eqt-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

☐

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

FOR THE TRANSITION PERIOD FROM__________ TO__________

COMMISSION FILE NUMBER: 001-03551

EQT CORPORATION

(Exact name of registrant as specified in its charter)


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

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

(412) 553-5700

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, no par value

EQT

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

The number of shares of common stock, no par value, of the registrant outstanding (in thousands) as of April 19, 2024: 441,592

Table of Contents

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Statements of Condensed Consolidated Operations	3
	Statements of Condensed Consolidated Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Statements of Condensed Consolidated Cash Flows	6
	Statements of Condensed Consolidated Equity	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	35
Item 6.	Exhibits	36

Signatures		38

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED OPERATIONS (UNAUDITED)


	Three Months Ended March 31,
	2024		2023

	(Thousands, except per share amounts)
Operating revenues:
Sales of natural gas, natural gas liquids and oil	$	1,303,905	$	1,830,358
Gain on derivatives	106,511		824,852
Net marketing services and other	1,852		5,861
Total operating revenues	1,412,268		2,661,071
Operating expenses:
Transportation and processing	545,181		514,984
Production	102,319		47,940
Exploration	916		952
Selling, general and administrative	73,053		51,894
Depreciation and depletion	486,750		387,685
Loss on sale/exchange of long-lived assets	147		16,528
Impairment and expiration of leases	9,209		10,546
Other operating expenses	11,973		19,662
Total operating expenses	1,229,548		1,050,191
Operating income	182,720		1,610,880
Income from investments	(2,260)		(4,764)
Other income	(205)		(175)
Loss (gain) on debt extinguishment	3,449		(6,606)
Interest expense, net	54,371		46,546
Income before income taxes	127,365		1,575,879
Income tax expense	24,302		356,646
Net income	103,063		1,219,233
Less: Net (loss) income attributable to noncontrolling interests	(425)		685
Net income attributable to EQT Corporation	$	103,488	$	1,218,548

Income per share of common stock attributable to EQT Corporation:
Basic:
Weighted average common stock outstanding	439,459		361,462
Net income attributable to EQT Corporation	$	0.24	$	3.37
Diluted (Note 7):
Weighted average common stock outstanding	444,967		393,883
Net income attributable to EQT Corporation	$	0.23	$	3.10

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

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EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended March 31,
	2024		2023

	(Thousands)
Net income	$	103,063	$	1,219,233
Other comprehensive income, net of tax:
Other postretirement benefits liability adjustment, net of tax: $13 and $15	43		164
Comprehensive income	103,106		1,219,397
Less: Comprehensive (loss) income attributable to noncontrolling interests	(425)		685
Comprehensive income attributable to EQT Corporation	$	103,531	$	1,218,712

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

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EQT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	March 31, 2024		December 31, 2023

	(Thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	648,048	$	80,977
Accounts receivable (less provision for doubtful accounts: $89 and $663)	445,156		823,695
Derivative instruments, at fair value	817,996		978,634
Income tax receivable	90,665		91,414
Prepaid expenses and other	93,914		38,255
Total current assets	2,095,779		2,012,975

Property, plant and equipment	34,360,921		33,817,169
Less: Accumulated depreciation and depletion	11,338,339		10,866,999
Net property, plant and equipment	23,022,582		22,950,170

Other assets	319,959		321,953
Total assets	$	25,438,320	$	25,285,098

LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt	$	606,967	$	292,432
Accounts payable	1,124,918		1,272,522
Derivative instruments, at fair value	336,104		186,363
Other current liabilities	305,644		285,523
Total current liabilities	2,373,633		2,036,840


Term Loan Facility borrowings	497,390		1,244,265
Senior notes	4,319,747		4,176,180
Note payable to EQM Midstream Partners, LP	80,637		82,236
Deferred income taxes	1,928,228		1,904,821
Other liabilities and credits	1,067,284		1,059,939
Total liabilities	10,266,919		10,504,281

