39	$	2.74

Calculation of EQT Production adjusted operating revenues Three Months Ended September 30, Nine Months Ended September 30,
$ in thousands (unless noted) 2017 2016 2017 2016
EQT Production total operating revenues $ 597,718
$ 508,092
$ 2,057,481
$ 1,068,752
(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 )
Pipeline and net marketing services (9,140 ) (10,797 ) (31,656 ) (28,196 )
EQT Production adjusted operating revenues, a non-GAAP financial measure $ 566,811
$ 430,668
$ 1,797,890
$ 1,293,840

Total sales volumes (MMcfe) 205,067
196,085
593,081
560,568

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

Table of Contents

EQT Corporation and Subsidiaries

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

Sales Volumes and Revenues

~~Business Segment Results~~


	Three Months Ended September 30,									Nine Months Ended September 30,
	2020		2019		%	2020		2019		%
	(Thousands, unless otherwise noted)
Sales volumes by shale (MMcfe):
Marcellus (a)	318,740		314,915		1.2	958,243		960,588		(0.2)
Ohio Utica	46,523		64,581		(28.0)	134,728		169,501		(20.5)
Other	875		1,327		(34.1)	3,884		4,318		(10.1)
Total sales volumes (b)	366,138		380,823		(3.9)	1,096,855		1,134,407		(3.3)

Average daily sales volumes (MMcfe/d)	3,980		4,139		(3.8)	4,003		4,155		(3.7)

Operating revenues:
Sales of natural gas, NGLs and oil	$	598,992	$	769,627	(22.2)	$	1,812,965	$	2,941,767	(38.4)
(Loss) gain on derivatives not designated as hedges	(427,182)		180,313		(336.9)	(11,320)		455,952		(102.5)
Net marketing services and other	317		1,636		(80.6)	4,613		7,282		(36.7)
Total operating revenues	$	172,127	$	951,576	(81.9)	$	1,806,258	$	3,405,001	(47.0)

(a)Includes Upper Devonian wells.

(b)NGLs, ethane and oil were converted to Mcfe at a rate of ~~Operations~~six Mcfe per barrel.

~~Business segment operating results are presented in~~Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil decreased for the ~~segment discussions and financial tables on the following pages. Operating segments are evaluated on their contribution~~three months ended September 30, 2020 compared to the ~~Company’s consolidated results based~~same period in 2019 due to a lower average realized price and lower sales volumes. Average realized price decreased due to lower NYMEX prices and unfavorable differential, partly offset by higher cash settled derivatives. For the three months ended September 30, 2020 and 2019, the Company received $252.1 million and $162.6 million, respectively, of net cash settlements on derivatives not designated as hedges, which are included in average realized price but may not be included in operating ~~income. Other income, interest and income taxes are managed on a consolidated basis. Headquarters’ costs are billed~~revenues. Sales volumes for the three months ended September 30, 2020 decreased 4% or, excluding sales volumes related to the ~~operating segments based upon a fixed allocation of the headquarters’ annual operating budget. Unallocated expenses consist primarily of incentive compensation expense~~2020 Divestiture (defined and ~~administrative costs, including the Rice Merger acquisition-related expenses.~~

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 incomediscussed in Note F10 to the Condensed Consolidated Financial ~~Statements~~Statements), 2% compared to the same period in ~~this Quarterly Report~~2019. This decrease was due primarily to the Company's strategic decisions to temporarily curtail (i) approximately 1.4 Bcf per day of gross production, equivalent to approximately 1.0 Bcf per day of net production, beginning on ~~Form 10-Q.~~ May 16, 2020 and ended mid-July 2020 and (ii) approximately 0.6 Bcf per day of gross production, equivalent to approximately 0.4 Bcf per day of net production, beginning on September 1, 2020 (collectively, the Strategic Production Curtailments).

~~As of December 31, 2016,~~(Loss) gain on derivatives not designated as hedges. For the three months ended September 30, 2020 and 2019, the Company ~~reports its results~~recognized a loss of ~~operations through three business segments: EQT Production, EQT Gathering~~$427.2 million and ~~EQT Transmission.~~a gain of $180.3 million, respectively, on derivatives not designated as hedges. The ~~segment disclosures~~loss for 2020 was related primarily to decreases in the fair market value of the Company's NYMEX swaps and ~~discussions contained~~options due to increases in ~~this Quarterly Report on Form 10-Q have been recast~~NYMEX forward prices. The gain for 2019 was related primarily to ~~reflect~~increases in the ~~current reporting structure~~fair market value of the Company's NYMEX swaps and options due to decreases in NYMEX forward prices.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil decreased for ~~all periods presented. Certain previously reported amounts have been reclassified to conform~~the nine months ended September 30, 2020 compared to the ~~current year presentation under~~same period in 2019 due to a lower average realized price and lower sales volumes. Average realized price decreased due to lower NYMEX prices, lower liquids prices and unfavorable differential, partly offset by higher cash settled derivatives. For the ~~current segment reporting structure.~~nine months ended September 30, 2020 and 2019, the Company received $813.2 million and $152.1 million, respectively, of net cash settlements on derivatives not designated as hedges, which are included in average realized price but may not be included in operating revenues. Sales volumes for the nine months ended September 30, 2020 decreased 3%, or, excluding sales volumes related to the 2020 Divestiture, 2% compared to the same period in 2019 due primarily to the Strategic Production Curtailments.

Table of Contents

EQT Corporation and Subsidiaries

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

(Loss) gain on derivatives not designated as hedges. For the nine months ended September 30, 2020 and 2019, the Company recognized a loss of $11.3 million and a gain of $456.0 million, respectively, on derivatives not designated as hedges. The loss for 2020 was related primarily to decreases in the fair market value of the Company's NYMEX swaps and options due to increases in NYMEX forward prices. The gain for 2019 was related primarily to increases in the fair market value of the Company's NYMEX swaps and options due to decreases in NYMEX forward prices, partly offset by decreases in the fair market value of the Company's basis swaps due to increases in basis prices.

~~EQT PRODUCTION~~

Production-Related Operating Expenses

~~RESULTS OF OPERATIONS~~

The following table presents information on the Company's production-related operating expenses.


	Three Months Ended September 30,									Nine Months Ended September 30,
	2020		2019		%	2020		2019		%
	(Thousands, unless otherwise noted)
Operating expenses:
Gathering	$	274,196	$	258,680	6.0	$	788,012	$	778,249	1.3
Transmission	120,681		148,956		(19.0)	387,358		440,543		(12.1)
Processing	32,814		30,306		8.3	97,791		95,380		2.5
Lease operating expenses (LOE), excluding production taxes	28,758		22,355		28.6	82,675		62,582		32.1
Production taxes	10,912		15,466		(29.4)	35,704		54,963		(35.0)
Exploration	3,160		3,492		(9.5)	4,959		6,356		(22.0)
Selling, general and administrative	56,330		79,376		(29.0)	134,609		214,562		(37.3)

Production depletion	$	336,672	$	387,404	(13.1)	$	1,007,654	$	1,143,552	(11.9)
Other depreciation and depletion	4,355		3,589		21.3	13,995		10,967		27.6
Total depreciation and depletion	$	341,027	$	390,993	(12.8)	$	1,021,649	$	1,154,519	(11.5)

Per Unit ($/Mcfe):
Gathering	$	0.75	$	0.68	10.3	$	0.72	$	0.69	4.3
Transmission	0.33		0.39		(15.4)	0.35		0.39		(10.3)
Processing	0.09		0.08		12.5	0.09		0.08		12.5
LOE, excluding production taxes	0.08		0.06		33.3	0.08		0.06		33.3
Production taxes	0.03		0.04		(25.0)	0.03		0.05		(40.0)
Exploration	0.01		0.01		—	—		0.01		(100.0)
Selling, general and administrative	0.15		0.21		(28.6)	0.12		0.19		(36.8)
Production depletion	0.92		1.02		(9.8)	0.92		1.01		(8.9)

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Gathering. Gathering expense increased on an absolute and per Mcfe basis for the three months ended September 30, 2020 compared to the same period in 2019 due to a higher gathering rate structure as a result of the Consolidated GGA (defined and discussed in Note 9 to the Condensed Consolidated Financial Statements), partly offset by lower gathered volumes as a result of the Strategic Production Curtailments. The Company expects to realize fee relief and a lower gathering rate structure from the Consolidated GGA beginning in 2021.

Transmission. Transmission expense decreased on an absolute and per Mcfe basis for the three months ended September 30, 2020 compared to the same period in 2019 due primarily to released capacity on, and credits received from, the Texas Eastern Transmission Pipeline. The decrease in transmission expense per Mcfe was partly offset by the decrease in sales volumes.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 % 2017 2016 %
OPERATIONAL DATA

Sales volume detail (MMcfe):

Marcellus (a) 181,650
171,468
5.9
523,122
486,439
7.5
Other (b) 23,417
24,617
(4.9 ) 69,959
74,129
(5.6 )
Total production sales volumes (c) 205,067
196,085
4.6
593,081
560,568
5.8

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

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

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
Third-party gathering and transmission ($/Mcfe) $ 0.45
$ 0.29
55.2
$ 0.46
$ 0.29
58.6
Processing ($/Mcfe) $ 0.22
$ 0.17
29.4
$ 0.23
$ 0.16
43.8
Lease operating expenses (LOE), excluding production taxes ($/Mcfe) $ 0.13
$ 0.14
(7.1 ) $ 0.13
$ 0.15
(13.3 )
Production taxes ($/Mcfe) $ 0.07
$ 0.05
40.0
$ 0.09
$ 0.07
28.6
Production depletion ($/Mcfe) $ 1.03
$ 1.06
(2.8 ) $ 1.03
$ 1.06
(2.8 )

Depreciation, depletion and amortization (DD&A) (thousands):

Production depletion $ 210,393
$ 207,120
1.6
$ 613,379
$ 594,408
3.2
Other DD&A 13,710
13,648
0.5
41,032
40,845
0.5
Total DD&A $ 224,103
$ 220,768
1.5
$ 654,411
$ 635,253
3.0

Capital expenditures (thousands) (d) $ 449,303
$ 622,856
(27.9 ) $ 1,850,482
$ 1,094,747
69.0

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
Pipeline and net marketing services 9,140

10,797
(15.3 ) 31,656
28,196
12.3
Gain (loss) on derivatives not designated as hedges 35,625
93,356
(61.8 ) 222,693
(32,342 ) (788.6 )
Total operating revenues 597,718
508,092
17.6
2,057,481
1,068,752
92.5

Operating expenses:

Gathering 116,921
103,231
13.3
334,801
307,682
8.8
Transmission 119,729
81,456
47.0
354,534
235,196
50.7
Processing 44,166
33,332
32.5
133,745
88,429
51.2
LOE, excluding production taxes 26,177
28,303
(7.5 ) 77,522
84,510
(8.3 )
Production taxes 13,453
10,696
25.8
52,290
41,582
25.8
Exploration 2,437
2,670
(8.7 ) 9,040
9,384
(3.7 )
Selling, general and administrative (SG&A) 38,650
43,101
(10.3 ) 118,861
135,394
(12.2 )
DD&A 224,103
220,768
1.5
654,411
635,253
3.0
Total operating expenses 585,636
523,557
11.9
1,735,204
1,537,430
12.9
Operating income (loss) $ 12,082
$ (15,465 ) (178.1 ) $ 322,277
$ (468,678 ) (168.8 )


~~(a)~~	~~Includes Upper Devonian wells.~~


~~(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.


