Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 22, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-03551 | |
Entity Registrant Name | EQT CORPORATION | |
Entity Incorporation, State or Country Code | PA | |
Entity Tax Identification Number | 25-0464690 | |
Entity Address, Street | 625 Liberty Avenue | |
Entity Address, Suite | Suite 1700 | |
Entity Address, City or Town | Pittsburgh | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15222 | |
City Area Code | 412 | |
Local Phone Number | 553-5700 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | EQT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 255,603,156 | |
Entity Central Index Key | 0000033213 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Statements of Condensed Consoli
Statements of Condensed Consolidated Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating revenues: | ||||
Sales of natural gas, natural gas liquids and oil | $ 498,772 | $ 900,527 | $ 1,213,973 | $ 2,172,140 |
Gain on derivatives not designated as hedges | 26,426 | 407,635 | 415,862 | 275,639 |
Net marketing services and other | 1,876 | 2,090 | 4,296 | 5,646 |
Total operating revenues | 527,074 | 1,310,252 | 1,634,131 | 2,453,425 |
Operating expenses: | ||||
Transportation and processing | 405,636 | 436,984 | 845,470 | 876,230 |
Production | 38,329 | 36,316 | 78,709 | 79,724 |
Exploration | 876 | 1,857 | 1,799 | 2,864 |
Selling, general and administrative | 43,341 | 86,208 | 78,279 | 135,186 |
Depreciation and depletion | 323,096 | 372,413 | 680,622 | 763,526 |
Amortization of intangible assets | 7,477 | 10,342 | 14,955 | 20,684 |
Loss on sale/exchange of long-lived assets | 49,207 | 0 | 98,059 | 0 |
Impairment and expiration of leases | 41,279 | 48,584 | 95,047 | 78,118 |
Transaction, proxy and reorganization | 4,745 | 21,518 | 4,745 | 25,607 |
Total operating expenses | 913,986 | 1,014,222 | 1,897,685 | 1,981,939 |
Operating (loss) income | (386,912) | 296,030 | (263,554) | 471,486 |
Gain on Equitrans Share Exchange | 0 | 0 | (187,223) | 0 |
(Gain) loss on investment in Equitrans Midstream Corporation | (82,983) | 104,741 | 307,645 | 15,686 |
Dividend and other income | (3,590) | (23,645) | (28,304) | (44,632) |
Loss on debt extinguishment | 353 | 0 | 16,963 | 0 |
Interest expense | 65,386 | 50,503 | 127,760 | 107,076 |
(Loss) income before income taxes | (366,078) | 164,431 | (500,395) | 393,356 |
Income tax (benefit) expense | (103,003) | 38,865 | (70,181) | 77,099 |
Net (loss) income | $ (263,075) | $ 125,566 | $ (430,214) | $ 316,257 |
Basic: | ||||
Weighted average common stock outstanding (in shares) | 255,524 | 255,099 | 255,477 | 254,975 |
Net (loss) income (in dollars per share) | $ (1.03) | $ 0.49 | $ (1.68) | $ 1.24 |
Diluted: | ||||
Weighted average common stock outstanding (in shares) | 255,524 | 255,223 | 255,477 | 255,211 |
Net (loss) income (in dollars per share) | $ (1.03) | $ 0.49 | $ (1.68) | $ 1.24 |
Sales of natural gas, natural gas liquids and oil | ||||
Operating revenues: | ||||
Sales of natural gas, natural gas liquids and oil | $ 498,772 | $ 900,527 | $ 1,213,973 | $ 2,172,140 |
Gain on derivatives not designated as hedges | ||||
Operating revenues: | ||||
Gain on derivatives not designated as hedges | $ 26,426 | $ 407,635 | $ 415,862 | $ 275,639 |
Statements of Condensed Conso_2
Statements of Condensed Consolidated Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Net (loss) income | $ (263,075) | $ 125,566 | $ (430,214) | $ 316,257 | |
Other comprehensive income (loss), net of tax: | |||||
Net change in interest rate cash flow hedges | [1] | 0 | 42 | 0 | 84 |
Other post-retirement benefits liability adjustment | [2] | 72 | 76 | 84 | 152 |
Other comprehensive income (loss) | 72 | 118 | 84 | (260) | |
Comprehensive (loss) income | (263,003) | 125,684 | (430,130) | 315,997 | |
Change in accounting principle | |||||
Other comprehensive income (loss), net of tax: | |||||
Other comprehensive income (loss) | [3] | $ 0 | $ 0 | $ 0 | $ (496) |
[1] | Net of tax expense of $10 and $20 for the three and six months ended June 30, 2019. | ||||
[2] | Net of tax expense of $24 and $26 for the three months ended June 30, 2020 and 2019, respectively, and $48 and $52 for the six months ended June 30, 2020 and 2019, respectively. | ||||
[3] | Related to adoption of Accounting Standards Update (ASU) 2018-02. |
Statements of Condensed Conso_3
Statements of Condensed Consolidated Comprehensive (Loss) Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||||
Other post-retirement benefits liability adjustments, tax | $ 10 | $ 20 | |||
Other post-retirement benefits liability adjustments, tax | $ 24 | $ 26 | $ 48 | $ 52 | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201802Member |
Statements of Condensed Conso_4
Statements of Condensed Consolidated Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (430,214) | $ 316,257 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Deferred income tax benefit | 24,987 | 76,597 |
Depreciation and depletion | 680,622 | 763,526 |
Amortization of intangible assets | 14,955 | 20,684 |
Impairment of leases and loss on sale/exchange of long-lived assets | 193,106 | 78,118 |
Gain on Equitrans Share Exchange | (187,223) | 0 |
(Gain) loss on investment in Equitrans Midstream Corporation | 307,645 | 15,686 |
Loss on debt extinguishment | 16,963 | 0 |
Share-based compensation expense | 8,123 | 9,501 |
Amortization, accretion and other | 12,614 | 12,408 |
Gain on derivatives not designated as hedges | (415,862) | (275,639) |
Cash settlements received (paid) on derivatives not designated as hedges | 561,129 | (10,490) |
Net premiums (paid) received on derivative instruments | (53,473) | 26,406 |
Changes in other assets and liabilities: | ||
Accounts receivable | 206,322 | 467,055 |
Accounts payable | (85,973) | (253,463) |
Tax receivable | 96,920 | 4,186 |
Other items, net | (3,520) | 64,001 |
Net cash provided by operating activities | 947,121 | 1,314,833 |
Cash flows from investing activities: | ||
Capital expenditures | (512,095) | (765,781) |
Proceeds from sale of assets | 110,937 | 0 |
Cash received for Equitrans Share Exchange | 52,323 | 0 |
Other investing activities | (135) | 1,152 |
Net cash used in investing activities | (348,970) | (764,629) |
Cash flows from financing activities: | ||
Proceeds from borrowings on credit facility | 781,000 | 1,395,750 |
Repayment of borrowings on credit facility | (1,037,000) | (2,195,750) |
Proceeds from issuance of debt | 2,250,000 | 1,000,000 |
Debt issuance costs and Capped Call Transactions (See Note 6) | (65,102) | (913) |
Repayments and retirements of debt | (2,507,074) | (702,298) |
Premiums paid on debt extinguishment | (13,635) | 0 |
Dividends paid | (7,664) | (15,317) |
Cash paid for taxes related to net settlement of share-based incentive awards | (304) | (4,993) |
Net cash used in financing activities | (599,779) | (523,521) |
Net change in cash and cash equivalents | (1,628) | 26,683 |
Cash and cash equivalents at beginning of period | 4,596 | 3,487 |
Cash and cash equivalents at end of period | 2,968 | 30,170 |
Non-cash activity during the period for: | ||
Increase in right-of-use lease assets and liabilities | 1,697 | 89,021 |
Increase in asset retirement costs and obligations | 6,596 | 2,456 |
Cash paid (received) during the period for: | ||
Interest, net of amount capitalized | 74,596 | 109,713 |
Income taxes, net | (191,598) | (2,394) |
Share-based Payment Arrangement, Amount Capitalized | $ 1,611 | $ 0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 2,968 | $ 4,596 |
Accounts receivable (less provision for doubtful accounts: $4,818 and $6,861) | 341,461 | 610,088 |
Derivative instruments, at fair value | 915,441 | 812,664 |
Tax receivable | 201,934 | 298,854 |
Prepaid expenses and other | 79,991 | 28,653 |
Total current assets | 1,541,795 | 1,754,855 |
Property, plant and equipment | 20,924,066 | 21,655,351 |
Less: Accumulated depreciation and depletion | 5,219,993 | 5,499,861 |
Net property, plant and equipment | 15,704,073 | 16,155,490 |
Intangible assets, net | 11,050 | 26,006 |
Contract asset | 355,469 | 0 |
Investment in Equitrans Midstream Corporation | 210,241 | 676,009 |
Other assets | 186,240 | 196,867 |
Total assets | 18,008,868 | 18,809,227 |
Current liabilities: | ||
Current portion of debt | 16,309 | 16,204 |
Accounts payable | 686,512 | 796,438 |
Derivative instruments, at fair value | 625,808 | 312,696 |
Other current liabilities | 231,957 | 220,564 |
Total current liabilities | 1,560,586 | 1,345,902 |
Credit facility borrowings | 38,000 | 294,000 |
Term loan facility borrowings | 0 | 999,353 |
Senior notes | 4,463,548 | 3,878,366 |
Note payable to EQM Midstream Partners, LP | 102,483 | 105,056 |
Deferred income taxes | 1,550,249 | 1,485,814 |
Other liabilities and credits | 855,175 | 897,148 |
Total liabilities | 8,570,041 | 9,005,639 |
Shareholders' equity: | ||
Common stock, no par value, shares authorized: 320,000, shares issued: 257,003 | 7,889,072 | 7,818,205 |
Treasury stock, shares at cost: 1,713 and 1,832 | (30,341) | (32,507) |
Retained earnings | 1,585,211 | 2,023,089 |
Accumulated other comprehensive loss | (5,115) | (5,199) |
Total shareholders' equity | 9,438,827 | 9,803,588 |