Equity:
Common stock, no par value, shares authorized: 640,000, shares issued: 441,558 and 419,896	12,450,876		12,093,986
Retained earnings	2,715,974		2,681,898
Accumulated other comprehensive loss	(2,641)		(2,684)
Total common shareholders' equity	15,164,209		14,773,200
Noncontrolling interest in consolidated subsidiaries	7,192		7,617
Total equity	15,171,401		14,780,817
Total liabilities and equity	$	25,438,320	$	25,285,098

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

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EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)


	Three Months Ended March 31,
	2024		2023

	(Thousands)
Cash flows from operating activities:
Net income	$	103,063	$	1,219,233
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense	23,394		356,618
Depreciation and depletion	486,750		387,685
Impairments and loss/gain on sale/exchange of long-lived assets	9,356		27,074
Income from investments	(2,260)		(4,764)
Loss (gain) on debt extinguishment	3,449		(6,606)
Share-based compensation expense	10,551		11,276
Distribution of earnings from equity method investment	2,852		5,456
Amortization, accretion and other	2,797		3,888
Gain on derivatives	(106,511)		(824,852)
Net cash settlements received on derivatives	451,004		157,000
Net premiums paid on derivatives	(33,904)		(94,916)
Changes in other assets and liabilities:
Accounts receivable	372,654		980,908
Accounts payable	(117,157)		(422,519)
Other current assets	(55,501)		(80,472)
Other items, net	5,126		(52,241)
Net cash provided by operating activities	1,155,663		1,662,768
Cash flows from investing activities:
Capital expenditures	(534,468)		(494,784)
Cash paid for acquisitions	(30,053)		—
Other investing activities	(2,631)		(3,542)
Net cash used in investing activities	(567,152)		(498,326)
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings	107,000		—
Repayment of revolving credit facility borrowings	(107,000)		—
Proceeds from issuance of debt	750,000		—
Proceeds from net settlement of Capped Call Transactions (Note 6)	93,290		—
Debt issuance costs	(8,147)		—
Repayment and retirement of debt	(752,112)		(211,429)
Discounts received on debt extinguishment	—		7,981
Dividends paid	(69,412)		(54,070)
Repurchase and retirement of common stock	—		(201,029)
Net distribution to noncontrolling interest	—		(85)
Other financing activities	(35,059)		(37,192)
Net cash used in financing activities	(21,440)		(495,824)
Net change in cash and cash equivalents	567,071		668,618
Cash and cash equivalents at beginning of period	80,977		1,458,644
Cash and cash equivalents at end of period	$	648,048	$	2,127,262

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

See Note 1 for supplemental cash flow information.

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EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)


	Common Stock
	Shares	Amount		Retained Earnings		Accumulated Other Comprehensive Loss (a)		Noncontrolling Interest in Consolidated Subsidiaries		Total Equity

	(Thousands, except per share amounts)
Balance at January 1, 2023	365,363	$	9,891,890	$	1,283,578	$	(2,994)	$	40,854	$	11,213,328
Comprehensive income, net of tax:
Net income				1,218,548				685		1,219,233
Other postretirement benefits liability adjustment, net of tax: $15						164				164
Dividends ($0.15 per share)				(54,070)						(54,070)
Share-based compensation plans	2,127	(24,023)								(24,023)
Convertible Notes settlements	2	70								70
Repurchase and retirement of common stock	(5,906)	(91,545)		(109,484)						(201,029)
Distribution to noncontrolling interest								(3,835)		(3,835)
Contribution from noncontrolling interest								3,750		3,750
Balance at March 31, 2023	361,586	$	9,776,392	$	2,338,572	$	(2,830)	$	41,454	$	12,153,588