~~(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 million and $30.1 million for general leasing activity 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 months ended September 30, 2017 and 2016, respectively. The three and nine months ended September 30, 2017 includes $7.8 million and $819.0 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 million of non-cash capital expenditures for the acquisitions discussed in Note~~ M.

Table of Contents

EQT Corporation and Subsidiaries

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

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

~~EQT Production’s operating income was $12.1 million for the three months ended September 30, 2017 compared to~~LOE. LOE increased on an ~~operating loss of $15.5 million for the three months ended September 30, 2016. The increase was primarily due to a higher average realized price~~absolute and ~~increased sales volumes of produced natural gas and NGLs, partly offset by increased operating expenses and lower gains on derivatives not designated as hedges.~~

Total operating revenues were $597.7 million for the three months ended September 30, 2017 compared to $508.1 million for the three months ended September 30, 2016. Sales of natural gas, oil and NGLs increased as a result of a higher average realized price and a 5% increase in production sales volumes in the current period. EQT Production received $13.3 million and $27.3 million of net cash settlements for derivatives not designated as hedges for the three months ended September 30, 2017 and ~~2016~~, 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~~ per Mcfe increase in the average realized price for the three months ended September 30, 2017 was primarily due to an increase in the average natural gas differential of $0.36 per Mcf, higher liquids prices and an increase in the average NYMEX natural gas price net of cash settled derivatives. The improvement in the average differential primarily related to higher basis. Basis improved in the Appalachian Basin and at sales points reached through the Company’s transportation portfolio. 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 three months ended September 30, ~~2017~~2020 compared to the ~~three months ended September 30, 2016.~~same period in 2019 due primarily to higher repairs and maintenance costs as a result of the Company's increased focus on optimizing production from currently producing wells. In addition, LOE per Mcfe increased as a result of the decrease in sales volumes.

~~EQT~~ Production ~~total operating revenues~~taxes. Production taxes decreased on an absolute and per Mcfe basis for the three months ended September 30, ~~2017 included a $35.6 million gain on derivatives not designated as hedges~~2020 compared to the same period in 2019 due primarily to lower Pennsylvania impact fees and severance taxes as a ~~$93.4 million gain~~result of lower commodity prices. The decrease in production taxes per Mcfe was partly offset by the decrease in sales volumes.

Selling, general and administrative. Selling, general and administrative expense decreased on an absolute and per Mcfe basis for the three months ended September 30, ~~2016.~~2020 compared to the same period in 2019 as a result of decreased litigation expenses, net of settlements received, of $31.9 million as well as lower personnel costs due to reductions in workforce, partly offset by higher short- and long-term incentive compensation costs due to changes in the value of awards. The ~~gains~~decrease in selling, general and administrative expense per Mcfe was partly offset by the decrease in sales volumes.

Depreciation and depletion. Production depletion decreased on an absolute and per Mcfe basis for the three months ended September 30, ~~2017~~2020 compared to the same period in 2019 due primarily ~~related~~ to a ~~gain~~lower annual depletion rate and lower volumes.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Gathering. Gathering expense increased on an absolute and per Mcfe basis for the nine months ended September 30, 2020 compared to the same period in 2019 due to a ~~physical contract treated~~higher gathering rate structure as a ~~derivative~~result of the Consolidated GGA, partly offset by lower gathered volumes as a result of the Strategic Production Curtailments. The Company expects to realize fee relief and a lower gathering rate structure from the Consolidated GGA beginning in 2021.

Transmission. Transmission expense decreased on an absolute and per Mcfe basis for ~~accounting purposes~~the nine months ended September 30, 2020 compared to the same period in 2019 due primarily to released capacity on, and credits received from, the Texas Eastern Transmission Pipeline, partly offset by higher costs associated with additional capacity on the Tennessee Gas Pipeline. The decrease in transmission expense per Mcfe was partly offset by the decrease in sales volumes.

LOE. LOE increased on an ~~increase~~absolute and per Mcfe basis for the nine months ended September 30, 2020 compared to the same period in 2019 due primarily to higher repairs and maintenance costs as a result of the Company's increased focus on optimizing production from currently producing wells as well as higher salt water disposal costs. In addition, LOE per Mcfe increased as a result of the decrease in sales volumes.

Production taxes. Production taxes decreased on an absolute and per Mcfe basis for the nine months ended September 30, 2020 compared to the same period in 2019 due primarily to lower severance taxes and Pennsylvania impact fees as a result of lower commodity prices. The decrease in production taxes per Mcfe was partly offset by the decrease in sales volumes.

Selling, general and administrative. Selling, general and administrative expense decreased on an absolute and per Mcfe basis for the nine months ended September 30, 2020 compared to the same period in 2019 as a result of decreased litigation expenses, net of settlements received, of $77.7 million as well as lower personnel costs due to reductions in workforce, partly offset by higher short- and long-term incentive compensation costs due to changes in the ~~fair~~ value of ~~EQT Production’s~~awards. The decrease in selling, general and administrative expense per Mcfe was partly offset by the decrease in sales volumes.

Depreciation and depletion. Production depletion decreased on an absolute and per Mcfe basis ~~swaps~~for the nine months ended September 30, 2020 compared to the same period in 2019 due primarily to ~~decreased basis prices. The gains~~ a lower annual depletion rate and lower volumes.

Other Operating Expenses

Amortization of intangible assets. Amortization of intangible assetsfor the three months ended September 30, ~~2016 primarily related~~2020 was $7.5 million compared to ~~favorable changes in the fair market value of EQT Production’s NYMEX and basis swaps due to a decrease in forward prices during the third quarter of 2016.~~

~~Operating expenses totaled $585.6~~$7.8 million for the ~~three~~same period in 2019. Amortization of intangible assetsfor the nine months ended September 30, ~~2017~~2020 was $22.4 million compared to ~~$523.6~~$28.4 million for the ~~three months ended September 30, 2016. Gathering expense increased~~same period in 2019. The decreases were due 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 outthe impairment of the Appalachian Basin. During the fourth quarter of 2016 the Ohio Valley Connector (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 lower salt water disposal costs in 2017. Production taxes increased as a result of higher severance taxes associated with increased production volumes resulting from recent acquisitions and an increase in the Pennsylvania impact fee, primarily as a result of higher NYMEX prices during the three months ended September 30, 2017.

SG&A expense decreased primarily due to decreased legal reserves, partly offset by higher personnel costs. DD&A expense increased as a result of higher produced volumes partly offset by a lower overall depletion rateintangible assets recognized in the third quarter of ~~2017.~~2019, which decreased the amortization rate.

Loss on sale/exchange of long-lived assets. During the nine months ended September 30, 2020, the Company recognized a loss on sale/exchange of long-lived assets of $102.7 million, of which $67.2 million related to the 2020 Asset Exchange Transactions and $35.5 million related to asset sales. During the three and nine months ended September 30, 2019, the Company recognized a loss

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EQT Corporation and Subsidiaries

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

on sale/exchange of long-lived assets of $13.9 million related to the 2019 Asset Exchange Transaction. The 2020 and 2019 Asset Exchange Transactions and 2020 Divestiture are defined and discussed in Note 10 to the Condensed Consolidated Financial Statements.

~~Nine Months Ended~~

Impairment of intangible assets. For the three months ended September 30, ~~2017 vs. Nine Months Ended~~2019, the Company recognized impairment of $15.4 million of intangible assets associated with non-compete agreements for former Rice Energy Inc. executives who are now employees of the Company.

Impairment and expiration of leases. Impairment and expiration of leases for the three months ended September 30, ~~2016~~

~~EQT Production’s operating income totaled $322.3~~2020 was $50.4 million compared to $49.6 million for the same period in 2019. Impairment and expiration of leases for the nine months ended September 30, ~~2017~~2020 was $145.5 million compared to ~~an operating loss of $468.7~~$127.7 million for the same period in 2019. The increases were driven by increased lease expirations due to the Company's change in strategic focus to core development opportunities as well as changes in market conditions.

Transaction, proxy and reorganization. Transaction, proxy and reorganization expense for the nine months ended September 30, ~~2016. The $791.0 million increase was primarily due~~2020 were related to ~~higher average realized price, gains on derivatives not designated as hedges~~transaction and reorganization costs. Transaction, proxy and reorganization expense for the nine months ended September 30, ~~2017 compared~~2019 were related to ~~losses~~reductions in workforce and other strategic alignment initiatives, which resulted in the recognition of severance and other termination benefits of $68.0 million, contract termination fees of $12.6 million and proxy costs of $19.3 million.

Other Income Statement Items

Gain on ~~derivatives not designated~~Equitrans Share Exchange. During the first quarter of 2020, the Company recognized a gain on the Equitrans Share Exchange of $187.2 million. See Note 9 to the Condensed Consolidated Financial Statements.

(Gain) loss on investment in Equitrans Midstream Corporation. The Company's investment in Equitrans Midstream is recorded at fair value by multiplying the closing stock price of Equitrans Midstream's common stock by the number of shares of Equitrans Midstream's common stock owned by the Company. Changes in fair value are recorded in (gain) loss on investment in Equitrans Midstream Corporation in the Statements of Condensed Consolidated Operations. The Company's investment in Equitrans Midstream fluctuates with changes in Equitrans Midstream's stock price, which was $8.46 and $13.36 as ~~hedges~~of September 30, 2020 and December 31, 2019, respectively. Note, the effect of the Company's sale of 50% of its ownership of its retained shares of Equitrans Midstream's common stock was recorded as a reduction to the investment in Equitrans Midstream in conjunction with the Company's recognition of the gain on the Equitrans Share Exchange. See Note 9 to the Condensed Consolidated Financial Statements.

Dividend and other income. Dividend and other income decreased for the three and nine months ended September 30, ~~2016~~2020 compared to the same periods in 2019 due primarily to lower dividends received from the Company's investment in Equitrans Midstream driven by decreased shares of Equitrans Midstream's common stock owned.

Loss on debt extinguishment. During the three 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~~2020, the Company recognized a loss on debt extinguishment of $3.7 million and $20.7 million, respectively, related to ~~$1,068.8 million~~the repayment of the Company's 4.875% senior notes, 2.50% senior notes, floating rate notes and term loan facility. See Note 6 to the Condensed Consolidated Financial Statements.

Interest expense. Interest expense increased for the three and nine months ended September 30, ~~2016. Sales of natural gas, oil~~2020 compared to the same periods in 2019 due to increased interest incurred on new debt, including the senior notes issued in January 2020 and ~~NGLs increased as a result of a higher average realized price and a 6% increase~~the convertible senior notes issued 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,April 2020, as well as ~~recent acquisition activity, partially~~interest incurred on letters of credit issued in 2020. These increases were partly 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~~lower interest incurred due to the ~~increase in~~repayment of the ~~average NYMEX natural gas price net of cash settled derivatives of $0.44 per Mcf, an increase in~~Company's 8.125% senior notes, 4.875% senior notes, floating rate notes and 2.50% senior notes and decreased borrowings on 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 comparedCompany's credit facility. See Note 6 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 comparedCondensed Consolidated Financial Statements.