Total liabilities and shareholders' equity | $ 18,008,868 | $ 18,809,227 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, accumulated provision for doubtful accounts | $ 4,818 | $ 6,861 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares (in shares) | 320,000,000 | 320,000,000 |
Common stock, shares issued (in shares) | 257,003,000 | 257,003,000 |
Treasury stock, shares at cost (in shares) | 1,713,000 | 1,832,000 |
Statements of Condensed Conso_5
Statements of Condensed Consolidated Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Treasury Stock | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossCumulative Effect, Period of Adoption, Adjustment | ||
Comprehensive income, net of tax: | ||||||||||
Change in accounting principle | [1] | $ 0 | $ 496 | $ (496) | ||||||
Beginning balance (in shares) at Dec. 31, 2018 | 254,472 | |||||||||
Beginning balance at Dec. 31, 2018 | $ 10,958,229 | $ 7,828,554 | $ (49,194) | $ 3,184,275 | $ (5,406) | |||||
Comprehensive income, net of tax: | ||||||||||
Net (loss) income | 316,257 | 316,257 | ||||||||
Comprehensive income, net of tax: | ||||||||||
Net change in interest rate cash flow hedges, net of tax expense | 84 | [2] | 84 | |||||||
Other post-retirement benefit liability adjustment, net of tax expense | 152 | [3] | 152 | |||||||
Dividends | (15,317) | (15,317) | ||||||||
Share-based compensation plans | 3,540 | $ (6,344) | 9,884 | |||||||
Share-based compensation plans (in shares) | 546 | |||||||||
Other (in shares) | (222) | |||||||||
Other | $ (14,470) | |||||||||
Ending balance (in shares) at Jun. 30, 2019 | 254,796 | |||||||||
Ending balance at Jun. 30, 2019 | 11,248,475 | $ 7,807,740 | (39,310) | 3,485,711 | (5,666) | |||||
Beginning balance (in shares) at Mar. 31, 2019 | 254,999 | |||||||||
Beginning balance at Mar. 31, 2019 | 11,139,588 | $ 7,817,227 | (39,665) | 3,367,810 | (5,784) | |||||
Comprehensive income, net of tax: | ||||||||||
Net (loss) income | 125,566 | 125,566 | ||||||||
Comprehensive income, net of tax: | ||||||||||
Net change in interest rate cash flow hedges, net of tax expense | 42 | [2] | 42 | |||||||
Other post-retirement benefit liability adjustment, net of tax expense | 76 | [3] | 76 | |||||||
Dividends | (7,665) | (7,665) | ||||||||
Share-based compensation plans | 5,338 | $ 4,983 | 355 | |||||||
Share-based compensation plans (in shares) | 19 | |||||||||
Other (in shares) | (222) | |||||||||
Other | (14,470) | $ (14,470) | ||||||||
Ending balance (in shares) at Jun. 30, 2019 | 254,796 | |||||||||
Ending balance at Jun. 30, 2019 | 11,248,475 | $ 7,807,740 | (39,310) | 3,485,711 | (5,666) | |||||
Beginning balance (in shares) at Dec. 31, 2019 | 255,171 | |||||||||
Beginning balance at Dec. 31, 2019 | 9,803,588 | $ 7,818,205 | (32,507) | 2,023,089 | (5,199) | |||||
Comprehensive income, net of tax: | ||||||||||
Net (loss) income | (430,214) | (430,214) | ||||||||
Comprehensive income, net of tax: | ||||||||||
Net change in interest rate cash flow hedges, net of tax expense | [2] | 0 | ||||||||
Other post-retirement benefit liability adjustment, net of tax expense | 84 | [3] | 84 | |||||||
Dividends | (7,664) | (7,664) | ||||||||
Share-based compensation plans | 9,388 | $ 7,222 | 2,166 | |||||||
Share-based compensation plans (in shares) | 119 | |||||||||
Equity component of convertible senior notes (See Note 6) | 63,645 | $ 63,645 | ||||||||
Ending balance (in shares) at Jun. 30, 2020 | 255,290 | |||||||||
Ending balance at Jun. 30, 2020 | 9,438,827 | $ 7,889,072 | (30,341) | 1,585,211 | (5,115) | |||||
Beginning balance (in shares) at Mar. 31, 2020 | 255,262 | |||||||||
Beginning balance at Mar. 31, 2020 | 9,633,878 | $ 7,821,631 | (30,852) | 1,848,286 | (5,187) | |||||
Comprehensive income, net of tax: | ||||||||||
Net (loss) income | (263,075) | (263,075) | ||||||||
Comprehensive income, net of tax: | ||||||||||
Net change in interest rate cash flow hedges, net of tax expense | [2] | 0 | ||||||||
Other post-retirement benefit liability adjustment, net of tax expense | 72 | [3] | 72 | |||||||
Share-based compensation plans | 4,307 | $ 3,796 | 511 | |||||||
Share-based compensation plans (in shares) | 28 | |||||||||
Equity component of convertible senior notes (See Note 6) | 63,645 | $ 63,645 | ||||||||
Ending balance (in shares) at Jun. 30, 2020 | 255,290 | |||||||||
Ending balance at Jun. 30, 2020 | $ 9,438,827 | $ 7,889,072 | $ (30,341) | $ 1,585,211 | $ (5,115) | |||||
[1] | Related to adoption of ASU 2018-02 | |||||||||
[2] | Net of tax expense of $10 and $20 for the three and six months ended June 30, 2019. | |||||||||
[3] | Net of tax expense of $24 and $26 for the three months ended June 30, 2020 and 2019, respectively, and $48 and $52 for the six months ended June 30, 2020 and 2019, respectively. |
Statements of Condensed Conso_6
Statements of Condensed Consolidated Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Other post-retirement benefits liability adjustments, tax | $ 10 | $ 20 | ||
Other post-retirement benefits liability adjustments, tax | $ 24 | $ 26 | $ 48 | $ 52 |
Dividends declared per common share (in dollars per share) | $ 0.03 | $ 0.03 | $ 0.06 | |
Common stock, authorized shares (in shares) | 320,000,000 | 320,000,000 | ||
Preferred stock authorized (in shares) | 3,000,000 | 3,000,000 | ||
Preferred stock issued (in shares) | 0 | 0 | ||
Preferred stock outstanding (in shares) | 0 | 0 |
Financial Statements
Financial Statements | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statements | Financial Statements The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of June 30, 2020 and December 31, 2019, the results of its operations and equity for the three and six month periods ended June 30, 2020 and 2019 and its cash flows for the six month periods ended June 30, 2020 and 2019. Certain previously reported amounts have been reclassified to conform to the current year presentation. In this Quarterly Report on Form 10-Q, references to "EQT," "EQT Corporation" and "the Company" refer collectively to EQT Corporation and its consolidated subsidiaries. The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all information and notes required by GAAP for complete financial statements. For further information, refer to the Consolidated Financial Statements and accompanying notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments . This ASU amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this ASU eliminates the probable initial recognition threshold and requires entities to reflect their current estimate of all expected credit losses. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from its scope that have a contractual right to receive cash. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures. In July 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting . This ASU expands the scope of Topic 718, Compensation – Share Compensation, to include share-based payment transactions where a grantor acquires goods or services from a nonemployee. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, Changes to the Disclosure Requirements for Fair Value Measurement . This ASU modifies the hierarchy associated with Level 1, 2 and 3 fair value measurements and the related disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . This ASU provides guidance on accounting for implementation costs incurred by a customer in a cloud computing arrangement that is a service contract. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this ASU prospectively on January 1, 2020, at which point onward applicable costs were capitalized to the Condensed Consolidated Balance Sheet rather than expensed to selling, general and administrative expense in the Statement of Condensed Consolidated Operations. For the three and six months ended June 30, 2020, such capitalized costs were approximately $3 million and $4 million, respectively. In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes . This ASU simplifies accounting for income taxes by eliminating certain exceptions to ASC 740, Income Taxes, related to the general approach for intraperiod tax allocation, methodology for calculating income taxes in an interim period and recognition of deferred taxes when there are investment ownership changes. In addition, this ASU simplifies aspects of accounting for franchise taxes and interim period effects of enacted changes in tax laws or rates and provides clarification on accounting for transactions that result |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Under the Company's natural gas, natural gas liquids (NGLs) and oil sales contracts, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. These contracts typically require payment within 25 days of the end of the calendar month in which the commodity is delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company's efforts to satisfy the performance obligations. Other contracts, such as fixed price contracts or contracts with a fixed differential to New York Mercantile Exchange (NYMEX) or index prices, contain fixed consideration. The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price. Based on management's judgment, the performance obligations for the sale of natural gas, NGLs and oil are satisfied at a point in time because the customer obtains control and legal title of the asset when the natural gas, NGLs or oil is delivered to the designated sales point. The sales of natural gas, NGLs and oil presented in the Statements of Condensed Consolidated Operations represent the Company's share of revenues net of royalties and excluding revenue interests owned by others. When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company is acting as an agent and, thus, reports the revenue on a net basis. For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $197.7 million and $384.0 million in accounts receivable in the Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019, respectively. The table below provides disaggregated information on the Company's revenues. Certain contracts that provide for the release of capacity that is not used to transport the Company's produced volumes are outside the scope of ASU 2014-09, Revenue from Contracts with Customers . The costs of, and recoveries on, such capacity are reported in net marketing services and other in the Statements of Condensed Consolidated Operations. Derivative contracts are also outside the scope of ASU 2014-09. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Thousands) Revenues from contracts with customers: Natural gas sales $ 468,216 $ 843,867 $ 1,141,446 $ 2,037,716 NGLs sales 28,761 46,520 64,517 116,124 Oil sales 1,795 10,140 8,010 18,300 Total revenues from contracts with customers $ 498,772 $ 900,527 $ 1,213,973 $ 2,172,140 Other sources of revenue: Gain on derivatives not designated as hedges 26,426 407,635 415,862 275,639 Net marketing services and other 1,876 2,090 4,296 5,646 Total operating revenues $ 527,074 $ 1,310,252 $ 1,634,131 $ 2,453,425 The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of June 30, 2020. Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of June 30, 2020. 2020 (a) 2021 2022 2023 Total (Thousands) Natural gas sales $ 17,694 $ 178,100 $ 8,158 $ 6,794 $ 210,746 (a) July 1 through December 31. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company's primary market risk exposure is the volatility of future prices for natural gas and NGLs, which can affect the Company's operating results. The Company uses derivative commodity instruments to hedge its cash flows from sales of produced natural gas and NGLs. The overall objective of the Company's hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices. The derivative commodity instruments used by the Company are primarily swap, collar and option agreements. These agreements 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 when executing its commodity hedging strategy. The Company typically enters into over the counter (OTC) derivative commodity instruments with financial institutions, and the creditworthiness of all counterparties is regularly monitored. The Company does not designate any of its derivative instruments as cash flow hedges; therefore, all changes in fair value of the Company's derivative instruments are recognized in operating revenues in the Statements of Condensed Consolidated Operations. The Company recognizes all derivative instruments as either assets or liabilities at fair value on a gross basis. These derivative instruments are reported as either current assets or current liabilities due to their highly liquid nature. The Company can net settle its derivative instruments at any time. Contracts that result in physical delivery of a commodity expected to be sold by the Company in the normal course of business are generally designated as normal sales and are exempt from derivative accounting. Contracts that result in the physical receipt or delivery of a commodity but are not designated or do not meet all of the criteria to qualify for the normal purchase and normal sale scope exception are subject to derivative accounting. The Company's OTC derivative instruments generally require settlement in cash. The Company also enters into exchange traded derivative commodity instruments that are generally settled with offsetting positions. Settlements of derivative commodity instruments are reported as a component of cash flows from operating activities in the Statements of Condensed Consolidated Cash Flows. With respect to the derivative commodity instruments held by the Company, the Company hedged portions of expected sales of production and portions of its basis exposure covering approximately 1,583 Bcf and 1,644 Bcf of natural gas as of June 30, 2020 and December 31, 2019, respectively. The open positions at both June 30, 2020 and December 31, 2019 had maturities extending through December 2024. Certain of the Company's OTC derivative instrument contracts provide that, if the Company's credit rating assigned by Moody's Investors Service, Inc. (Moody's) or S&P Global Ratings (S&P) is below the agreed-upon credit rating threshold (typically, below investment grade), and if the associated derivative liability exceeds the agreed-upon dollar threshold for such credit rating, the counterparty to such contract can require the Company to deposit collateral. Similarly, if such counterparty's credit rating assigned by Moody's or S&P is below the agreed-upon credit rating threshold, and if the associated derivative liability exceeds the agreed-upon dollar threshold for such credit rating, the Company can require the counterparty to deposit collateral with the Company. Such collateral can be up to 100% of the derivative liability. Investment grade refers to the quality of a company's credit as assessed by one or more credit rating agencies. To be considered investment grade, a company must be rated "Baa3" or higher by Moody's, "BBB–" or higher by S&P and "BBB–" or higher by Fitch Rating Service (Fitch). Anything below these ratings is considered non-investment grade. As of June 30, 2020, the Company's senior notes were rated "Ba3" by Moody's and "BB–" by S&P. When the net fair value of any of the Company's OTC derivative instrument contracts represents a liability to the Company that is in excess of the agreed-upon dollar threshold for the Company's then-applicable credit rating, the counterparty has the right to require the Company to remit funds as a margin deposit in an amount equal to the portion of the derivative liability that is in excess of the dollar threshold amount. The Company records these deposits as a current asset in the Condensed Consolidated Balance Sheets. As of June 30, 2020, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $6.2 million, for which the Company deposited and recorded as a current asset $2.4 million. As of December 31, 2019, there were no such deposits recorded in the Condensed Consolidated Balance Sheet. When the net fair value of any of the Company's OTC derivative instrument contracts represents an asset to the Company that is in excess of the agreed-upon dollar threshold for the counterparty's then-applicable credit rating, the Company has the right to require the counterparty to remit funds as a margin deposit in an amount equal to the portion of the derivative asset that is in excess of the dollar threshold amount. The Company records these deposits as a current liability in the Condensed Consolidated Balance Sheets. As of June 30, 2020 and December 31, 2019, there were no such deposits recorded in the Condensed Consolidated Balance Sheets. When the Company enters into exchange traded natural gas contracts, exchanges may require the Company to remit funds to the corresponding broker as good-faith deposits to guard against the risks associated with changing market conditions. The Company is required to make such deposits based on an established initial margin requirement and the net liability position, if any, of the fair value of the associated contracts. The Company records these deposits as a current asset in the Condensed Consolidated Balance Sheets. When the fair value of such contracts is in a net asset position, the broker may remit funds to the Company. The Company records these deposits as a current liability in the Condensed Consolidated Balance Sheets. The initial margin requirements are established by the exchanges based on the price, volatility and the time to expiration of the contract. The margin requirements are subject to change at the exchanges' discretion. As of June 30, 2020 and December 31, 2019, the Company recorded $6.9 million and $12.6 million, respectively, of such deposits as a current asset. As of June 30, 2020, the Company recorded $13.6 million of such deposits as a current liability. As of December 31, 2019, there were no such deposits recorded as a current liability. Refer to Note 9 for a discussion of the derivative liability recorded in connection with the Equitrans Share Exchange (defined in Note 9). The Company has netting agreements with financial institutions and its brokers that permit net settlement of gross commodity derivative assets against gross commodity derivative liabilities. The table below summarizes the impact of netting agreements and margin deposits on gross derivative assets and liabilities. Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets Derivative instruments subject to Margin requirements with counterparties Net derivative instruments (Thousands) June 30, 2020 Asset derivative instruments, at fair value $ 915,441 $ (441,923) $ (13,609) $ 459,909 Liability derivative instruments, at fair value 625,808 (441,923) (9,257) 174,628 December 31, 2019 Asset derivative instruments, at fair value $ 812,664 $ (226,116) $ — $ 586,548 Liability derivative instruments, at fair value 312,696 (226,116) (12,606) 73,974 The Company has not executed any interest rate swaps since 2011. As of December 31, 2019, amounts related to historical interest rate swaps that had been previously recorded in accumulated other comprehensive income (OCI) were fully reclassified into interest expense. See Note 8. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company records its financial instruments, which are principally derivative instruments, at fair value in the Condensed Consolidated Balance Sheets. The Company estimates the fair value of its financial instruments using quoted market prices when available. If quoted market prices are not available, fair value is based on models that use market-based parameters, including forward curves, discount rates, volatilities and nonperformance risk, as inputs. Nonperformance risk considers the effect of the Company's credit standing on the fair value of liabilities and the effect of the counterparty's credit standing on the fair value of assets. The Company estimates nonperformance risk by analyzing publicly available market information, including a comparison of the yield on debt instruments with credit ratings similar to the Company's or counterparty's credit rating and the yield on a risk-free instrument. The Company has categorized its assets and liabilities recorded at fair value into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities that use Level 2 inputs primarily include the Company's swap, collar and option agreements. Exchange traded commodity swaps have Level 1 inputs. The fair value of the commodity swaps with Level 2 inputs is based on standard industry income approach models that use significant observable inputs, including, but not limited to, NYMEX natural gas forward curves, LIBOR-based discount rates, basis forward curves and natural gas liquids forward curves. The Company's collars and options are valued using standard industry income approach option models. The significant observable inputs used by the option pricing models include NYMEX forward curves, natural gas volatilities and LIBOR-based discount rates. The table below summarizes assets and liabilities measured at fair value on a recurring basis. Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets Fair value measurements at reporting date using: Quoted prices in active Significant other observable inputs Significant unobservable inputs (Thousands) June 30, 2020 Asset derivative instruments, at fair value $ 915,441 $ 133,817 $ 781,624 $ — Liability derivative instruments, at fair value 625,808 111,315 514,493 — December 31, 2019 Asset derivative instruments, at fair value $ 812,664 $ 95,041 $ 717,623 $ — Liability derivative instruments, at fair value 312,696 71,107 241,589 — The carrying values of cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term maturities. The carrying value of the 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 on the Company's credit facility and term loan facility approximate fair value as the interest rates are based on prevailing market rates. The Company considered all of these fair values to be Level 1 fair value measurements. The Company has an immaterial investment in a fund that invests in companies developing technology and operating solutions for exploration and production companies. The investment is valued using, as a practical expedient, the net asset value provided in the financial statements received from fund managers and is recorded in other assets in the Condensed Consolidated Balance Sheets. The Company estimates the fair value of its senior notes using established fair value methodology. Because not all of the Company's senior notes are actively traded, their fair value is a Level 2 fair value measurement. As of June 30, 2020 and December 31, 2019, the Company's senior notes had a fair value of approximately $4.4 billion and $3.9 billion, respectively, and a carrying value of approximately $4.5 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 an income approach model with a market- based discount rate and is a Level 3 fair value measurement. As of June 30, 2020 and December 31, 2019, the Company's note payable to EQM had a fair value of approximately $132 million and $128 million, respectively, and a carrying value of approximately $108 million and $110 million, respectively, inclusive of any current portion. See Note 6 for further discussion of the 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. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the six months ended June 30, 2020 and 2019, 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" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period. There were no material changes to the Company's methodology for determining unrecognized tax benefits during the six months ended June 30, 2020. The Company recorded income tax benefit at an effective tax rate of 14.0% for the six months ended June 30, 2020 and income tax expense at an effective tax rate of 19.6% for the six months ended June 30, 2019. The Company's effective tax rate for the six months ended June 30, 2020 was lower compared to the U.S. federal statutory rate due primarily to valuation allowances provided against federal and state deferred tax assets for the additional unrealized losses on the Company's investment in Equitrans Midstream incurred in the first half of 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 six months ended June 30, 2019 was lower compared to the U.S. federal statutory rate due primarily to 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 Internal Revenue Service (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, of which $189.6 million was received during the three months ended June 30, 2020 and the remainder is recorded in tax receivable in the Condensed Consolidated Balance Sheet as of June 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. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 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 June 30, 2020 and no letters of credit outstanding under its credit facility as of December 31, 2019. Under the Company's credit facility, for the three months ended June 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $173 million and $572 million, respectively, the average daily balances were approximately $35 million and $276 million, respectively, and interest was incurred at weighted average annual interest rates of 2.4% and 4.0%, respectively. Under the Company's credit facility, for the six months ended June 30, 2020 and 2019, the maximum amounts of outstanding borrowings were $356 million and $1,108 million, respectively, the average daily balances were approximately $60 million and $459 million, respectively, and interest was incurred at weighted average annual interest rates of 2.9% and 4.0%, respectively. Based on the Company's senior notes credit rating as of June 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. For the three and six months ended June 30, 2020, the average daily balances were approximately $431 million and $692 million, respectively, and interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 2.2% and 2.6%, respectively. As of June 30, 2019, the Company had $1.0 billion of outstanding borrowings under its term loan facility. For the period May 31, 2019 through June 30, 2019, interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 3.4%. Based on the Company's senior notes credit rating as of June 30, 2020 and December 31, 2019, the margin on the Company's term loan facility borrowings was 1.50% and 1.00%, respectively. 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 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. In addition, in April 2020, the Company repurchased $4.6 million aggregate principal amount of its 4.875% senior notes pursuant to open market purchases. 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 will increase to 7.875% and the interest rate on the 7.000% senior notes will increase to 8.750% beginning with the interest payment period that starts 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. 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 five-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. 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. As of June 30, 2020, the net carrying amount of the Convertible Notes liability component consisted of principal of $500 million less the unamortized debt discount of $138.7 million and unamortized issuance costs of $11.9 million. During the three and six months ended June 30, 2020, the Company recognized interest expense related to the Convertible Notes of $4.9 million, consisting of contractual interest expense of $1.5 million, amortization of the debt discount of $3.2 million and amortization of issuance costs of $0.2 million. For the three months ended June 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. Surety Bonds . During the three months ended June 30, 2020, the Company issued approximately $93 million in surety bonds in response to its recent credit downgrades by Moody's, S&P and Fitch. |