Balance at January 1, 2024	419,896	$	12,093,986	$	2,681,898	$	(2,684)	$	7,617	$	14,780,817
Comprehensive income, net of tax:
Net income (loss)				103,488				(425)		103,063
Other postretirement benefits liability adjustment, net of tax: $13						43				43
Dividends ($0.1575 per share)				(69,412)						(69,412)
Share-based compensation plans	1,670	(22,008)								(22,008)
Convertible Notes settlements	19,992	285,608								285,608
Net settlement of Capped Call Transactions		93,290								93,290
Balance at March 31, 2024	441,558	$	12,450,876	$	2,715,974	$	(2,641)	$	7,192	$	15,171,401

Common shares authorized (in thousands): 640,000. Preferred shares authorized (in thousands): 3,000. There were no preferred shares issued or outstanding.

(a)Amounts included in accumulated other comprehensive loss are related to other postretirement benefits liability adjustments, net of tax, which are attributable to net actuarial losses and net prior service costs.

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

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

1. 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 March 31, 2024 and December 31, 2023 and the results of its operations, equity and cash flows for the three month periods ended March 31, 2024 and 2023. 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" and the "Company" refer collectively to EQT Corporation and its consolidated subsidiaries unless otherwise noted.

The Condensed Consolidated Balance Sheet at December 31, 2023 has been derived from the audited financial statements at that date. 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, 2023.

Supplemental Cash Flow Information. The following table summarizes net cash paid for interest and income taxes and non-cash activity included in the Statements of Condensed Consolidated Cash Flows.


	Three Months Ended March 31,
	2024		2023

	(Thousands)
Cash paid during the period for:
Interest, net of amount capitalized	$	49,752	$	42,650
Income taxes, net	6,879		13,526

Non-cash activity during the period for:
Issuance of EQT Corporation common stock for Convertible Notes settlement	285,608		70
Increase in asset retirement costs and obligations	6,918		2,686
Increase in right-of-use assets and lease liabilities, net	3,634		—
Investment in nonconsolidated entity	2,375		—
Capitalization of non-cash equity share-based compensation	1,771		1,362

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through the requirement of enhanced disclosure of significant segment expenses. In addition, this ASU enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and provides new segment disclosure requirements for entities with a single reportable segment. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company does not expect adoption of ASU 2023-07 to have a material impact on its financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures to improve its income tax disclosure requirements. Under this ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. This ASU is effective for fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company does not expect adoption of ASU 2023-09 to have a material impact on its financial statements and related disclosures.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

2. 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 (million British thermal units (MMBtu) or barrel (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 exclude revenue interests owned by others. When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company acts 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 $307.2 million and $584.8 million in accounts receivable in the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively.

The table below provides disaggregated information on the Company's revenues. Certain other revenue contracts are outside the scope of ASU 2014-09, Revenue from Contracts with Customers. These contracts 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 March 31,
	2024		2023

	(Thousands)
Revenues from contracts with customers:
Natural gas sales	$	1,121,574	$	1,712,232
NGLs sales	156,150		98,828
Oil sales	26,181		19,298
Total revenues from contracts with customers	$	1,303,905	$	1,830,358

Other sources of revenue:
Gain on derivatives	106,511		824,852
Net marketing services and other	1,852		5,861
Total operating revenues	$	1,412,268	$	2,661,071

As of March 31, 2024, the Company had no remaining performance obligations on its natural gas sales contracts with fixed consideration.

3. 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.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The derivative commodity instruments used by the Company are primarily swap, collar and option agreements. These agreements may result in 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 gain on derivatives 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 its expected sales of production and portions of its basis exposure covering approximately 2,072 billion cubic feet (Bcf) of natural gas and 3,300 thousand barrels (Mbbl) of NGLs as of March 31, 2024 and 2,045 Bcf of natural gas and 1,049 Mbbl of NGLs as of December 31, 2023. The open positions at both March 31, 2024 and December 31, 2023 had maturities extending through December 2027.

