Market Overview

EQT Reports Second Quarter 2018 Results

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Board authorizes $500 million share repurchase program

EQT Corporation (NYSE:EQT) today announced financial and operational
performance results for the second quarter 2018.

Highlights:

  • Increase of 116% in net cash provided by operating activities
  • Increase of 128% in adjusted operating cash flow
  • Decrease of 20% in Production's per unit cash operating costs
  • Approved a 19.9% retention of SpinCo stock
  • Authorized a $500 million stock buyback program
  • Completed midstream streamlining transactions
  • Announced and completed the sale of Huron assets
  • Completed sale of Permian assets
Financial Results   Three Months Ended  
June 30,
($ millions, except EPS) 2018   2017 Difference
Net income attributable to EQT $ 17.8 $ 41.1 $ (23.3 )
Adjusted net income attributable to EQT (a non-GAAP measure) $ 116.3 $ 11.4 $ 104.9
Diluted earnings per share (EPS) $ 0.07 $ 0.24 $ (0.17 )
Adjusted EPS (a non-GAAP measure) $ 0.44 $ 0.07 $ 0.37
Net cash provided by operating activities $ 636.7 $ 294.2 $ 342.5
Adjusted operating cash flow attributable to EQT (a non-GAAP measure) $ 526.1 $ 230.5 $ 295.6

Net income attributable to EQT for the second quarter 2018 decreased due
to higher operating costs, including impairments of long-lived assets
and leases, transaction-related expenses, higher interest expense, and
losses on derivatives not designated as hedges – all of which
more-than-offset higher revenue that resulted from an 83% sales volume
increase, lower corporate income taxes, and higher pipeline, water, and
net marketing services revenue. Net cash provided by operating
activities was higher as a result of an increase in revenues, partly
offset by an increase in cash operating costs.

Adjusted net income attributable to EQT, which excludes non-cash
derivatives, asset and lease impairments, and transaction-related
expenses, increased $104.9 million for the second quarter 2018. Adjusted
operating cash flow attributable to EQT, which includes
transaction-related expenses and excludes the non-controlling interests
in EQT Midstream Partners, LP (EQM) and Rice Midstream Partners LP
(RMP), increased 128%.

The Non-GAAP Disclosures section of this news release provides
reconciliations of non-GAAP financial measures to the most comparable
GAAP financial measure, as well as important disclosures regarding
certain projected non-GAAP financial measures.

RESULTS BY BUSINESS

EQT PRODUCTION

Financial Results   Three Months Ended  
June 30,
($ millions, except average realized price) 2018   2017 Difference
Sales volume (Bcfe) 362.5 198.1 164.4
Pipeline and net marketing services $ 13.2 $ 8.1 $ 5.1
Operating revenue $ 950.6 $ 631.1 $ 319.5
Adjusted operating revenue (a non-GAAP measure) $ 1,017.1 $ 566.1 $ 451.0
Operating expenses $ 1,030.5 $ 578.2 $ 452.3
Operating (loss) income $ (79.8 ) $ 52.9 $ (132.7 )
Adjusted operating income (loss) (a non-GAAP measure) $ 137.4 $ (1.8 ) $ 139.2
Average realized price ($/Mcfe) $ 2.81 $ 2.86 $ (0.05 )

The $132.7 million decrease in operating income in the quarter was
primarily due to higher operating expenses, which included an impairment
charge of $118.1 million associated with non-core production assets and
retained pipeline assets in the Huron and Permian plays; a loss on
derivatives not designated as hedges in the current quarter; and a lower
average realized price, partially offset by revenue from increased sales
volume of produced natural gas. The increase in sales of natural gas,
oil, and NGLs was primarily a result of the acquisition of Rice Energy
Inc. (Rice).

The decrease in the average realized price for the quarter was primarily
due to a decrease in the average NYMEX natural gas price, partly offset
by an improvement in the average natural gas differential and higher
liquids prices.

Operating expenses for the quarter were $452.3 million higher than the
same period last year. In addition to the impairment, depreciation and
depletion expense increased $155.6 million; gathering expense increased
$83.8 million; and transmission expense increased $70.9 million;
primarily due to increased produced volumes. Exploration expense
increased $17.7 million, primarily due to an increase in the number of
leases expiring in the second quarter of 2018. Per unit cash operating
expenses decreased 20%.

Adjusted operating income for the quarter, which excludes impairment
charges and non-cash derivatives, was $139.2 million higher, primarily
due to higher revenue, partially offset by higher expenses.