Earnings Per Share (EPS)
Earnings Per Share (EPS) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share (EPS) | Earnings Per Share (EPS) In periods when the Company reports a net loss, all options, 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. As a result, for the three and six months ended June 30, 2020, all securities, totaling 6,769,822 and 6,739,305, respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS. For the three and six months ended June 30, 2019, potentially dilutive securities included in the calculation of diluted weighted average shares outstanding were 124,250 and 235,743, respectively. For both the three and six months ended June 30, 2019, options to purchase common stock of 1,885,529 were excluded from potentially dilutive securities because of their anti-dilutive effect on EPS. As discussed in Note 6, the Company issued the Convertible Notes during the second quarter of 2020 and, upon conversion of the 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 six months ended June 30, 2020, the conversion premium of 6,666,670 shares was excluded from potentially dilutive securities because of its anti-dilutive effect on EPS. |
Changes in Accumulated OCI (Los
Changes in Accumulated OCI (Loss) by Component | 6 Months Ended |
Jun. 30, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Changes in Accumulated OCI (Loss) by Component | Changes in Accumulated OCI (Loss) by Component The following table summarizes the changes in accumulated OCI (loss) by component. Interest rate cash Other postretirement Accumulated OCI (loss), (Thousands) April 1, 2019 $ (345) $ (5,439) $ (5,784) Losses reclassified from accumulated OCI, net of tax 42 (a) 76 (b) 118 June 30, 2019 $ (303) $ (5,363) $ (5,666) April 1, 2020 $ — $ (5,187) $ (5,187) Losses reclassified from accumulated OCI, net of tax — 72 (b) 72 June 30, 2020 $ — $ (5,115) $ (5,115) January 1, 2019 $ (387) $ (5,019) $ (5,406) Losses reclassified from accumulated OCI, net of tax 84 (a) 152 (b) 236 Change in accounting principle — (496) (c) (496) June 30, 2019 $ (303) $ (5,363) $ (5,666) January 1, 2020 $ — $ (5,199) $ (5,199) Losses reclassified from accumulated OCI, net of tax — 84 (b) 84 June 30, 2020 $ — $ (5,115) $ (5,115) (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. |
Equitrans Share Exchange
Equitrans Share Exchange | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Equitrans Share Exchange | Equitrans Share Exchange On February 26, 2020, the Company entered into two 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 Closing Date). The rate relief was effected through the execution of the Consolidated GGA (defined herein). As of June 30, 2020, the Company owned 25,299,751 shares of Equitrans Midstream's common stock. On February 26, 2020, the Company entered into a gas gathering and compression agreement (the Consolidated GGA) with an affiliate of EQM, pursuant to which, among other things, EQM agreed to provide to the Company gas gathering services in the Marcellus and Utica Shales of Pennsylvania and West Virginia, and the Company committed to an initial annual minimum volume commitment of 3.0 Bcf per day and an acreage dedication in Pennsylvania and West Virginia. The Consolidated GGA is effective through December 31, 2035 and will renew annually thereafter unless terminated by the Company or EQM. The Consolidated GGA provides for additional cash bonus payments (the Henry Hub Cash Bonus) payable by the Company to EQM during the period beginning on the first day of the quarter in which the Mountain Valley Pipeline (MVP) is placed in service and ending on the earlier of 36 months thereafter or December 31, 2024. Such payments are conditioned upon the quarterly average of the NYMEX Henry Hub natural gas settlement price exceeding certain price thresholds. In addition, the Consolidated GGA provides a cash payment option that grants the Company the right to receive payments from EQM in the event that the MVP in-service date has not occurred prior to January 1, 2022. On the Share Purchase Closing Date, the Company recorded in the Condensed Consolidated Balance Sheet a contract asset representing the estimated fair value of the rate relief provided by the Consolidated GGA of $410 million, of which $54.5 million was classified as current as of June 30, 2020, a derivative liability related to the Henry Hub Cash Bonus of approximately $117 million and a decrease in the Company's investment in Equitrans Midstream of approximately $158 million. The resulting gain of approximately $187 million was recorded in the Statement of Condensed Consolidated Operations. Beginning in the first quarter of 2021, the Company will recognize amortization of the contract asset over a period of four years in a manner consistent with the expected timing of the Company's realization of the economic benefits of the rate relief provided by the Consolidated GGA. As of June 30, 2020, the derivative liability related to the Henry Hub Cash Bonus was approximately $130 million. The fair value of the contract asset was based on significant inputs that are not observable in the market and, as such, is a Level 3 fair value measurement. Key assumptions used in the fair value calculation included an estimated production volume forecast and a market-based discount rate. The fair value of the derivative liability related to the Henry Hub Cash Bonus was based on significant inputs that were interpolated from observable market data and, as such, is a Level 2 fair value measurement. See Note 4 for a description of the fair value hierarchy. |
2020 Asset Transactions
2020 Asset Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Nonmonetary Transactions [Abstract] | |
2020 Asset Transactions | 2020 Asset Transactions 2020 Asset Exchange Transactions . During the first and second quarters of 2020, the Company closed on various acreage trade agreements (collectively, the 2020 Asset Exchange Transactions), pursuant to which the Company exchanged approximately 11,700 aggregate net revenue interest acres across Greene, Allegheny and Westmoreland Counties, Pennsylvania and Wetzel and Marshall Counties, West Virginia for approximately 11,700 aggregate net revenue interest acres across Greene and Washington Counties, Pennsylvania and Wetzel County, West Virginia. As a result of the 2020 Asset Exchange Transactions, the Company recognized a loss of $6.7 million and $55.6 million in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the three and six months ended June 30, 2020, respectively. The fair value of leases acquired were based on inputs that are not observable in the market and, as such, is a Level 3 fair value measurement. See Note 4 for a description of the fair value hierarchy. Key assumptions used in the fair value calculation included market-based prices for comparable acreage. 2020 Divestiture. On May 11, 2020, the Company closed a transaction to sell certain non-strategic assets located in Pennsylvania and West Virginia (the 2020 Divestiture) for an aggregate purchase price of approximately $125 million in cash, subject to customary purchase price adjustments and the Contingent Consideration defined and discussed below. Pennsylvania assets sold included 80 Marcellus wells and approximately 33 miles of gathering lines; West Virginia assets sold included 809 conventional wells and approximately 154 miles of gathering lines. In addition, the 2020 Divestiture relieved the Company of approximately $49 million in asset retirement obligations and other liabilities associated with the sold assets. Proceeds from the sale were used to pay down the Company's term loan facility. See Note 6. The purchase and sale agreement for the 2020 Divestiture provides for additional cash bonus payments (the Contingent Consideration) payable to the Company of up to $20 million. Such Contingent Consideration is conditioned upon the three-month average of the NYMEX Henry Hub natural gas settlement price relative to stated floor and target price thresholds beginning on August 31, 2020 and ending on November 30, 2022. The Contingent Consideration represents an embedded derivative that had no fair value as of both May 11, 2020 and June 30, 2020. The fair value of the Contingent Consideration was based on significant inputs that were interpolated from observable market data and, as such, is a Level 2 fair value measurement. See Note 4 for a description of the fair value hierarchy. As a result of the 2020 Divestiture, the Company recognized a loss of $42.5 million in loss on sale/exchange of long-lived assets in the Statements of Condensed Consolidated Operations during the second quarter of 2020. |
Share-Based Compensation Plans