Income tax benefit. See Note 5 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.Condensed Consolidated Financial Statements.

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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EQT Corporation and Subsidiaries

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

Outlook

~~EQT GATHERING~~

In 2020, the Company expects to spend $1.05 billion to $1.10 billion in total capital expenditures, which are expected to be funded by operating cash flow and, if required, borrowings on the Company's credit facility. Sales volumes in 2020 are expected to be 1,480 Bcfe to 1,500 Bcfe.

~~RESULTS OF OPERATIONS~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 % Change 2017 2016 % Change
(Thousands, other than per day amounts)
FINANCIAL DATA
Firm reservation fee revenues $ 104,772
$ 83,560
25.4
$ 300,901
$ 249,127
20.8
Volumetric based fee revenues:
Usage fees under firm contracts (a) 7,873
10,024
(21.5 ) 19,173
31,515
(39.2 )
Usage fees under interruptible contracts 3,877
5,557
(30.2 ) 10,922
16,663
(34.5 )
Total volumetric based fee revenues 11,750
15,581
(24.6 ) 30,095
48,178
(37.5 )
Total operating revenues 116,522
99,141
17.5
330,996
297,305
11.3

Operating expenses:
Operating and maintenance 10,219
9,672
5.7
31,082
27,740
12.0
SG&A 10,503
9,311
12.8
28,800
28,771
0.1
Depreciation and amortization 9,983
7,663
30.3
28,398
22,520
26.1
Total operating expenses 30,705
26,646
15.2
88,280
79,031
11.7

Operating income $ 85,817
$ 72,495
18.4
$ 242,716
$ 218,274
11.2

OPERATIONAL DATA

Gathered volumes (BBtu per day)
Firm capacity reservation 1,838
1,563
17.6
1,783
1,506
18.4
Volumetric based services (b) 370
451
(18.0 ) 292
463
(36.9 )
Total gathered volumes 2,208
2,014
9.6
2,075
1,969
5.4

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


~~(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 vs. Three Months Ended September 30, 2016~~

~~Gathering~~The Company's revenues, profitability, ability to grow, liquidity and financial performance are substantially dependent on the prices it receives for, and the Company's ability to develop its reserves of, natural gas, NGLs and oil. Changes in natural gas, NGLs and oil prices could affect, among other things, the Company's development plans, which would increase or decrease the pace of the development and the level of the Company's reserves, as well as the Company's revenues, earnings or liquidity. Lower prices and changes in development plans could also result in non-cash impairments of the book value of the Company's oil and gas properties or other long-lived assets or downward adjustments to the Company's estimated proved reserves. Any such impairments or downward adjustments to the Company's estimated reserves could potentially be material to the Company's financial statements. Increases in natural gas, NGLs or oil prices may be accompanied by, or result in, increased ~~by $17.4 million~~well drilling costs, production taxes, lease operating expenses, volatility in seasonal gas price spreads for the ~~three months ended September 30, 2017 compared~~Company's storage assets and end-user conservation or conversion to alternative fuels. In addition, to the ~~three months ended September 30, 2016 driven by third party and affiliate~~extent the Company has hedged its production ~~development~~at prices below the current market price, the Company will not benefit fully from any increase in the ~~Marcellus Shale. EQT Gathering~~price of natural gas.

See "Critical Accounting Policies and Estimates" herein and Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the Company's accounting policies and significant assumptions related to impairment of the Company's oil and gas properties.

See Item 1A., "Risk Factors – Natural gas, NGLs and oil price declines and changes in our development strategy have resulted in impairment of certain of our assets. Future declines in commodity prices, increases in operating costs or adverse changes in well performance or additional changes in our development strategy may result in additional write-downs of the carrying amounts of our assets, including long lived intangible assets, which could materially and adversely affect our results of operations in future periods" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

COVID-19 and Oil Price War

The energy industry has recently experienced two significant external stimuli that have impacted, and are anticipated to continue impacting, both day-to-day operations and the macro environment. The novel coronavirus, or COVID-19, pandemic and voluntary and mandatory quarantines, travel restrictions and other restrictions throughout the United States and other parts of the world have resulted in decreased demand for natural gas, NGLs and oil. Additionally, in March 2020, the group of oil producing nations known as OPEC+ failed to reach an agreement over proposed oil production cuts stemming from the decrease in global demand for oil in light of the COVID-19 pandemic (the oil price war). Although the members of OPEC+ eventually reached an agreement to reduce their oil production beginning in May 2020 and continuing through April 2022, there remains significant uncertainty regarding the future actions of OPEC+, its members and other state-controlled oil companies related to oil price and production controls, including anticipated increases in supply from Russia and other members of OPEC+, particularly Saudi Arabia.

Impact of COVID-19 on the Company's Operations. To date, the Company has experienced limited operational impacts as a direct result of work from home restrictions or COVID-19. As a "life-sustaining" business under the guidelines issued by each of the states in which the Company operates, the Company has been allowed to continue operations, provided that non-essential personnel have been required to work from home. One of the primary actions taken by the Company's new management team over the past twelve months has been the establishment of a digital work environment, which has allowed the Company to maintain the engagement and connectivity of its personnel as well as minimize the number of employees required in the office and field.

Impact of Oil Price War on the Company's Operations. The Company has had, and expects to have, limited direct operational impacts from the oil price war. The oversupply of oil and NGLs resulting from the demand destruction attributable to the COVID-19 pandemic is anticipated by some market participants to result in a lack of storage capacity and ultimately the shutting in of certain oil and NGLs production. The Company has limited oil and NGLs exposure, with approximately 95% of its production being natural gas.

Impact of COVID-19 and Oil Price War on the Company's Outlook. The prices for natural gas, NGLs and oil have historically been volatile; however, the volatility in the prices for these commodities has substantially increased ~~firm reservation fee revenues primarily~~ as a result of ~~third parties~~recent world developments in 2020. Oil prices in particular drastically fell in March 2020, and, affiliates contracting for additional firm gathering capacity on the Range Resources Corporation (Range Resources) Header Pipeline project and various affiliate wellhead gathering expansion projects. 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.

Operating expenses increased by $4.1 million for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 primarily 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 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.

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

although prices have since risen from historic

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EQT Corporation and Subsidiaries

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

~~assets placed in-service including those associated~~lows in April 2020, oil prices continue to be depressed. However, forward strip pricing for natural gas has increased meaningfully compared to strip prices prior to the COVID-19 pandemic and oil price war, with the ~~Range Resources Header Pipeline project and~~principal contributing factor believed to be the market expectation that supply decreases in associated natural gas (defined as natural gas produced as a ~~NWV Gathering expansion project and higher personnel costs.~~

~~EQT TRANSMISSION~~

~~RESULTS OF OPERATIONS~~

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

Operating expenses:
Operating and maintenance 10,385
8,526
21.8
30,389
23,947
26.9
SG&A 8,336
8,414
(0.9 ) 23,412
24,606
(4.9 )
Depreciation and amortization 12,261
6,976
75.8
35,793
20,657
73.3
Total operating expenses 30,982
23,916
29.5
89,594
69,210
29.5

Operating income $ 59,689
$ 53,715
11.1
$ 188,995
$ 174,085
8.6

OPERATIONAL DATA

Transmission pipeline throughput (BBtu per day)
Firm capacity reservation 2,517
1,440
74.8
2,288
1,515
51.0
Volumetric based services (b) 21
610
(96.6 ) 22
556
(96.0 )
Total transmission pipeline throughput 2,538
2,050
23.8
2,310
2,071
11.5

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

Capital expenditures $ 22,312
$ 77,940
(71.4 ) $ 73,679
$ 253,957
(71.0 )


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


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

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

~~Transmission and storage revenues increased by $13.0 million~~byproduct of principally oil production activities) as a result of reduced or curtailed operations in oil basins will more than offset reduced demand for the three months ended September 30, 2017 compared to the three months ended September 30, 2016. Firm reservation fee revenues increased due to affiliates contracting for additional firm capacity on the OVC. Approximately $3.4 million of the increase was related tonatural gas as 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.~~

Operating expenses increased by $7.1 million for the three months ended September 30, 2017 compared to the three months ended September 30, 2016. The increases in operating and maintenance expense and depreciation and amortization expense were the result of the ~~OVC project placed in-service~~COVID-19 pandemic. The impact of these recent developments on natural gas prices and the Company's business are unpredictable, and there is no assurance that natural gas prices will remain at elevated prices or that any positive impact from the oil price war will outweigh the negative impact from reduced demand for natural gas as a result of the COVID-19 pandemic or other factors. See Item 1A., "Risk Factors" in the ~~fourth~~Company's Annual Report on Form 10-K for the year ended December 31, 2019, as well as Part II, Item 1A., "Risk Factors – The novel coronavirus, or COVID-19, pandemic has affected and may materially adversely affect, and any future outbreak of any other highly infectious or contagious diseases may materially adversely affect, our operations, financial performance and condition, operating results and cash flows" in this Quarterly Report on Form 10-Q.

Deleveraging Plan

In October 2019, the Company announced a plan to reduce its debt through asset monetizations and increased free cash flow (the Deleveraging Plan). The Deleveraging Plan contemplates generating targeted proceeds from monetizations of select, non-core exploration and production assets, core mineral assets and/or the Company's retained equity interest in Equitrans Midstream.

The Company intends to selectively pursue non-core asset sales and opportunistically monetize its remaining equity interest in Equitrans Midstream in a strategic manner. The Company believes that the combination of the anticipated proceeds from monetization transactions and improved realized free cash flow amounts as a result of accelerated well cost reductions will be sufficient to allow the Company to repay or refinance its remaining debt maturing in 2021 by the end of 2020 and begin repaying or refinancing its debt maturing after 2021. Until the Company's leverage target is achieved, the Company expects to use nearly all of its free cash flow and divestiture proceeds to reduce its debt.

As discussed in Note 6 to the Condensed Consolidated Financial Statements, the Company issued the Convertible Notes during the second quarter of ~~2016. Operating~~2020. Upon conversion of the Convertible Notes, the Company intends to use a combined settlement approach to satisfy its obligation by paying or delivering to holders of the Convertible Notes cash equal to the principal amount of the obligation and ~~maintenance expense increased primarily due to property taxes~~EQT common stock for amounts that exceed the principal amount of the obligation. By settling its Convertible Notes obligation either partially or wholly in EQT common stock, the Company could favorably affect its leverage levels.

The successful execution of the Deleveraging Plan is based on the ~~OVC.~~Company's current expectations, including with respect to matters beyond its control, and is subject to change. There can be no assurance that the Company will be able to find attractive asset monetization opportunities or that such transactions will be completed on its anticipated timeframe, if at all. Furthermore, the Company's estimated value for the assets to be monetized under the Deleveraging Plan involves multiple assumptions and judgments about future events that are inherently uncertain; accordingly, there can be no assurance that the resulting net cash proceeds from asset monetization transactions will be as anticipated, even if such transactions are consummated. Some of the factors that could affect the Company's ability to successfully execute the Deleveraging Plan include changes in the financial condition or prospects of prospective purchasers and the availability of financing to potential purchasers on reasonable terms, if at all, the number of prospective purchasers, the number of competing assets on the market, unfavorable economic conditions, industry trends and changes in laws and regulations. If the Company is not able to successfully execute the Deleveraging Plan or otherwise reduce debt to a level the Company believes is appropriate, the Company’s credit ratings may be lowered, the Company may reduce or delay its planned capital expenditures or investments and the Company may revise or delay its strategic plans.