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), S&P Global Ratings (S&P) or Fitch Ratings Service (Fitch) 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, S&P or Fitch 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. Anything below these ratings is considered non-investment grade. As of March 31, 2024, the Company's senior notes were rated "Baa3" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

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 March 31, 2024, none of the Company's OTC derivative instruments with credit rating risk-related contingent features were in a net liability position. As of December 31, 2023, the aggregate fair value of the Company's OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $6.4 million, for which no deposits were required or 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 both March 31, 2024 and December 31, 2023, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 March 31, 2024 and December 31, 2023, the Company recorded $69.3 million and $13.0 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

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 master netting agreements		Margin requirements with counterparties		Net derivative instruments

	(Thousands)
March 31, 2024
Asset derivative instruments, at fair value	$	817,996	$	(221,506)	$	—	$	596,490
Liability derivative instruments, at fair value	336,104		(221,506)		(69,315)		45,283

December 31, 2023
Asset derivative instruments, at fair value	$	978,634	$	(112,203)	$	—	$	866,431
Liability derivative instruments, at fair value	186,363		(112,203)		(13,017)		61,143

Henry Hub Cash Bonus. The consolidated gas gathering and compression agreement, dated February 26, 2020, between the Company and an affiliate of Equitrans Midstream Corporation (Equitrans Midstream) provides for cash bonus payments (the Henry Hub Cash Bonus) payable by the Company during the period beginning on the first day of the quarter in which the Mountain Valley Pipeline 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. As of March 31, 2024 and December 31, 2023, the derivative liability related to the Henry Hub Cash Bonus had a fair value of approximately $29 million and $48 million, respectively. The fair value of the derivative liability related to the Henry Hub Cash Bonus is based on significant inputs that are 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.

4. 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, the 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.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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, SOFR-based discount rates, basis forward curves and NGLs 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 SOFR-based discount rates.

The table below summarizes assets and liabilities measured at fair value on a recurring basis.


			Fair value measurements at reporting date using:
	Gross derivative instruments recorded in the Condensed Consolidated Balance Sheets		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)

	(Thousands)
March 31, 2024
Asset derivative instruments, at fair value	$	817,996	$	43,355	$	774,641	$	—
Liability derivative instruments, at fair value	336,104		53,297		282,807		—

December 31, 2023
Asset derivative instruments, at fair value	$	978,634	$	66,302	$	912,332	$	—
Liability derivative instruments, at fair value	186,363		42,218		144,145		—

The carrying values of cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term maturities. The carrying value of borrowings under the Company's revolving credit facility and the Term Loan Facility (defined in Note 6) approximates fair value as their interest rates are based on prevailing market rates. The Company considers all of these fair values to be Level 1 fair value measurements.

The Company has an investment in a fund (the Investment Fund) that invests in companies developing technology and operating solutions for exploration and production companies. The Company values the Investment Fund using, as a practical expedient, the net asset value provided in the financial statements received from fund managers.

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. The Company's senior notes had a fair value of approximately $4.9 billion as of both March 31, 2024 and December 31, 2023 and a carrying value of approximately $4.9 billion and $4.5 billion as of March 31, 2024 and December 31, 2023, respectively, inclusive of any current portion. The fair value of the Company's note payable to EQM Midstream Partners, LP (EQM), a wholly-owned subsidiary of Equitrans Midstream, is estimated using an income approach model with a market-based discount rate and is a Level 3 fair value measurement. As of March 31, 2024 and December 31, 2023, the Company's note payable to EQM had a fair value of approximately $88 million and $91 million, respectively, and a carrying value of approximately $87 million and $88 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 3 for a discussion of the fair value measurement of the Henry Hub Cash Bonus. See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the fair value measurement and any subsequent impairments of the Company's oil and gas properties and other long-lived assets, including impairment and expiration of leases.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

5. Income Taxes

For the three months ended March 31, 2024 and 2023, 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 three months ended March 31, 2024.