Share-Based Compensation Plans | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation Plans | Share-based Compensation Plans Effective in 2020, the Management Development and Compensation Committee of the Company's Board of Directors (the Compensation Committee) adopted the 2020 Incentive Performance Share Unit Program (the 2020 Incentive PSU Program) under the 2019 Long-Term Incentive Plan. The 2020 Incentive PSU Program was established to provide long-term incentive opportunities to key employees to further align their interests with the interests of shareholders and customers and the strategic objectives of the Company. The Company granted 1,376,198 units under the 2020 Incentive PSU Program during the first quarter of 2020. The units will vest following a three Effective January 13, 2020, the Compensation Committee granted 1,240,000 non-qualified stock appreciation rights exercisable in EQT common stock, cash or a combination thereof based on the excess of the fair market value of a share of EQT common stock as of the date of exercise over a base price of $10.00. The stock appreciation rights are subject to service and performance conditions. Effective February 27, 2020, the Compensation Committee granted 1,000,000 non-qualified stock options to the President and Chief Executive Officer of the Company. The 2020 options expire on the seventh anniversary of the grant date, have an exercise price of $10.00 and vest in three Effective in 2020, the Compensation Committee granted 1,734,740 restricted stock equity awards. The restricted stock equity awards vest in three equal annual installments beginning on the first anniversary of the grant date, assuming continued employment with the Company by the award recipient. |
Financial Statements (Policies)
Financial Statements (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments . This ASU amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this ASU eliminates the probable initial recognition threshold and requires entities to reflect their current estimate of all expected credit losses. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from its scope that have a contractual right to receive cash. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures. In July 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting . This ASU expands the scope of Topic 718, Compensation – Share Compensation, to include share-based payment transactions where a grantor acquires goods or services from a nonemployee. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, Changes to the Disclosure Requirements for Fair Value Measurement . This ASU modifies the hierarchy associated with Level 1, 2 and 3 fair value measurements and the related disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this ASU on January 1, 2020 with no changes to its methodology, financial statements or disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract . This ASU provides guidance on accounting for implementation costs incurred by a customer in a cloud computing arrangement that is a service contract. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this ASU prospectively on January 1, 2020, at which point onward applicable costs were capitalized to the Condensed Consolidated Balance Sheet rather than expensed to selling, general and administrative expense in the Statement of Condensed Consolidated Operations. For the three and six months ended June 30, 2020, such capitalized costs were approximately $3 million and $4 million, respectively. In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes . This ASU simplifies accounting for income taxes by eliminating certain exceptions to ASC 740, Income Taxes, related to the general approach for intraperiod tax allocation, methodology for calculating income taxes in an interim period and recognition of deferred taxes when there are investment ownership changes. In addition, this ASU simplifies aspects of accounting for franchise taxes and interim period effects of enacted changes in tax laws or rates and provides clarification on accounting for transactions that result |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The table below provides disaggregated information on the Company's revenues. Certain contracts that provide for the release of capacity that is not used to transport the Company's produced volumes are outside the scope of ASU 2014-09, Revenue from Contracts with Customers . The costs of, and recoveries on, such capacity are reported in net marketing services and other in the Statements of Condensed Consolidated Operations. Derivative contracts are also outside the scope of ASU 2014-09. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Thousands) Revenues from contracts with customers: Natural gas sales $ 468,216 $ 843,867 $ 1,141,446 $ 2,037,716 NGLs sales 28,761 46,520 64,517 116,124 Oil sales 1,795 10,140 8,010 18,300 Total revenues from contracts with customers $ 498,772 $ 900,527 $ 1,213,973 $ 2,172,140 Other sources of revenue: Gain on derivatives not designated as hedges 26,426 407,635 415,862 275,639 Net marketing services and other 1,876 2,090 4,296 5,646 Total operating revenues $ 527,074 $ 1,310,252 $ 1,634,131 $ 2,453,425 |
Summary of Transaction Price Allocation | The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of June 30, 2020. Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of June 30, 2020. 2020 (a) 2021 2022 2023 Total (Thousands) Natural gas sales $ 17,694 $ 178,100 $ 8,158 $ 6,794 $ 210,746 (a) July 1 through December 31. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Impact of Netting Agreements and Margin Deposits on Gross Derivative Assets | The table below summarizes the impact of netting agreements and margin deposits on gross derivative assets and liabilities. Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets Derivative instruments subject to Margin requirements with counterparties Net derivative instruments (Thousands) June 30, 2020 Asset derivative instruments, at fair value $ 915,441 $ (441,923) $ (13,609) $ 459,909 Liability derivative instruments, at fair value 625,808 (441,923) (9,257) 174,628 December 31, 2019 Asset derivative instruments, at fair value $ 812,664 $ (226,116) $ — $ 586,548 Liability derivative instruments, at fair value 312,696 (226,116) (12,606) 73,974 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The table below summarizes assets and liabilities measured at fair value on a recurring basis. Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets Fair value measurements at reporting date using: Quoted prices in active Significant other observable inputs Significant unobservable inputs (Thousands) June 30, 2020 Asset derivative instruments, at fair value $ 915,441 $ 133,817 $ 781,624 $ — Liability derivative instruments, at fair value 625,808 111,315 514,493 — December 31, 2019 Asset derivative instruments, at fair value $ 812,664 $ 95,041 $ 717,623 $ — Liability derivative instruments, at fair value 312,696 71,107 241,589 — |
Changes in Accumulated OCI (L_2
Changes in Accumulated OCI (Loss) by Component (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of Changes in Accumulated OCI by Component | The following table summarizes the changes in accumulated OCI (loss) by component. Interest rate cash Other postretirement Accumulated OCI (loss), (Thousands) April 1, 2019 $ (345) $ (5,439) $ (5,784) Losses reclassified from accumulated OCI, net of tax 42 (a) 76 (b) 118 June 30, 2019 $ (303) $ (5,363) $ (5,666) April 1, 2020 $ — $ (5,187) $ (5,187) Losses reclassified from accumulated OCI, net of tax — 72 (b) 72 June 30, 2020 $ — $ (5,115) $ (5,115) January 1, 2019 $ (387) $ (5,019) $ (5,406) Losses reclassified from accumulated OCI, net of tax 84 (a) 152 (b) 236 Change in accounting principle — (496) (c) (496) June 30, 2019 $ (303) $ (5,363) $ (5,666) January 1, 2020 $ — $ (5,199) $ (5,199) Losses reclassified from accumulated OCI, net of tax — 84 (b) 84 June 30, 2020 $ — $ (5,115) $ (5,115) (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. |
Financial Statements (Details)
Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201802Member | ||
Capitalized cost | $ 3,000 | $ 4,000 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Narratives (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2018 | Dec. 31, 2019 | |
Disaggregation of Revenue | |||
Amounts due from contracts with customers | $ 197.7 | $ 384 | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201802Member | ||
Natural Gas, Oil, and NGLs Sales | |||
Disaggregation of Revenue | |||
Number of days in which payment is required | 25 days |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue | ||||
Total revenues from contracts with customers | $ 498,772 | $ 900,527 | $ 1,213,973 | $ 2,172,140 |
Gain on derivatives not designated as hedges | 26,426 | 407,635 | 415,862 | 275,639 |
Net marketing services and other | 1,876 | 2,090 | 4,296 | 5,646 |
Total operating revenues | 527,074 | 1,310,252 | 1,634,131 | 2,453,425 |
Natural gas sales | ||||
Disaggregation of Revenue | ||||
Total revenues from contracts with customers | 468,216 | 843,867 | 1,141,446 | 2,037,716 |
NGLs sales | ||||
Disaggregation of Revenue | ||||
Total revenues from contracts with customers | 28,761 | 46,520 | 64,517 | 116,124 |
Oil sales | ||||
Disaggregation of Revenue | ||||
Total revenues from contracts with customers | 1,795 | 10,140 | 8,010 | 18,300 |
Net marketing services and other | ||||