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

Capital Resources and Liquidity

~~Transmission~~

Although the Company cannot provide any assurance, it believes cash flows from operating activities and ~~storage revenues increased~~availability under its credit facility should be sufficient to meet the Company's cash requirements inclusive of, but not limited to, normal operating needs, debt service obligations, planned capital expenditures and commitments for at least the next twelve months.

Operating Activities

Net cash provided by ~~$35.3~~operating activities was $1,132 million for the nine months ended September 30, ~~2017~~2020 compared to $1,634 million for the same period in 2019. The decrease was due primarily to lower cash operating revenues and unfavorable timing of working capital payments, partly offset by increased cash settlements received on derivatives not designated as hedges and income tax refunds, plus interest, received of $391.4 million during the nine months ended September 30, ~~2016. Firm reservation fee revenues increased due to affiliates and third parties contracting for~~

2020.

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EQT Corporation and Subsidiaries

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

additional firm capacity, primarily on the OVC, as well as higher contractual rates on existing contracts in the current year. The firm capacity on the OVC resulted in lower affiliate usage fees under firm contracts.

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 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 and higher personnel costs.

~~Other Income Statement Items~~

~~Other Income~~

For the three months ended September 30, 2017 and 2016, the Company recorded equity in earnings of nonconsolidated investments of $6.0 million and $2.7 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, 2017, other income was partly offset by losses on the sale of trading securities.~~

~~Interest Expense~~

Interest expense increased by $14.4 million for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 primarily driven by $6.8 million of expense for the Bridge Facility, $5.2 million of interest incurred on EQM's long-term debt issued in November 2016, lower interest income earned on short-term investments 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 million of interest incurred on EQM's long-term debt issued in November 2016, $7.6 million of expense for the Bridge Facility, lower capitalized interest due to the timing of drilling completions, lower AFUDC - debt associated with decreased spending on EQM's regulated projects, and lower interest income earned on short-term investments.

~~Income Tax Expense~~

The Company recorded income tax benefit for the three months ended September 30, 2017, compared to income tax expense for the three months ended September 30, 2016. The income tax benefit for the three months ended September 30, 2017 was attributable to a decrease in the estimated annual effective tax rate from the prior quarter and a discrete tax benefit of $12.4 million 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, 2017 was primarily the result of lower forecast pre-tax book income for EQT Production which resulted in a higher percentage of pre-tax income being attributable to noncontrolling interests as well 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% 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.

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

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

~~OUTLOOK~~

The Company is committed to profitably developing its Appalachian Basin natural gas and NGL reserves through environmentally responsible, cost-effective and technologically advanced horizontal drilling. 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, the Company believes the long-term outlook for its business is favorable due 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 or more drop-down transactions. See Note N ~~to the Company’s Condensed Consolidated Financial Statements for further discussion of 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.

See "Impairment of Oil and Gas Properties" and “Critical Accounting Policies and Estimates” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 for a discussion of the Company’s accounting 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. As a result of its third quarter 2017 evaluations, the Company did not recognize 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 assets in the Huron play, which had a carrying value of approximately $3 billion at September 30, 2017.

~~Table of Contents~~

~~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 million for the nine months ended September 30, 2017 compared to $767.7 million for the nine months ended September 30, 2016. The $443.7 million increase in cash flows provided by operating activities was primarily the result of higher operating income, the reasons for which are discussed in the section captioned "Corporate Overview" in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," partly offset by cash settlements paid in 2017 compared to cash received in 2016 on derivatives not designated as hedges.

The Company's cash flows from operating activities ~~will be impacted~~are affected by ~~future~~ movements in the market price for commodities. The Company is unable to predict ~~these future price~~such movements outside of the current market view as reflected in forward strip pricing. Refer to ~~"Natural~~Item 1A., "Risk Factors – Natural gas, NGLs and oil price volatility, or a prolonged period of low natural gas, NGLs and oil prices, may have an adverse effect ~~upon~~on 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 for further information.~~2019.

Investing Activities

Net cash ~~flows~~ used in investing activities ~~totaled $1,716.5~~was $623 million for the nine months ended September 30, ~~2017~~2020 compared to ~~$1,669.4~~$1,256 million for the ~~nine months ended September 30, 2016.~~same period in 2019. The ~~$47.1 million increase~~decrease was ~~primarily~~ due to lower capital expenditures as a result of the Company's ~~acquisitions and increased drilling and completions spending during the nine months ended September 30, 2017, partly offset by~~change in strategic focus from production growth to capital efficiency as well as cash received from asset sales and the ~~sale of trading securities and lower EQM~~Equitrans Share Exchange.

The following table summarizes the Company's capital expenditures. ~~The Company spud 149 gross wells in~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(Millions)
Reserve development	$	176	$	380	$	634	$	1,155
Land and lease	38		51		88		152
Capitalized overhead	15		18		39		59
Capitalized interest	5		6		13		19
Other production infrastructure	11		17		31		28

Other corporate items	3		3		8		4
Total capital expenditures	248		475		813		1,417
Deduct (add back): Non-cash items (a)	28		16		(25)		(160)
Total cash capital expenditures	$	276	$	491	$	788	$	1,257

(a)Represents the ~~first nine months~~net impact of ~~2017,~~non-cash capital expenditures, including ~~100 horizontal Marcellus wells, 48 horizontal Upper Devonian wells~~the effect of timing of receivables from working interest partners, accrued capital expenditures and one horizontal Utica well. The Company spud 68 gross wells in the first nine months of 2016, including 65 horizontal Marcellus wells and three horizontal Utica wells. The increase in drilling and completions spending was offset by decreased spending on the following projects: the OVC, the Range Resources Header Pipeline project and the NWV Gathering expansion. The OVC project, part 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.

~~Capital expenditures as reported on the Statement of Condensed Consolidated Cash Flows for the nine months ended September 30, 2017 and 2016 excluded~~ capitalized ~~non-cash stock-based~~share-based compensation ~~expense and accruals.~~costs. 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~~estimate.

Financing Activities

Net cash used in financing activities was ~~$102.7 million and $1.2~~$500 million for the nine months ended September 30, ~~2017 and 2016, respectively. Capital expenditures~~2020 compared to $374 million for ~~acquisitions as reported on~~ the ~~Statement of Condensed Consolidated Cash Flows for~~same period in 2019. For the nine months ended September 30, ~~2017 also excluded non-cash capital expenditures~~2020, the primary uses of ~~$7.5 million related to the Company's acquisitions.~~

~~Financing Activities~~

~~Net~~financing cash flows ~~used in~~were net repayments of debt and credit facility borrowings, and the primary source of financing ~~activities totaled $114.8 million for~~cash flows was net proceeds from the issuance of debt. For the nine months ended September 30, ~~2017 compared to net cash flows provided by financing activities of $1,057.9 million for the nine months ended September 30, 2016. During the nine months ended September 30, 2017,~~2019, the primary ~~financing~~ uses of cash were distributions to noncontrolling interests, cash paid for taxes on share-based incentive awards and dividends paid. The primary financing source of cash was a net increase in EQM credit facility borrowings. During the nine months ended September 30, 2016, the primary sources of financing cash flows were net ~~proceeds from public offerings~~repayments of ~~EQT common stock~~credit facility borrowings and ~~EQM common units,~~debt, and the primary source of financing ~~uses of~~ cash ~~were~~flows was net ~~credit facility repayments~~proceeds from borrowings under the ~~EQM credit facility, distributions to noncontrolling interests and payment of taxes related to the vesting or exercise of equity awards.~~Company's term loan facility.

~~On October 4, 2017, the Company completed the 2017 Notes Offering described in~~See Note O6 to the Condensed Consolidated Financial ~~Statements. The Company received net proceeds from~~Statements for further discussion of the ~~2017 Notes Offering of approximately $2,974.3 million, which~~Company's debt.

On March 26, 2020, the Company ~~expects~~announced its suspension of the quarterly cash dividend on its common stock for purposes of accelerating cash flow to be used for the Deleveraging Plan.

Depending on the Company's actual and anticipated sources and uses of liquidity, prevailing market conditions and other factors, the Company may from time to time seek to retire or repurchase its outstanding debt or equity securities through cash purchases in the open market or privately negotiated transactions. The amounts involved in any such transactions may be material. Additionally, the Company plans to dispose of its remaining retained shares of Equitrans Midstream's common stock and use ~~together with other cash on hand and borrowings under~~ the ~~Company’s revolving credit facility,~~proceeds to ~~fund~~reduce the Company's debt.

Table of Contents

EQT Corporation and Subsidiaries

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

Income Tax Receivables

As of September 30, 2020, the ~~cash portion~~Company had a tax receivable of $50.8 million in the Condensed Consolidated Balance Sheet. The tax receivable included $48.4 million, including interest, of expected federal refunds of Alternative Minimum Tax credits from the settlement of the ~~Merger Consideration, to pay expenses related to the Rice Merger~~Company's 2010, 2011 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 which2012 audit that the Company expects to ~~redeem all~~receive in the fourth quarter 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, 2017.2020.

Security Ratings and Financing Triggers

The table below reflects the credit ratings ~~for~~and rating outlooks assigned to the Company's debt instruments as of ~~the Company at September 30, 2017. Changes in~~October 16, 2020. The Company's credit ratings ~~may affect the Company’s cost of short-term debt through interest rates~~ and fees 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~~	~~Baa3~~	~~Stable~~
~~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. 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~~

~~The Company’s and EQM’s credit ratings~~rating outlooks are subject to revision or withdrawal at any time by the assigning rating ~~organization,~~agency, and each rating should be evaluated ~~independently of~~independent from 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~~the rating agency's judgment, circumstances so warrant. ~~If any~~See Note 3 to the Condensed Consolidated Financial Statements for further discussion of what is deemed investment grade.

Rating agency

Senior notes

Outlook

Moody's Investors Service (Moody's)

Ba3

Negative

Standard & Poor's Ratings Service (S&P)

BB–

Stable

Fitch Ratings Service (Fitch)

Positive

Changes in credit ~~rating agency downgrades~~ratings may affect the ~~ratings, particularly below investment grade, the Company’s or EQM’s~~Company's access to the capital markets, ~~may be limited, borrowing costs~~the cost of short-term debt through interest rates and ~~margin deposits~~fees under the Company's lines of credit, the interest rate on the ~~Company’s derivative contracts would increase, counterparties may request additional assurances, including collateral,~~Adjustable Rate Notes (defined and discussed in Note 6 to the ~~potential~~Condensed Consolidated Financial Statements), the rates available on new long-term debt, the Company's pool of investors and funding sources, ~~may decrease. Investment grade refers~~the borrowing costs and margin deposit requirements on the Company's over the counter (OTC) derivative instruments and credit assurance requirements, including collateral, in support of the Company's midstream service contracts, joint venture arrangements or construction contracts. Margin deposits on the Company's OTC derivative instruments are also subject to ~~the quality of a company's credit as assessed by one or more~~factors other than credit rating, ~~agencies. In order to be considered investment grade, a company must be rated BBB- or higher by S&P, Baa3 or higher by Moody's,~~such as natural gas prices and ~~BBB- or higher by Fitch. Anything below these ratings is considered non-investment grade.~~

I~~n July 2017,~~credit thresholds set forth in the agreements between hedging counterparties and the Company. As of October 16, 2020, the Company ~~amended and restated~~had sufficient unused borrowing capacity, net of letters of credit, under its ~~$1.5 billion revolving~~ credit facility to ~~extend the term~~satisfy any requests for margin deposit or other collateral that its counterparties are permitted to ~~July 2022. In addition, following the closing~~request of the ~~Rice Merger and subject~~Company pursuant to the ~~satisfaction~~Company's OTC derivative instruments, midstream services contracts and other contracts. As of ~~certain conditions,~~October 16, 2020, such assurances could be up to approximately $1.2 billion, inclusive of letters of credit, OTC derivative instrument margin deposits and other collateral posted of approximately $1.1 billion in the ~~borrowing capacity under the revolving credit facility will automatically increase to $2.5 billion.~~ aggregate.