For the three months ended March 31, 2024 and 2023, the Company recorded income tax expense at an effective tax rate of 19.1% and 22.6%, respectively. The Company's effective tax rate for the three months ended March 31, 2024 was lower compared to the U.S. federal statutory rate primarily as a result of excess tax benefits from share-based payments partly offset by state taxes. The Company's effective tax rate for the three months ended March 31, 2023 was higher compared to the U.S. federal statutory rate due primarily to state taxes, including valuation allowances limiting certain state tax benefits.

6. Debt

The table below summarizes the Company's outstanding debt.


	March 31, 2024				December 31, 2023
	Principal Value		Carrying Value (a)		Principal Value		Carrying Value (a)

	(Thousands)

Term Loan Facility due June 30, 2026 (b)	$	500,000	$	497,390	$	1,250,000	$	1,244,265
Senior notes:
6.125% notes due February 1, 2025 (b)	601,521		600,650		601,521		600,389
1.75% convertible notes due May 1, 2026 (c)	—		—		290,177		286,185
3.125% notes due May 15, 2026	392,915		390,282		392,915		389,978
7.75% debentures due July 15, 2026	115,000		113,840		115,000		113,716
3.90% notes due October 1, 2027	1,169,503		1,165,710		1,169,503		1,165,439
5.700% notes due April 1, 2028	500,000		490,942		500,000		490,376
5.00% notes due January 15, 2029	318,494		315,287		318,494		315,121
7.000% notes due February 1, 2030 (b)	674,800		671,175		674,800		671,020
3.625% notes due May 15, 2031	435,165		430,310		435,165		430,141
5.750% notes due February 1, 2034	750,000		742,201		—		—
Note payable to EQM	86,954		86,954		88,483		88,483
Total debt	5,544,352		5,504,741		5,836,058		5,795,113
Less: Current portion of debt (d)	607,838		606,967		296,424		292,432
Long-term debt	$	4,936,514	$	4,897,774	$	5,539,634	$	5,502,681

(a)For the Company's note payable to EQM, the principal value represents the carrying value. For all other debt, the principal value less the unamortized debt issuance costs and debt discounts represents the carrying value.

(b)Interest rates for the Term Loan Facility, the Company's 6.125% senior notes and the Company's 7.000% senior notes fluctuate based on changes to the credit ratings assigned to the Company's senior notes by Moody's, S&P and Fitch. Interest rates for the Company's other outstanding debt do not fluctuate.

(c)As of December 31, 2023, the fair value of the Company's 1.75% convertible notes was $768.6 million and was a Level 2 fair value measurement. See Note 4.

(d)As of March 31, 2024, the current portion of debt included the Company's 6.125% senior notes and a portion of the note payable to EQM. As of December 31, 2023, the current portion of debt included the Company's 1.75% convertible notes and a portion of the note payable to EQM.

Revolving Credit Facility. The Company has a $2.5 billion revolving credit facility that matures on June 28, 2027.

As of both March 31, 2024 and December 31, 2023, the Company had approximately $15 million of letters of credit outstanding under its revolving credit facility.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Under the Company's revolving credit facility, for the three months ended March 31, 2024, the maximum amount of outstanding borrowings was $107 million, the average daily balance was approximately $11 million and interest was incurred at a weighted average annual interest rate of 6.9%. For the three months ended March 31, 2023, there were no borrowings under the Company's revolving credit facility.

Term Loan Facility. On November 9, 2022, the Company entered into a Credit Agreement (as amended on December 23, 2022 and April 25, 2023, the Term Loan Agreement) with PNC Bank, National Association, as administrative agent, and the other lenders party thereto, under which such lenders agreed to make to the Company unsecured term loans in a single draw in an aggregate principal amount of up to $1.25 billion (the Term Loan Facility) to partly fund the Tug Hill and XcL Midstream Acquisition (defined in Note 9). On August 21, 2023, the Company borrowed $1.25 billion under the Term Loan Facility, receiving net proceeds of $1,242.9 million.