Disaggregation of Revenue | ||||
Net marketing services and other | $ 1,876 | $ 2,090 | $ 4,296 | $ 5,646 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Remaining Performance Obligations (Details) - Natural gas sales $ in Thousands | Jun. 30, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 210,746 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 17,694 |
Remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 178,100 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 8,158 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 6,794 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)Bcf | Dec. 31, 2019USD ($)Bcf | |
Derivative Instruments, Gain (Loss) | ||
Asset derivative instruments, at fair value | $ 915,441,000 | $ 812,664,000 |
Liability derivative instrument, at fair value | $ 625,808,000 | 312,696,000 |
Maximum additional collateral as percentage of derivative liability | 100.00% | |
Aggregate fair value of derivative instruments with credit-risk related contingencies | $ 6,200,000 | 0 |
Collateral posted | 2,400,000 | 0 |
Natural Gas Liquid Instrument | ||
Derivative Instruments, Gain (Loss) | ||
Asset derivative instruments, at fair value | (6,900,000) | 12,600,000 |
Liability derivative instrument, at fair value | 13,600,000 | 0 |
Aggregate fair value of derivative instruments with credit-risk related contingencies | 0 | 0 |
Commodity derivatives | ||
Derivative Instruments, Gain (Loss) | ||
Asset derivative instruments, at fair value | 915,441,000 | 812,664,000 |
Liability derivative instrument, at fair value | $ 625,808,000 | $ 312,696,000 |
Cash flow hedging | Commodity derivatives | ||
Derivative Instruments, Gain (Loss) | ||
Volume of derivative instruments (in Bcf, Mbbls) | Bcf | 1,583 | 1,644 |
Derivative Instruments - Impact
Derivative Instruments - Impact of Netting Agreements and Margin Deposits (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Asset derivative instruments, at fair value | ||
Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets | $ 915,441 | $ 812,664 |
Liability derivative instruments, at fair value | ||
Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets | 625,808 | 312,696 |
Commodity derivatives | ||
Asset derivative instruments, at fair value | ||
Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets | 915,441 | 812,664 |
Derivative instruments subject to master netting agreements | (441,923) | (226,116) |
Margin requirements with counterparties | (13,609) | 0 |
Net derivative instruments | 459,909 | 586,548 |
Liability derivative instruments, at fair value | ||
Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets | 625,808 | 312,696 |
Derivative instruments subject to master netting agreements | (441,923) | (226,116) |
Margin requirements with counterparties | (9,257) | (12,606) |
Net derivative instruments | $ 174,628 | $ 73,974 |
Fair Value Measurements - Deriv
Fair Value Measurements - Derivative Instrument Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Asset derivative instruments, at fair value | $ 915,441 | $ 812,664 |
Fair value on a recurring basis | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Asset derivative instruments, at fair value | 133,817 | 95,041 |
Liability derivative instruments, at fair value | 111,315 | 71,107 |
Fair value on a recurring basis | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Asset derivative instruments, at fair value | 781,624 | 717,623 |
Liability derivative instruments, at fair value | 514,493 | 241,589 |
Fair value on a recurring basis | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Asset derivative instruments, at fair value | 0 | 0 |
Liability derivative instruments, at fair value | 0 | 0 |
Fair value on a recurring basis | Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Asset derivative instruments, at fair value | 915,441 | 812,664 |
Liability derivative instruments, at fair value | $ 625,808 | $ 312,696 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
EQM Midstream Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Long-term debt | $ 108 | $ 110 |
Estimated fair value of long-term debt | 132 | 128 |
Senior Notes | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Carrying value of total debt | 4,400 | 3,900 |
Long-term debt | $ 4,500 | $ 3,900 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Income Tax Disclosure [Abstract] | ||||
Effective income tax | 14.00% | 19.60% | ||
Percentage of alternative AMT subjected to sequestration | 6.20% | |||
Change in alternative minimum tax | $ 94.8 | |||
Alternative minimum tax | $ 379.3 | |||
Tax credits received | $ 189.6 |
Debt (Details)
Debt (Details) | Apr. 28, 2020USD ($)$ / shares | Apr. 28, 2020USD ($)$ / shares | Apr. 28, 2020USD ($)numberOfWells$ / shares | Apr. 28, 2020USD ($)d$ / shares | Apr. 23, 2020$ / shares | Feb. 03, 2020 | Jan. 21, 2020USD ($) | Apr. 30, 2020USD ($) | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Aug. 01, 2020 | Dec. 31, 2019USD ($) |
Line of Credit Facility | ||||||||||||||
Redemption price, percentage | 100.00% | |||||||||||||
Interest expense, debt | $ 4,900,000 | $ 4,900,000 | ||||||||||||
Convertible note, measurement period trading days | d | 5 | |||||||||||||
Convertible notes, measurement period consecutive trading days | d | 5 | |||||||||||||
Payment of debt premium charges | $ 32,500,000 | |||||||||||||
Repayment of borrowing on credit facility | 1,037,000,000 | $ 2,195,750,000 | ||||||||||||
Strike price (in dollars per share) | $ / shares | $ 15 | $ 15 | $ 15 | $ 15 | ||||||||||
Capped price (in dollars per share) | $ / shares | $ 18.75 | $ 18.75 | $ 18.75 | $ 18.75 | ||||||||||
Interest expense | 65,386,000 | $ 50,503,000 | 127,760,000 | 107,076,000 | ||||||||||
Proceeds from issuance of debt | 2,250,000,000 | 1,000,000,000 | ||||||||||||
Convertible notes impact on shareholders equity | 63,645,000 | 63,645,000 | ||||||||||||
Common Stock | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Convertible notes impact on shareholders equity | 63,645,000 | 63,645,000 | ||||||||||||
Senior Notes | Scenario, Forecast | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Additional interest rate limit (percent) | 2.00% | |||||||||||||
Surety Bond | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Face amount | 93,000,000 | 93,000,000 | ||||||||||||
Term Loan Agreement | Unsecured Debt | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Average daily balance of short-term loans outstanding during the period | 431,000,000 | 692,000,000 | ||||||||||||
Face amount | $ 1,000,000,000 | $ 1,000,000,000 | $ 1,000,000,000 | $ 1,000,000,000 | ||||||||||
Interest rate, stated percentage | 1.50% | 1.50% | 1.00% | |||||||||||
Weighted average interest rate | 2.20% | 3.40% | 2.20% | 3.40% | 2.60% | |||||||||
Repayments of debt | $ 200,000,000 | |||||||||||||
Repayment of borrowing on credit facility | $ 450,000,000 | |||||||||||||
Senior Notes Due February 2025 | Senior Notes | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Face amount | $ 1,000,000,000 | |||||||||||||
Interest rate, stated percentage | 6.125% | |||||||||||||
Senior Notes Due February 2025 | Senior Notes | Scenario, Forecast | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Interest rate, stated percentage | 7.875% | |||||||||||||
Senior Notes Due February 2030 | Senior Notes | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Face amount | $ 750,000,000 | |||||||||||||
Interest rate, stated percentage | 7.00% | |||||||||||||
Senior Notes Due February 2030 | Senior Notes | Scenario, Forecast | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Interest rate, stated percentage | 8.75% | |||||||||||||
Floating Rate Notes Due 2020 | Senior Notes | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Repayments of debt | $ 500,000,000 | |||||||||||||
Redemption price, percentage | 100.00% | |||||||||||||
Interest expense, debt | $ 1,200,000 | |||||||||||||
2.50 Senior Notes Due 2020 | Senior Notes | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Interest rate, stated percentage | 2.50% | |||||||||||||
Repayments of debt | $ 500,000,000 | |||||||||||||
Redemption price, percentage | 100.446% | |||||||||||||
Interest expense, debt | $ 4,200,000 | |||||||||||||
Redemption premium | $ 2,200,000 | |||||||||||||
Senior Notes Due November 2021 | Senior Notes | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Interest rate, stated percentage | 4.875% | |||||||||||||
Repayments of debt | $ 500,000,000 | |||||||||||||
Interest expense, debt | 7,400,000 | |||||||||||||
Payments to repurchase senior notes | 517,400,000 | $ 517,400,000 | ||||||||||||
Early tender premium | $ 10,000,000 | |||||||||||||
Repurchase amount | $ 4,600,000 | |||||||||||||
1.75% Senior Notes Due 2026 | Senior Notes | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Face amount | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | ||||||||||
Interest rate, stated percentage | 1.75% | 1.75% | 1.75% | 1.75% | ||||||||||
Redemption price, percentage | 130.00% | |||||||||||||
Interest expense, debt | $ 1,500,000 | |||||||||||||
Convertible notes, trading days | 20 | 20 | ||||||||||||
Convertible notes, consecutive trading days | 30 | 30 | ||||||||||||