The ~~Company had no amounts outstanding under the facility as of September 30, 2017. The Company’s~~Company's debt agreements and other financial obligations contain various provisions that, if not complied with, could result in ~~termination~~default or event of default under the ~~agreements, require early payment~~Company's credit facility, mandatory partial or full repayment of amounts outstanding, reduced loan capacity or other similar actions. 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~~Company's credit facility contains financial

~~Table of Contents~~

~~EQT Corporation and Subsidiaries~~

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

covenants that require the Company to have 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).~~income. As of September 30, ~~2017,~~2020, the Company was in compliance with all debt provisions and covenants.

~~In July 2017, EQM amended and restated its credit facility~~See Note 6 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 terminationCondensed Consolidated Financial Statements for a discussion of the ~~agreements, require early payment~~borrowings on the Company's credit facility.

Table of ~~amounts outstanding or similar actions. The covenants~~Contents

EQT Corporation and ~~events~~Subsidiaries

Management's Discussion and Analysis of ~~default under the debt agreements relate to maintenance~~Financial Condition and Results of 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, EQM was in compliance with all debt provisions and covenants.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. During the three and nine months ended September 30, 2017, the maximum amount of EQM’s outstanding borrowings under the credit facility at any time was $40 million and $100 million and the average daily balances were approximately $11 million and $30 million, respectively. EQM had no borrowings outstanding under the 364-Day Facility as of September 30, 2017 and December 31, 2016.

~~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 26, 2017.

Commodity Risk Management

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

~~As of October 24, 2017,~~option agreements. The following table summarizes the approximate volumes and prices of the ~~Company’s derivative commodity instruments hedging sales~~Company's NYMEX hedge positions through 2024 as of ~~produced gas for 2017 through 2019 were:~~October 16, 2020.

NYMEX Swaps 2017 (a)(b)(c) 2018 (b)(c) 2019
Total Volume (Bcf) 120
189
19
Average Price per Mcf (NYMEX) (d) $ 3.35
$ 3.18
$ 3.12
Collars
Total Volume (Bcf) 6
18
—
Average Floor Price per Mcf (NYMEX) (d) $ 3.06
$ 3.16
$ —
Average Cap Price per Mcf (NYMEX) (d) $ 3.93
$ 3.63
$ —


	2020 (a)		2021		2022		2023		2024
Swaps:
Volume (MMDth)	288		817		240		61		2
Average Price ($/Dth)	$	2.75	$	2.66	$	2.62	$	2.48	$	2.67
Calls – Net Short:
Volume (MMDth)	79		384		284		77		15
Average Short Strike Price ($/Dth)	$	2.97	$	2.96	$	2.89	$	2.89	$	3.11
Puts – Net Long:
Volume (MMDth)	22		222		135		69		15
Average Long Strike Price ($/Dth)	$	2.31	$	2.57	$	2.35	$	2.40	$	2.45
Fixed Price Sales (b):
Volume (MMDth)	3		72		4		3		—
Average Price ($/Dth)	$	2.68	$	2.50	$	2.38	$	2.38	$	—

(a)October 1 through December 31.

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

For 2020 (October 1 through December 31), 2021, 2022, 2023 and 2024, the Company has natural gas sales agreements for approximately 2 MMDth, 18 MMDth, 18 MMDth, 88 MMDth and 11 MMDth, respectively, that include average NYMEX ceiling prices of $3.47, $3.17, $3.17, $2.84 and $3.21, respectively. The Company has also ~~sold calendar~~entered into derivative instruments to hedge basis. The Company may use other contractual agreements to implement its commodity hedging strategy.

During the second quarter of 2020, the Company purchased $54 million of options with the primary purpose of reducing future NYMEX based payments that could be due in 2021, 2022 and 2023 to Equitrans Midstream related to the Henry Hub Cash Bonus (defined and discussed in Note 9 to the Condensed Consolidated Financial Statements) provided for by the Consolidated GGA.

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

Off-Balance Sheet Arrangements

See Note 17 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ~~2017 and 2018 calls/swaptions~~ended December 31, 2019 for ~~approximately 8 Bcf and 33 Bcf, respectively, at strike prices~~a discussion of ~~$3.53 per Mcf and $3.47 per Mcf, respectively.~~


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

~~(d) The average price is based on a conversion rate of 1.05 MMBtu/Mcf.~~the Company's guarantees.

Table of Contents

EQT Corporation and Subsidiaries

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

Schedule of Contractual Obligations

The ~~Company also enters into natural gas sales agreements that are satisfied by physical delivery. The difference between these sales prices and NYMEX are included in average differential on~~following table presents the Company's ~~price reconciliation~~long-term contractual obligations as of September 30, 2020.


	Total		2020 (a)		2021 – 2022		2023 – 2024		Thereafter
	(Thousands)
Purchase obligations (b)	$	25,386,319	$	425,686	$	3,467,036	$	3,848,902	$	17,644,695
Long-term debt, including current portion	4,660,474		12,477		928,677		22,083		3,697,237
Interest payments on debt (c)	1,499,575		62,287		481,275		431,659		524,354
Credit facility borrowings (d)	244,500		—		244,500		—		—
Lease obligations (e)	42,864		7,646		19,324		15,866		28
Other liabilities (f)	33,252		438		17,957		9,339		5,518
Total contractual obligations	$	31,866,984	$	508,534	$	5,158,769	$	4,327,849	$	21,871,832

(a)October 1 through December 31.

(b)Purchase obligations are primarily commitments for demand charges under ~~"Consolidated Operational Data."~~existing long-term contracts and binding precedent agreements with various pipelines, some of which extend up to 20 years or longer. The Company has ~~fixed price physical sales~~entered into agreements to release some of its capacity. Purchase obligations also include commitments for processing capacity in order to extract heavier liquid hydrocarbons from the natural gas stream.

(c)Interest payments exclude interest related to the Company's credit facility borrowings as the interest rate is variable.

(d)The Company's credit facility borrowings were classified based on the credit facility's termination date.

(e)See Note 15 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the ~~remainder~~year ended December 31, 2019 for a discussion of ~~2017~~the Company's lease obligations.

(f)Other liabilities are primarily commitments for estimated payouts for various liability stock award plans. See "Critical Accounting Policies and 2018 of 25 Bcf and 18 Bcf, respectively, at average NYMEX prices of $3.31 per Mcf and $3.23 per Mcf, 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 2018 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, the Company also has a natural gas sales agreement for approximately 7 Bcf per year 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 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~~Estimates," Note G11 to the ~~Company’s~~ Condensed Consolidated Financial Statements and Note 13 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-Kfor ~~further~~the year ended December 31, 2019 for a discussion of factors that affect the ~~Company’s hedging program.~~ ultimate amount of the payout of these obligations.

The Company is currently unable to make reasonably reliable estimates of the period of cash settlement of potential liabilities with taxing authorities related to its total reserve for unrecognized tax benefits; therefore, this amount has been excluded from the schedule of contractual obligations.

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~~Company's financial ~~position,~~condition, results of operations or liquidity.

~~Off-Balance Sheet Arrangements~~

See Note D16 to the Consolidated Financial Statements and Part I, Item 3., "Legal Proceedings" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the Company's commitments and contingencies. See also Part II, Item 1., "Legal Proceedings."

Recently Issued Accounting Standards

The Company's recently issued accounting standards are described in Note 1 to the Condensed Consolidated Financial ~~Statements in this Quarterly Report on Form 10-Q for further discussion of the MVP Joint Venture guarantee.~~Statements.

~~Dividend~~

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

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

Critical Accounting Policies and Estimates

The ~~Company’s~~Company's significant accounting policies are described in Item ~~7, “Management’s~~7., "Management's Discussion and Analysis of Financial Condition and Results of ~~Operations,” contained~~Operations" in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been

Table of Contents

EQT Corporation and Subsidiaries

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

included in the notes to the ~~Company’s~~ Condensed Consolidated Financial ~~Statements contained in this Quarterly Report on Form 10-Q.~~Statements. The application of the ~~Company’s~~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.

See Note 5 for a discussion of the CARES Act, including its expected impact on the Company's methodologies, financial statements and related disclosures.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk and Derivative Instruments

The ~~Company’s~~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 basis,~~ and NGLs at the Company's ultimate sales points 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~~Company's development plans, which would decrease the pace of development and the level of the ~~Company’s~~Company's proved reserves. ~~Such changes~~Increases in natural gas and NGLs prices may be accompanied by, or ~~similar impacts on third-party shippers on~~result in, increased well drilling costs, increased production taxes, increased lease operating expenses, increased volatility in seasonal gas price spreads for the Company's ~~midstream~~storage assets ~~could also impact the Company’s revenues, earnings~~and increased end-user conservation or ~~liquidity and could result in material non-cash impairments~~conversion to alternative fuels. In addition, to the ~~recorded value~~extent the Company has hedged its production at prices below the current market price, the Company will not benefit fully from any increase in the price of natural gas.

The overall objective of the ~~Company’s property, plant and equipment.~~

Company's hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices. The ~~Company uses derivatives to reduce the effects of commodity price volatility. The Company’s~~Company's use of derivatives is further described in Note G3 to the Condensed Consolidated Financial Statements and "Commodity Risk Management" under ~~the caption “Commodity Risk Management” in the “Capital~~"Capital Resources and ~~Liquidity” section of~~Liquidity" in Item ~~2, “Management’s~~2., "Management's Discussion and Analysis of Financial Condition and Results of ~~Operations” of this Quarterly Report on Form 10-Q.~~Operations." The ~~Company uses~~Company's OTC derivative commodity instruments ~~that~~ are ~~typically~~ placed primarily with financial institutions and the creditworthiness of ~~these~~those 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~~Company's use of derivative instruments is implemented under a set of policies approved by the ~~Company’s~~Company's Hedge and Financial Risk Committee and reviewed by the ~~Audit Committee of the Company’s~~Company's Board of Directors.