On January 16, 2024, the Company entered into a third amendment to the Term Loan Agreement to, among other things, extend the maturity date of the Term Loan Agreement from June 30, 2025 to June 30, 2026. The third amendment to the Term Loan Agreement became effective on January 19, 2024 upon the Company's prepayment of $750 million principal amount of the term loans outstanding under the Term Loan Facility (funded with the net proceeds from the issuance of the Company's 5.750% senior notes and cash on hand) and the satisfaction of other closing conditions. Pursuant to the Term Loan Agreement, the Company may voluntarily prepay, in whole or in part, borrowings under the Term Loan Facility without premium or penalty but subject to reimbursement of funding losses with respect to prepayment of loans that bear interest based on the Term SOFR Rate (as defined in the Term Loan Agreement). Borrowings under the Term Loan Facility that are repaid may not be re-borrowed.

At the Company's election, the term loans outstanding under the Term Loan Facility bear interest at a Term SOFR Rate plus the SOFR Adjustment or Base Rate (all terms defined in the Term Loan Agreement), each plus a margin based on the Company's credit ratings. For the three months ended March 31, 2024, interest was incurred under the Term Loan Facility at a weighted average annual interest rate of 6.9%.

5.750% Senior Notes. On January 19, 2024, the Company issued $750 million aggregate principal amount of 5.750% senior notes due February 1, 2034. The Company used net proceeds of $742.0 million, composed of the principal amount of $750 million net of capitalized debt issuance costs and underwriters' discount of $8.0 million, and cash on hand to prepay $750 million principal amount of the term loans outstanding under the Term Loan Facility. The covenants of the 5.750% senior notes are consistent with the Company's existing senior unsecured notes.

Convertible Notes. In April 2020, the Company issued $500 million aggregate principal amount of 1.75% convertible senior notes (the Convertible Notes). The effective interest rate for the Convertible Notes was 2.4%.

On January 2, 2024, in accordance with the indenture governing the Convertible Notes (the Convertible Notes Indenture), the Company issued an irrevocable notice of redemption for all of the outstanding Convertible Notes and announced that the Company would redeem any of the Convertible Notes outstanding on January 17, 2024 in cash for 100% of the principal amount, plus accrued and unpaid interest on such Convertible Notes to, but excluding, such redemption date (the Redemption Price).

Pursuant to the Convertible Notes Indenture, between January 2, 2024 and the conversion deadline of 5:00 p.m., New York City time, on January 12, 2024, certain holders of the Convertible Notes exercised their right to convert their Convertible Notes prior to the redemption and validly surrendered an aggregate principal amount of $289.6 million of Convertible Notes. Based on a conversion rate of 69.0364 shares of EQT Corporation common stock per $1,000 principal amount of Convertible Notes, the Company issued to such holders an aggregate 19,992,482 shares of EQT Corporation common stock. Settlement of such Convertible Note conversion right exercises net of unamortized deferred issuance costs increased shareholder's equity by $285.6 million.

The remaining $0.6 million in outstanding principal amount of Convertible Notes was redeemed on January 17, 2024 in cash for the Redemption Price.

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EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Inclusive of January 2024 settlements of Convertible Notes conversion right exercises that were exercised in December 2023, during January 2024, the Company settled $290.2 million aggregate principal amount of Convertible Notes conversion right exercises by issuing an aggregate 20,036,639 shares of EQT Corporation common stock to the converting holders at an average conversion price of $38.03.

Settlement and Termination of Capped Call Transactions. In connection with, but separate from, the issuance of the Convertible Notes, in 2020, the Company entered into capped call transactions (the Capped Call Transactions) with certain financial institutions (the Capped Call Counterparties) to reduce the potential dilution to EQT Corporation common stock upon any conversion of Convertible Notes at maturity and/or offset any cash payments that the Company is required to make in excess of the principal amount of such converted notes. The Capped Call Transactions had an initial strike price of $15.00 per share of EQT Corporation common stock and an initial cap price of $

SEC Form 10-Q filed by EQT Corporation