Minimum trigger price as percentage | 98.00% | |||||||||||||
Convertible notes, conversion ratio | 66.6667 | |||||||||||||
Initial conversion price (in dollars per share) | $ / shares | $ 15 | $ 15 | ||||||||||||
Conversion premium, percent | 20.00% | |||||||||||||
Convertible closing price (in dollars per share) | $ / shares | $ 12.50 | |||||||||||||
Convertible notes, term | 6 years | |||||||||||||
Effective interest rate | 8.40% | 8.40% | ||||||||||||
Fair value of convertible notes | $ 358,100,000 | $ 358,100,000 | ||||||||||||
Net deferred tax liability of convertible notes | 41,000,000 | 41,000,000 | ||||||||||||
Equity component of convertible notes | 100,900,000 | 100,900,000 | ||||||||||||
Debt issuance cost attributable to liability component | 12,100,000 | 12,100,000 | ||||||||||||
Debt issuance cost attributable to equity component | 4,800,000 | 4,800,000 | ||||||||||||
Unamortized discount | 138,700,000 | 138,700,000 | ||||||||||||
Unamortized issuance cost | 11,900,000 | 11,900,000 | ||||||||||||
Interest expense | 1,500,000 | |||||||||||||
Amortization of debt discount | 3,200,000 | 3,200,000 | ||||||||||||
Amortization of issuance cost | 200,000 | 200,000 | ||||||||||||
Proceeds from issuance of debt | $ 450,600,000 | |||||||||||||
Debt Issuance Costs, Net | $ 16,900,000 | $ 16,900,000 | $ 16,900,000 | $ 16,900,000 | ||||||||||
Credit Facility | EQT 2.5 Billion Facility | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Line of credit facility, maximum borrowing capacity | 2,500,000,000 | 2,500,000,000 | ||||||||||||
Letters of credit outstanding under revolving credit facility | 800,000,000 | 800,000,000 | $ 0 | |||||||||||
Maximum amount of outstanding short-term loans at any time during the period | 173,000,000 | $ 572,000,000 | 356,000,000 | $ 1,108,000,000 | ||||||||||
Average daily balance of short-term loans outstanding during the period | $ 35,000,000 | $ 276,000,000 | $ 60,000,000 | $ 459,000,000 | ||||||||||
Weighted average interest rates of average daily balance of short-term loans | 2.40% | 4.00% | 2.90% | 4.00% | ||||||||||
Credit Facility | EQT 2.5 Billion Facility | Base Rate | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Basis spread on variable rate | 1.00% | |||||||||||||
Credit Facility | EQT 2.5 Billion Facility | Eurodollar | ||||||||||||||
Line of Credit Facility | ||||||||||||||
Basis spread on variable rate | 2.00% |
Earnings Per Share (EPS) (Detai
Earnings Per Share (EPS) (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Shares excluded from potentially dilutive securities (in shares) | 6,769,822 | 6,739,305 | ||
Potentially dilutive securities (in shares) | 124,250 | 235,743 | ||
Convertible notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Shares excluded from potentially dilutive securities (in shares) | 6,666,670 | 6,666,670 | ||
Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Shares excluded from potentially dilutive securities (in shares) | 1,885,529 | 1,885,529 |
Changes in Accumulated OCI (L_3
Changes in Accumulated OCI (Loss) by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Changes in AOCI by Component | |||||
Beginning balance | $ 9,633,878 | $ 11,139,588 | $ 9,803,588 | $ 10,958,229 | |
Change in accounting principle | 72 | 118 | 84 | (260) | |
Ending balance | 9,438,827 | 11,248,475 | 9,438,827 | 11,248,475 | |
Change in accounting principle | |||||
Changes in AOCI by Component | |||||
Change in accounting principle | [1] | 0 | 0 | 0 | (496) |
Accumulated Other Comprehensive Loss | |||||
Changes in AOCI by Component | |||||
Beginning balance | (5,187) | (5,784) | (5,199) | (5,406) | |
Losses reclassified from accumulated OCI, net of tax | 72 | 118 | 84 | 236 | |
Ending balance | (5,115) | (5,666) | (5,115) | (5,666) | |
Accumulated Other Comprehensive Loss | Change in accounting principle | |||||
Changes in AOCI by Component | |||||
Change in accounting principle | (496) | ||||
Interest rate cash flow hedges, net of tax | Change in accounting principle | |||||
Changes in AOCI by Component | |||||
Change in accounting principle | 0 | ||||
Interest rate cash flow hedges, net of tax | Interest rate cash flow hedges, net of tax | |||||
Changes in AOCI by Component | |||||
Beginning balance | 0 | (345) | 0 | (387) | |
Losses reclassified from accumulated OCI, net of tax | 0 | 42 | 0 | 84 | |
Ending balance | 0 | (303) | 0 | (303) | |
Other postretirement benefits liability adjustment, net of tax | |||||
Changes in AOCI by Component | |||||
Beginning balance | (5,187) | (5,439) | (5,199) | (5,019) | |
Losses reclassified from accumulated OCI, net of tax | 72 | 76 | 84 | 152 | |
Ending balance | $ (5,115) | $ (5,363) | $ (5,115) | (5,363) | |
Other postretirement benefits liability adjustment, net of tax | Change in accounting principle | |||||
Changes in AOCI by Component | |||||
Change in accounting principle | $ (496) | ||||
[1] | Related to adoption of Accounting Standards Update (ASU) 2018-02. |
Equitrans Share Exchange (Detai
Equitrans Share Exchange (Details) $ in Thousands | Feb. 26, 2020USD ($)numberOfSharePurchaseAgreementssharesBcf | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Class of Stock | ||||||
Number of share purchase agreements | numberOfSharePurchaseAgreements | 2 | |||||
Cash received for Equitrans Share Exchange | $ 52,323 | $ 0 | ||||
Contract asset | $ 410,000 | |||||
Contract asset, current | 54,500 | |||||
Derivative instruments, at fair value | $ 625,808 | 625,808 | $ 312,696 | |||
Gain on Equitrans Share Exchange | $ 187,000 | 0 | $ 0 | 187,223 | $ 0 | |
Contract asset, term | 4 years | |||||
Henry hub cash bonus | ||||||
Class of Stock | ||||||
Derivative instruments, at fair value | $ 117,000 | |||||
Derivative liability | $ 130,000 | $ 130,000 | ||||
Equitrans Midstream | ||||||
Class of Stock | ||||||
Initial annual minimum volume commitment (in Bcf) | Bcf | 3 | |||||
Commitment term | 36 months | |||||
Equitrans Midstream | ||||||
Class of Stock | ||||||
Sales of equity shares (in shares) | shares | 25,299,752 | |||||
Ownership percentage | 50.00% | |||||
Cash received for Equitrans Share Exchange | $ 52,000 | |||||
Outstanding shares of Equitrans Midstream's common stock (in shares) | shares | 25,299,751 | 25,299,751 | ||||
Decrease in equity investments | $ 158,000 |
2020 Asset Transactions (Detail
2020 Asset Transactions (Details) $ in Thousands | May 11, 2020USD ($)numberOfWellsmi | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)a | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Nonmonetary Transaction | ||||||
Loss from asset exchange transaction | $ 49,207 | $ 0 | $ 98,059 | $ 0 | ||
Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets | 625,808 | 625,808 | $ 312,696 | |||
2020 Divestiture | Pennsylvania | ||||||
Nonmonetary Transaction | ||||||
Miles of gathering lines (in miles) | mi | 33 | |||||
2020 Divestiture | West Virginia | ||||||
Nonmonetary Transaction | ||||||
Miles of gathering lines (in miles) | mi | 154 | |||||
Disposal Group, Not Discontinued Operations | 2020 Divestiture | ||||||
Nonmonetary Transaction | ||||||
Purchase price | $ 125,000 | |||||
Repayment of asset retirement obligation and other liabilities | 49,000 | |||||
Potential contingent consideration | 20,000 | 20,000 | ||||
Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets | 0 | $ 0 | ||||
Loss on sale, exchange of long-lived assets | 42,500 | |||||
Disposal Group, Not Discontinued Operations | 2020 Divestiture | Pennsylvania | ||||||
Nonmonetary Transaction | ||||||
Number of wells sold | numberOfWells | 80 | |||||
Disposal Group, Not Discontinued Operations | 2020 Divestiture | West Virginia | ||||||
Nonmonetary Transaction | ||||||
Number of wells sold | numberOfWells | 809 | |||||
Asset Exchange Transaction | ||||||
Nonmonetary Transaction | ||||||
Area of acres exchanged (in acres) | a | 11,700 | |||||
Area of acres obtained in asset exchange (in acres) | a | 11,700 | |||||
Loss from asset exchange transaction | $ 6,700 | $ 55,600 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Details) - $ / shares | Feb. 27, 2020 | Jan. 13, 2020 | Jun. 30, 2020 |
Nonqualified Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Options granted (in shares) | 1,240,000 | ||
Options exercise price (in dollars per share) | $ 10 | ||
Nonqualified Stock Options | CEO | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Options granted (in shares) | 1,000,000 | ||
Options exercise price (in dollars per share) | $ 10 | ||
Compensation period | 3 years | ||
Nonqualified Stock Options | President | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Options granted (in shares) | 1,000,000 | ||
Options exercise price (in dollars per share) | $ 10 | ||
Compensation period | 3 years | ||
Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Shares granted (in shares) | 1,734,740 | ||
2020 Incentive PSU Program | PSU | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Shares granted (in shares) | 1,376,198 | ||
Vesting period | 3 years | ||
2020 Incentive PSU Program | PSU | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting percentage | 0.00% | ||
2020 Incentive PSU Program | PSU | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting percentage | 150.00% |