For ~~the~~ derivative commodity instruments used to hedge the ~~Company’s~~Company's forecasted sales of production, ~~most of~~ which are ~~hedged~~ at, for the most part, NYMEX natural gas prices, the Company sets policy limits relative to the expected production and sales levels ~~which~~that 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~~used by the Company are primarily ~~fixed price~~ swap, ~~agreements~~collar and ~~collar~~option agreements. These agreements ~~which~~ may require payments to, or receipt of payments from, counterparties based on the differential between two prices for the commodity. The Company uses these agreements to hedge its NYMEX and basis exposure. The Company may also use other contractual agreements ~~in implementing~~when executing 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 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 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~~on September 30, ~~2017~~2020 and December 31, ~~2016 levels~~2019 would ~~have increased~~increase the fair value of ~~these~~the Company's natural gas derivative commodity instruments by approximately ~~$103.1~~$501.4 million and ~~$179.0~~$389.4 million, respectively. A hypothetical increase of 10% in the market price of natural gas ~~from the~~on September 30, ~~2017~~2020 and December 31, ~~2016 levels~~2019 would ~~have decreased the fair value of these natural gas derivative instruments by approximately $105.3 million and $181.8 million, respectively. The Company determined the change in~~decrease the fair value of the Company's natural gas derivative commodity instruments by approximately $489.3 million and $394.5 million, respectively. For purposes of this analysis, the Company applied the 10% change in the market price of natural gas on September 30, 2020 and December 31, 2019 to the Company's natural gas derivative commodity instruments as of September 30, 2020 and December 31, 2019 to calculate the hypothetical change in fair value. The change in fair value was determined using a method similar to ~~its~~the Company's normal ~~determination of~~process for determining derivative commodity instrument fair value as described in Note H4 to the Condensed Consolidated Financial Statements. ~~The Company assumed a 10% change in the price~~

Table of natural gas from its levels at September 30, 2017 and December 31, 2016. The price change was then applied to these natural gas derivative commodity instruments, resulting in the hypothetical change in fair value.Contents

The above analysis of the Company's 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~~Company's physical sales of natural gas. The portfolio of derivative commodity instruments held to hedge the ~~Company’s~~Company's forecasted produced gas approximates a portion of the ~~Company’s~~Company's expected physical sales of natural ~~gas. Therefore,~~gas; therefore, an adverse impact to the fair value of the portfolio of derivative commodity instruments held to hedge the ~~Company’s~~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~~Company's physical sales of natural gas, assuming that the derivative commodity instruments 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 market interest rates affect the amount of interest the Company ~~EQGP and EQM earn~~earns on cash, cash equivalents and short-term investments and the interest rates the Company ~~and EQM pay~~pays on borrowings ~~under their respective revolving~~on its credit ~~facilities~~facility and, prior to its full redemption on June 30, 2020, term loan facility. None of the interest ~~rate~~ the Company pays on its ~~Floating Rate Notes. All of the Company’s and EQM’s long-term borrowings, other than borrowings~~senior notes fluctuate based on changes to market interest rates. A 1% increase in interest rates on the Company's ~~Floating~~borrowings on its credit facility and term loan facility during the nine months ended September 30, 2020 would have increased interest expense by approximately $5 million.

Interest rates on the Adjustable Rate Notes ~~are fixed rate~~fluctuate based on changes to the credit ratings assigned to the Company's senior notes by Moody's, S&P and ~~thus do~~Fitch. For a discussion of credit rating downgrade risk, see Item 1A., "Risk Factors – Our exploration and production operations have substantial capital requirements, and we may not ~~expose~~be able to obtain needed capital or financing on satisfactory terms" in the ~~Company to fluctuations~~Company's Annual Report on Form 10-K for the year ended December 31, 2019. See also Item 1A., "Risk Factors" in ~~its results of operations or liquidity from changes in market interest rates.~~this Quarterly Report on Form 10-Q. Changes in interest rates do affect the fair value of the ~~Company’s and EQM’s~~Company's fixed rate debt. See Note J6 to the Condensed Consolidated Financial Statements for further discussion of the ~~Company’s and EQM’s revolving credit facilities~~Company's debt and Note H4 to the Condensed Consolidated Financial Statements for a discussion of fair value measurements, including the fair value of ~~long-term~~the Company's debt.

Other Market Risks

The Company is exposed to credit loss in the event of nonperformance by counterparties to its 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)~~Company's OTC derivative instruments are primarily with financial institutions and, thus, are subject to events that would impact those companies individually as well as ~~that~~the financial industry as a whole. The Company ~~utilizes~~uses various processes and analyses to monitor and evaluate its credit risk ~~exposures. These include closely~~exposures, including monitoring current market conditions and counterparty credit ~~fundamentals and credit default swap rates.~~fundamentals. 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 primarily 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%~~36%, or ~~$67.6~~$436.8 million, of the ~~Company’s~~Company's OTC derivative contracts outstanding at September 30, ~~2017~~2020 had a positive fair value. Approximately ~~11%~~75%, or ~~$33.1~~$718.0 million, of the ~~Company’s~~Company's OTC derivative contracts outstanding at December 31, ~~2016~~2019 had a positive fair value.

As of September 30, ~~2017,~~2020, the Company was not in default under any derivative contracts and had no knowledge of default by any counterparty to its derivative contracts. ~~The~~During the three months ended September 30, 2020, the Company made no adjustments to the fair value of its derivative contracts due to credit related concerns outside of the normal non-performance risk adjustment included in the ~~Company’s~~Company's established fair value procedure. The Company monitors market conditions that may impact the fair value of its derivative ~~contracts reported in the Condensed Consolidated Balance Sheets.~~contracts.

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~~gas, NGLs and oil. Revenues and related accounts receivable from the Company's operations are generated primarily from the sale of produced natural gas, NGLs and ~~NGLs~~oil to ~~certain~~ marketers, ~~utility~~utilities and industrial customers located ~~mainly~~ in the Appalachian Basin and in markets that are accessible through the ~~northeastern United States as well as the Permian Basin of Texas and a gas processor in Kentucky and West Virginia. 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 and Canada. The Company also contracts with certain processors to market a portion of NGLs on behalf of the ~~United States. Similarly, revenues and related accounts receivable are generated from the gathering, transmission and storage~~Company.

Table of ~~natural gas in the Appalachian Basin for independent producers, local distribution companies and marketers.~~Contents

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 for the Company's credit facility holds more than 10% of the financial commitments under such facility. The ~~Company’s~~ large syndicate group and relatively low percentage of participation by each lender isare expected to limit the ~~Company’s~~Company's exposure to ~~problems~~disruption 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~~Company's Principal Executive Officer and Principal Financial Officer, an evaluation of the ~~Company’s~~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~~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 in internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the third quarter of ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, the ~~Company’s~~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, the Company is from time to time involved in various legal and regulatory claims and proceedings, ~~are pending or threatened against the Company.~~including those discussed below. 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 pending matter ~~currently pending against~~involving the Company will not materially affect the financial ~~position,~~condition, results of operations or liquidity of the Company.

The Company and Equitrans Midstream, through certain of their subsidiaries, are parties to a gas gathering agreement (the Hammerhead Gathering Agreement) related to Equitrans Midstream's Hammerhead Gas Gathering System. Pursuant to the terms of the Hammerhead Gathering Agreement, if the "In-Service Date" did not occur on or before October 1, 2020, the Company may terminate the Hammerhead Gathering Agreement and purchase the Hammerhead Gas Gathering System from Equitrans Midstream for an amount equal to 88% of expenses actually incurred and other obligations made or to be incurred by Equitrans Midstream. The "In-Service Date" is defined in the Hammerhead Gathering Agreement as "the later of (i) the first Day of the Month immediately following the date on which Gatherer is first able to provide the Gathering Services to Shipper in accordance with [the Hammerhead Gathering] Agreement and (ii) the first Day of the Month immediately following the date on which the Interconnect Facilities connecting the Gathering System to the Mountain Valley Pipeline are first able to receive deliveries of the Contract MDQ." On September 24, 2020, the Company initiated arbitration proceedings against Equitrans Midstream, seeking a declaration that the Company is entitled to terminate the Hammerhead Gathering Agreement and purchase the Hammerhead Gas Gathering System. The deadline for the Company to provide notice of its election to terminate the Hammerhead Gathering Agreement and purchase the Hammerhead Gas Gathering System has been tolled while the contract claim is pending in arbitration.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1A., "Risk Factors" in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019 other than those listed in this section.

The novel coronavirus, or COVID-19, pandemic has affected and may materially adversely affect, and any future outbreak of any other highly infectious or contagious diseases may materially adversely affect, our operations, financial performance and condition, operating results and cash flows.

The COVID-19 pandemic has affected, and may materially adversely affect, our business and financial and operating results. The severity, magnitude and duration of the ~~risks described below relating~~COVID-19 pandemic is uncertain, rapidly changing and hard to predict. Thus far in 2020, the pandemic has significantly impacted economic activity and markets around the world, and COVID-19 or another similar pandemic could negatively impact our business in numerous ways, including, but not limited to, the ~~proposed Rice Merger.~~following:

~~Our acquisition~~•our revenue may be reduced if the pandemic results in an economic downturn or recession that leads to a prolonged decrease in the demand for natural gas and, to a lesser extent, NGLs and oil;

•our operations may be disrupted or impaired (thus lowering our production level), if a significant portion of ~~Rice Energy Inc. (Rice) is subject~~our employees or contractors are unable to ~~conditions,~~work due to illness or if our field operations are suspended or temporarily shut-down or restricted due to control measures designed to contain the pandemic;

•the operations of our midstream service providers, on whom we rely for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs and oil, may be disrupted or suspended in response to containing the pandemic, and/or the difficult economic environment may lead to the bankruptcy or closing of the facilities and infrastructure of our midstream service providers, which may result in substantial discounts in the prices we receive for our produced natural gas, NGLs and oil or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties; and

•the disruption and instability in the financial markets and the uncertainty in the general business environment may affect our ability to find attractive asset monetization opportunities and successfully execute our plan to deleverage our business within our anticipated timeframe or at all; for example, the market value of the assets to be monetized may be

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reduced and the financial condition or prospects of prospective purchasers and other counterparties, and such parties' access to financing on acceptable terms, may be adversely affected. If we are not able to successfully execute our Deleveraging Plan or otherwise reduce absolute debt to a level we believe appropriate, our credit ratings may be lowered, we may reduce or delay our planned capital expenditures or investments and we may revise or delay our strategic plans.

Prior to the declaration of COVID-19 as a global pandemic by the World Health Organization on March 15, 2020, we established a COVID-19 Response Team (the Response Team) consisting of a multi-disciplinary group of senior leaders. The primary functions of the Response Team are to analyze areas of risk, scenario plan and assess business continuity matters. The Response Team meets regularly and has been in consistent communication with our Board of Directors. We expect that the principal areas of operational risk for us are availability of service providers and supply chain disruption. Active development operations, including drilling and fracking operations, represent the greatest risk for transmission given the number of personnel and contractors on site. While we believe that we are following best practices under COVID-19 guidance, the potential for transmission still exists. In certain ~~conditions that~~instances, it may ~~not~~ be ~~satisfied,~~necessary or ~~completed~~determined advisable for us to delay development operations. The Response Team continues to monitor potential areas of risk for us.

In addition, the COVID-19 pandemic has increased volatility and caused negative pressure in the capital and credit markets. As a result, we may experience difficulty accessing the capital or financing needed to fund our exploration and production operations, which have substantial capital requirements, or refinance our upcoming maturities on ~~a timely basis, if~~satisfactory terms or at all. ~~Failure to complete the acquisition of Rice could have a material~~We typically fund our capital expenditures with existing cash and ~~adverse effect on us.~~

~~Completion of our acquisition of Rice~~cash generated by operations (which is subject to a number of ~~conditions~~variables, including many beyond our control) and, to the extent our capital expenditures exceed our cash resources, from borrowings under our revolving credit facility and other external sources of capital. If our cash flows from operations or the borrowing capacity under our revolving credit facility are insufficient to fund our capital expenditures and we are unable to obtain the capital necessary for our planned capital budget or our operations, we could be required to curtail our operations and the development of our properties, which in turn could lead to a decline in our reserves and production, and could adversely affect our business, results of operations and financial position.

As of December 31, 2019, our senior notes were rated "Baa3" by Moody's, "BBB–" by S&P and "BBB–" by Fitch, each with a "Negative" outlook. In January 2020, Moody's downgraded our senior notes credit rating to "Ba1." In February 2020, S&P downgraded our senior notes credit rating to "BB+," and Fitch downgraded our senior notes credit rating to "BB." In April 2020, S&P further downgraded our senior notes credit rating to "BB–," and Moody's further downgraded our senior notes credit rating to "Ba3." In June 2020, Fitch revised our outlook to "Positive." In August 2020, S&P revised our outlook to "Stable." As a result of the February 2020 and April 2020 downgrades, the interest rate on our 6.125% senior notes increased to 7.875% and the interest rate on our 7.000% senior notes increased to 8.750% beginning with the interest payment period that started on August 1, 2020. Although we are not aware of any current plans of Moody's, S&P or Fitch to further downgrade its rating of our senior notes, we cannot be assured that one or more will not further downgrade or withdraw entirely their rating of our senior notes. Further impacts to our business as a result of the COVID-19 pandemic, including low prices for natural gas, NGLs and oil, or an increase in the level of our indebtedness or failure to significantly execute the Deleveraging Plan, may result in Moody's, S&P or Fitch further downgrading its rating of our senior notes. If there are further downgrades to our credit rating, our access to the capital markets may be impacted, the cost of short-term debt through interest rates and fees under our lines of credit may increase, the interest rate on our Adjustable Rate Notes will further increase, the rates available on new long-term debt may increase, our pool of investors and funding sources may decrease, the borrowing costs and margin deposit requirements on our derivative instruments may increase and we may be required to provide additional credit assurances, including collateral, in support of our midstream service contracts, joint venture arrangements or construction contracts, which could adversely affect our business, results of operations and liquidity.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in Item 1A., "Risk Factors" in our ~~merger agreement with Rice,~~Annual Report on Form 10-K for the year ended December 31, 2019, such as those relating to our financial performance and debt obligations. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on our business, which will depend on numerous evolving factors and future developments that we are not able to predict, including the ~~approval by our shareholders~~length of time that the pandemic continues, its effect on the demand for natural gas, NGLs and oil, the response of the ~~issuance~~overall economy and the financial markets as well as the effect of ~~shares~~governmental actions taken in response to the pandemic.

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The accounting for the Convertible Notes may have a material effect on our ~~common stock as acquisition consideration~~reported financial results.

On April 28, 2020, we issued the Convertible Notes due May 1, 2026 unless earlier redeemed, repurchased or converted. In accordance with GAAP, an issuer must separately account for the liability and ~~approval by Rice stockholders~~equity components of certain convertible debt instruments that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer's economic interest cost. The effect on the accounting for the Convertible Notes is that the equity component is required to be included in additional paid-in capital of shareholders' equity on our Condensed Consolidated Balance Sheet, and the value of the ~~adoption~~equity component is treated as a debt discount for purposes of accounting for the debt component of the merger agreement, 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 are not completed, our ongoing business 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:

Convertible Notes. Accordingly, we will be required to ~~pay~~record a greater amount of non-cash interest expense in current and future periods as a result of the amortization of the discounted carrying value of the Convertible Notes to their face amount over the term of the Convertible Notes. We will report lower net income (or greater net loss) in our ~~costs relating~~financial results because GAAP requires interest to include both the ~~transactions, such as legal, accounting,~~current period's amortization of the debt discount and the instrument's coupon interest, which could adversely affect our reported or future financial ~~advisory and printing fees, 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;~~

results, the market price of our common stock ~~could decline~~and the trading price of the Convertible Notes.

In addition, because we have the ability and intent to settle the Convertible Notes, upon conversion, by paying or delivering cash equal to the principal amount of the obligation and common stock for amounts over the principal amount, the shares issuable upon conversion of the Convertible Notes are accounted for using the treasury stock method and, as such, are not included in the calculation of diluted earnings per share except to the extent that the ~~current market price reflects a market assumption that~~conversion value of the ~~transactions will be completed; and~~

Convertible Notes exceeds their principal amount. Further, under the treasury stock method, the transaction is accounted for as if the ~~merger agreement is terminated and our board~~number of ~~directors seeks another acquisition, our shareholders~~shares of common stock that would be necessary to settle such excess are issued. We cannot be ~~certain~~sure that we will be able to ~~find a party willing~~continue to ~~enter into a transaction as attractive~~demonstrate the ability or intent to ~~us as~~settle in cash or that the ~~acquisition of Rice.~~

Ifaccounting standards will continue to permit the ~~acquisition of Rice is completed, we may not achieve the intended benefits and the acquisition may disrupt our current plans or operations.~~

~~There can be no assurance that we will be able to successfully integrate Rice’s assets or otherwise realize the expected benefits~~use of the ~~acquisition. In addition, our business may be negatively impacted following the acquisition if~~treasury stock method. If we are unable to ~~effectively manage~~use the treasury stock method in accounting for the shares issuable upon conversion of the Convertible Notes, our ~~expanded operations. The integration will require significant time and focus from management following the acquisition. Additionally, consummating the acquisition~~diluted earnings per share could ~~disrupt current plans and operations, which could delay the achievement of our strategic objectives.~~be adversely affected.

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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~~Company did not repurchase any equity securities registered under Section 12 of the Securities Exchange Act ~~that have occurred~~of 1934, as amended, during the three months ended September 30, ~~2017:~~2020.

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
—


~~(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, 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~~3.01(a)

Restated Articles of Incorporation of EQT Corporation (as amended through November 13, 2017).

~~Fifth Supplemental Indenture dated as of October 4, 2017 between the Company and The Bank of New York Mellon, as Trustee, pursuant to which the Floating Rate Notes due 2020 were issued~~

Incorporated herein by reference to Exhibit ~~4.3~~3.1 to Form 8-K (#001-3551) filed on ~~October 4, 2017~~

November 14, 2017.

~~4.02~~3.01(b)

Articles of Amendment to the Restated Articles of Incorporation of EQT Corporation (effective May 1, 2020).

~~Sixth Supplemental Indenture dated as of October 4, 2017 between the Company and The Bank of New York Mellon, as Trustee, pursuant to which the 2.50% Senior Notes due 2020 were issued~~

Incorporated herein by reference to Exhibit ~~4.5~~3.1 to Form 8-K (#001-3551) filed on ~~October~~May 4, ~~2017~~

2020.

~~4.03~~3.01(c)

Articles of Amendment to the Restated Articles of Incorporation of EQT Corporation (effective July 23, 2020).

~~Seventh Supplemental Indenture dated as of October 4, 2017 between the Company and The Bank of New York Mellon, as Trustee, pursuant to which the 3.00% Senior Notes due 2022 were issued~~

Incorporated herein by reference to Exhibit ~~4.7~~3.1 to Form 8-K (#001-3551) filed on ~~October 4, 2017~~

July 23, 2020.

~~4.04~~3.02

Amended and Restated Bylaws of EQT Corporation (as amended through May 1, 2020).

~~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~~3.4 to Form 8-K (#001-3551) filed on ~~October~~May 4, ~~2017~~

2020.

10.01

~~First~~ Amendment to ~~Voting~~Gas Gathering and ~~Support~~Compression Agreement, ~~effective as of October 9, 2017~~dated August 26, 2020, by and among ~~the~~EQT Corporation, EQT Production Company, Rice Drilling B LLC, EQT Energy, ~~2016 Irrevocable Trust, Rice Energy Holdings~~ LLC ~~Daniel J. Rice III, Daniel J. Rice IV, Derek A. Rice~~ and ~~Toby Z. Rice~~

EQM Gathering OpCo, LLC.

Filed herewith as Exhibit ~~10.01~~

10.01.

~~10.02~~31.01

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~~

Officer.

Filed herewith as Exhibit ~~31.01~~

31.01.

31.02

Rule 13(a)-14(a) Certification of Principal Financial ~~Officer~~

Officer.

Filed herewith as Exhibit ~~31.02~~

31.02.

Section 1350 Certification of Principal Executive Officer and Principal Financial ~~Officer~~

Officer.

Furnished herewith as Exhibit 32

32.

101

~~101~~

Interactive Data ~~File~~File.

Filed herewith as Exhibit ~~101~~101.

104

Cover Page Interactive Data File.

Formatted as Inline XBRL and contained in Exhibit 101.

Table of Contents

~~Signature~~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~~David M. Khani
						~~Robert J. McNally~~David M. Khani
						~~Senior Vice President and~~ Chief Financial Officer

Date: October ~~26, 2017~~22, 2020



~~PENNSYLVANIA~~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)~~Code)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(Thousands, except per share amounts)
Operating revenues:
Sales of natural gas, natural gas liquids and oil	$	598,992	$	769,627	$	1,812,965	$	2,941,767
(Loss) gain on derivatives not designated as hedges	(427,182)		180,313		(11,320)		455,952
Net marketing services and other	317		1,636		4,613		7,282
Total operating revenues	172,127		951,576		1,806,258		3,405,001
Operating expenses:
Transportation and processing	427,691		437,942		1,273,161		1,314,172
Production	39,670		37,821		118,379		117,545
Exploration	3,160		3,492		4,959		6,356
Selling, general and administrative	56,330		79,376		134,609		214,562
Depreciation and depletion	341,027		390,993		1,021,649		1,154,519
Amortization of intangible assets	7,478		7,755		22,433		28,439
Loss on sale/exchange of long-lived assets	4,662		13,935		102,721		13,935
Impairment of intangible assets	0		15,411		0		15,411
Impairment and expiration of leases	50,449		49,601		145,496		127,719
Transaction, proxy and reorganization	1,855		76,779		6,600		102,386
Total operating expenses	932,322		1,113,105		2,830,007		3,095,044
Operating (loss) income	(760,195)		(161,529)		(1,023,749)		309,957
Gain on Equitrans Share Exchange (see Note 9)	0		0		(187,223)		0
(Gain) loss on investment in Equitrans Midstream Corporation	(3,801)		261,093		303,844		276,779
Dividend and other income	(2,900)		(22,960)		(31,204)		(67,592)
Loss on debt extinguishment	3,749		0		20,712		0
Interest expense	69,154		47,709		196,914		154,785
Loss before income taxes	(826,397)		(447,371)		(1,326,792)		(54,015)
Income tax benefit	(225,757)		(86,343)		(295,938)		(9,244)
Net loss	$	(600,640)	$	(361,028)	$	(1,030,854)	$	(44,771)

Loss per share of common stock:
Basic:
Weighted average common stock outstanding	255,589		255,235		255,516		255,069
Net loss	$	(2.35)	$	(1.41)	$	(4.03)	$	(0.18)
Diluted:
Weighted average common stock outstanding	255,589		255,235		255,516		255,069
Net loss	$	(2.35)	$	(1.41)	$	(4.03)	$	(0.18)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017		2016
	(Thousands, except per share amounts)
Revenues:
Sales of natural gas, oil and NGLs	$	552,953		$	403,939		$	1,803,132	$	1,072,898
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		)
Total operating revenues	660,313			556,726			2,248,729		1,229,326

Operating expenses:
Transportation and processing	136,219			89,883			404,743		251,283
Operation and maintenance	20,604			18,198			61,471		51,687
Production	39,630			38,999			129,812		126,092
Exploration	2,436			2,671			9,039		9,385
Selling, general and administrative	77,170			61,430			206,237		196,765
Depreciation, depletion and amortization	246,560			237,088			719,295		682,948
Total operating expenses	522,619			448,269			1,530,597		1,318,160

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 (loss) before income taxes	94,176			83,188			597,900		(174,104		)
Income tax (benefit) expense	(11,281		)	13,084			119,093		(151,826		)
Net income (loss)	105,457			70,104			478,807		(22,278		)
Less: Net income attributable to noncontrolling interests	82,117			78,120			250,349		238,747
Net income (loss) attributable to EQT Corporation	$	23,340		$	(8,016	)	$	228,458	$	(261,025	)

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



	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	)



	Nine Months Ended September 30,
	2017			2016
	(Thousands)
Cash flows from operating activities:
Net income (loss)	$	478,807		$	(22,278	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes	121,704			(145,739		)
Depreciation, depletion and amortization	719,295			682,948
Lease impairments	5,053			5,498
(Recoveries of) provision for losses on accounts receivable	(1,230		)	1,165
Other income	(16,878		)	(23,199		)
Stock-based compensation expense	27,894			34,551
(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
Changes in other assets and liabilities:
Accounts receivable	64,057			(11,521		)
Accounts payable	(15,446		)	(12,916		)
Other items, net	57,646			(5,071		)
Net cash provided by operating activities	1,211,372			767,699

Cash flows from investing activities:
Capital expenditures	(1,152,865		)	(1,193,321		)
Capital expenditures for acquisitions	(818,957		)	(412,348		)
Sales of investments in trading securities	283,758			—
Capital contributions to Mountain Valley Pipeline, LLC	(103,448		)	(76,297		)
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		)

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		)
Dividends paid	(15,620		)	(14,966		)
Distributions to noncontrolling interests	(172,498		)	(137,719		)
Proceeds from awards under employee compensation plans	—			2,040
Cash paid for taxes related to net settlement of share-based incentive awards	(18,030		)	(26,517		)
Debt issuance costs and revolving credit facility origination fees	(13,679		)	—
Repurchase of common stock	(15		)	(23		)
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
Cash and cash equivalents at end of period	$	483,558		$	1,757,414

Cash paid during the period for:
Interest, net of amount capitalized	$	113,618		$	88,281
Income taxes, net	$	9,702		$	1,294



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~~2020



		Page No.
~~Part~~PART I. ~~Financial Information:~~FINANCIAL INFORMATION

Item 1.			Financial Statements (Unaudited):

	Statements of Condensed Consolidated Operations for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019			3

	Statements of Condensed Consolidated Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019			4

	Statements of Condensed Consolidated Cash Flows for the Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019			5

	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019			6

	Statements of Condensed Consolidated Equity for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019			87

	Notes to the Condensed Consolidated Financial Statements			9

Item 2.	~~Management��s~~Management's Discussion and Analysis of Financial Condition and Results of Operations			2321

Item 3.	Quantitative and Qualitative Disclosures About Market Risk			4035

Item 4.	Controls and Procedures			4237

~~Part~~PART II. ~~Other Information:~~OTHER INFORMATION

Item 1.			Legal Proceedings		4338
Item 1A.			Risk Factors		38
~~Item 1A.~~			~~Risk Factors~~	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			4440
Item 6.			Exhibits		41

~~Item 6.~~Signature					~~Exhibits~~	4542

~~Signature~~		46



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

Current assets:
Cash and cash equivalents	$	483,558	$	1,103,540
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
Derivative instruments, at fair value	67,555		33,053
Prepaid expenses and other	28,144		63,602
Total current assets	858,458		1,828,219

Property, plant and equipment	20,296,620		18,216,775
Less: accumulated depreciation and depletion	5,755,358		5,054,559
Net property, plant and equipment	14,541,262		13,162,216

Restricted cash	—		75,000
Investment in nonconsolidated entity	339,978		184,562
Other assets	244,950		222,925
Total assets	$	15,984,648	$	15,472,922


	Common Stock									Accumulated Other Comprehensive Loss
	Shares	No Par Value		Treasury Stock		Retained Earnings						Total Equity
	(Thousands, except per share amounts)
Balance at July 1, 2019	254,796	$	7,807,740	$	(39,310)	$	3,485,711	$	(5,666)	$	11,248,475
Comprehensive income, net of tax:
Net income						(361,028)				(361,028)
Net change in interest rate cash flow hedges, net of tax expense: $10								43		43
Other postretirement benefits liability adjustment, net of tax expense: $26								77		77
Dividends ($0.03 per share)						(7,668)				(7,668)
Share-based compensation plans	374	10,943		6,783						17,726

Balance at September 30, 2019	255,170	$	7,818,683	$	(32,527)	$	3,117,015	$	(5,546)	$	10,897,625

Balance at July 1, 2020	255,290	$	7,889,072	$	(30,341)	$	1,585,211	$	(5,115)	$	9,438,827
Comprehensive loss, net of tax:
Net loss						(600,640)				(600,640)
Other postretirement benefits liability adjustment, net of tax expense: $23								72		72
Share-based compensation plans	55	6,556		994						7,550
Balance at September 30, 2020	255,345	$	7,895,628	$	(29,347)	$	984,571	$	(5,043)	$	8,845,809



	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, 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



Classification	September 30, 2017		December 31, 2016
	(Thousands)
Assets:
Cash and cash equivalents	$	6,933	$	60,453
Accounts receivable	21,768		20,662
Prepaid expenses and other	4,196		5,745
Property, plant and equipment, net	2,745,509		2,578,834
Other assets	363,186		206,104
Liabilities:
Accounts payable	$	37,494	$	35,831
Other current liabilities	70,960		32,242
Credit facility borrowings	105,000		—
Long-term debt	986,947		985,732
Other liabilities and credits	9,877		9,562



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


~~(a)~~	~~Unallocated expenses consist primarily of compensation expense and administrative costs, including the Rice Merger (defined in Note~~ N~~) acquisition-related expenses.~~



	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


~~(b)~~	~~Includes the capitalized portion of non-cash stock-based compensation expense and the impact of capital accruals.~~


	Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets		Derivative instruments subject to master netting agreements		Margin requirements with counterparties		Net derivative instruments
	(Thousands)
September 30, 2020
Asset derivative instruments, at fair value	$	503,648	$	(433,954)	$	0	$	69,694
Liability derivative instruments, at fair value	894,618		(433,954)		(244,457)		216,207

December 31, 2019
Asset derivative instruments, at fair value	$	812,664	$	(226,116)	$	0	$	586,548
Liability derivative instruments, at fair value	312,696		(226,116)		(12,606)		73,974



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
	(Thousands)
Asset derivatives:
Derivative instruments, at fair value	$	67,555	$	(42,886	)	$	—	$	24,669
Liability derivatives:
Derivative instruments, at fair value	$	71,374	$	(42,886	)	$	—	$	28,488



	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 September 30,								Nine Months Ended September 30,
in thousands (unless noted)	2017			2016			%		2017			2016			%
NATURAL GAS
Sales volume (MMcf)	176,311			175,191			0.6		508,457			508,206			—
NYMEX price ($/MMBtu) (a)	$	3.00		$	2.81		6.8		$	3.16		$	2.29		38.0
Btu uplift	0.30			0.27			11.1		0.28			0.21			33.3
Natural gas price ($/Mcf)	$	3.30		$	3.08		7.1		$	3.44		$	2.50		37.6

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

Average adjusted price ($/Mcf)	$	2.45		$	1.87		31.0		$	2.89		$	1.75		65.1
Cash settled derivatives (cash flow hedges) ($/Mcf)	0.01			0.14			(92.9	)	0.01			0.14			(92.9	)
Cash settled derivatives (not designated as hedges) ($/Mcf)	0.13			0.15			(13.3	)	0.01			0.38			(97.4	)
Average natural gas price, including cash settled derivatives ($/Mcf)	$	2.59		$	2.16		19.9		$	2.91		$	2.27		28.2

Natural gas sales, including cash settled derivatives	$	456,347		$	378,484		20.6		$	1,484,711		$	1,155,898		28.4

LIQUIDS
NGLs (excluding ethane):
Sales volume (MMcfe) (c)	19,054			16,803			13.4		55,089			44,897			22.7
Sales volume (Mbbls)	3,176			2,799			13.5		9,182			7,482			22.7
Price ($/Bbl)	$	29.81		$	14.82		101.1		$	28.33		$	15.26		85.6
Cash settled derivatives (not designated as hedges) ($/Bbl)	(0.44		)	—			(100.0	)	(0.43		)	—			(100.0	)
Average NGL price, including cash settled derivatives ($/Bbl)	$	29.37		$	14.82		98.2		$	27.90		$	15.26		82.8

NGL sales	$	93,273		$	41,508		124.7		$	256,123		$	114,188		124.3
Ethane:
Sales volume (MMcfe) (c)	8,226			2,967			177.2		24,970			4,144			502.6
Sales volume (Mbbls)	1,371			495			177.0		4,162			691			502.3
Price ($/Bbl)	$	5.92		$	8.02		(26.2	)	$	6.45		$	8.09		(20.3	)
Ethane sales	$	8,119		$	3,966		104.7		$	26,858		$	5,590		380.5
Oil:
Sales volume (MMcfe) (c)	1,476			1,124			31.3		4,565			3,321			37.5
Sales volume (Mbbls)	246			188			30.9		761			554			37.4
Price ($/Bbl)	$	36.86		$	35.81		2.9		$	39.69		$	32.81		21.0
Oil sales	$	9,072		$	6,710		35.2		$	30,198		$	18,164		66.3

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

Liquids sales	$	110,464		$	52,184		111.7		$	313,179		$	137,942		127.0

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
Total sales volume (MMcfe)	205,067			196,085			4.6		593,081			560,568			5.8

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



NYMEX Swaps	2017 (a)(b)(c)		2018 (b)(c)		2019
Total Volume (Bcf)	120		189		19
Average Price per Mcf (NYMEX) (d)	$	3.35	$	3.18	$	3.12
Collars
Total Volume (Bcf)	6		18		—
Average Floor Price per Mcf (NYMEX) (d)	$	3.06	$	3.16	$	—
Average Cap Price per Mcf (NYMEX) (d)	$	3.93	$	3.63	$	—



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	—