EQT MIDSTREAM PARTNERS, LP (EQM)

The second quarter 2018 financial results for EQM were released today
and provide operational results, as well as updates on significant
midstream projects under development by EQM. EQM's news release is
available at www.eqtmidstreampartners.com.
The summary results are:

EQM Gathering Financial Results

  Three Months Ended  
June 30,
($ millions) 2018   2017 Difference
Operating revenue $ 180.6 $ 112.1 $ 68.5
Operating expenses $ 59.0 $ 28.7 $ 30.3
Operating income $ 121.6 $ 83.4 $ 38.2

Operating income increased 46% in the second quarter 2018 compared to
second quarter 2017, primarily driven by higher revenue from the
acquisition of EQT's retained midstream assets and production
development in the Marcellus Shale partly offset by higher operating
costs. Revenue from firm reservation fees represented 62% of total
revenue during the quarter.

Operating expenses were $30.3 million higher due to additional assets
acquired and placed in-service.

EQM Transmission Financial Results

  Three Months Ended  
June 30,
($ millions) 2018   2017 Difference
Operating revenue $ 89.1 $ 84.7 $ 4.4
Operating expenses $ 28.5 $ 26.8 $ 1.7
Operating income $ 60.6 $ 57.9 $ 2.7

The increase in operating income in the second quarter 2018 compared to
second quarter 2017 was primarily due to higher contractual rates on
existing contracts with third parties and affiliates. Revenue from firm
reservation fees represented 92% of total revenue during the quarter.

Operating expenses were $1.7 million higher, primarily as a result of
increased SG&A expense.

Mountain Valley Pipeline Update

Mountain Valley Pipeline, LLC (MVP JV) has modified its construction
schedule for the Mountain Valley Pipeline (MVP) and now anticipates a
first quarter 2019 in-service date. The 303-mile pipeline is estimated
to cost $3.5 - $3.7 billion, with EQM funding its 45.5% proportional
share.

OTHER BUSINESS

SpinCo Share Retention

EQT plans to retain 19.9% of the shares of the new midstream company
(SpinCo) that will be spun-off to EQT shareholders. EQT currently plans
to dispose its retained SpinCo shares after the spin-off. The proceeds
from the sale of SpinCo shares will be used to reduce EQT's post-spin
debt and to fund the stock buyback program.

EQT Stock Buyback

During the second quarter 2018, EQT repurchased 700,000 shares of EQT
common stock at an average price of $55.25. The Board authorized an
additional $500 million EQT stock buyback program, effective immediately.

Streamlining Transactions

The Company completed its previously announced plan to streamline its
midstream structure, including:

  • On July 23, 2018, EQM acquired Rice Midstream Partners LP (RMP) in a
    unit-for-unit merger at an exchange ratio of 0.3319x. EQM also repaid
    $260 million of RMP debt.
  • On June 25, 2018, EQM completed its offering of $2.5 billion in
    aggregate principal of three tranches of senior notes.
  • On May 22, 2018, EQT sold all of its RMP incentive distribution rights
    to EQT GP Holdings, LP (EQGP) for 36.3 million EQGP common units.
  • On May 22, 2018, EQM acquired EQT's retained midstream assets for
    $1.15 billion in cash and 5.9 million EQM common units (May 2018
    Acquisition).
  • On May 1, 2018, EQM acquired Gulfport Energy Corporation's 25%
    ownership interest in the Strike Force Gathering System for $175
    million in cash.

As a result of the drop down of retained midstream assets to EQM, EQT
recast its segment information to retrospectively reflect the
pre-acquisition results as if the entities were owned by EQM as of
November 13, 2017, the date they were acquired from Rice.

Huron Sale

On July 18, 2018, EQT completed the sale of its non-core Huron assets
located in Southern Appalachia to Diversified Gas and Oil PLC, for $575
million cash. The transaction also relieved EQT of approximately $200
million of plugging and other liabilities associated with the assets.
EQT retained the deep drilling rights across the acreage. EQT is
reiterating 2018 production sales volume guidance after adjusting for
the approximately 35 Bcfe reduction related to this sale.

As a result of the Huron Sale, the Company expects to record an
additional impairment/loss on sale of long-lived assets of up to $275
million during the second half of 2018, associated with certain capacity
contracts that the Company will no longer have existing production to
satisfy and does not plan to utilize in the future.

Permian Sale

On June 19, 2018, EQT completed the sale of its Permian Basin assets
located in Texas for $64 million cash. The transaction also relieved EQT
of approximately $40 million of related plugging and other liabilities.

EQM and EQGP Distributions

On July 24, 2018, EQM approved a cash distribution to its unitholders of
$1.09 per unit for the second quarter 2018. The quarterly distribution
is 2% higher than the first quarter 2018 and 17% higher than the second
quarter 2017.

EQGP approved a cash distribution to its unitholders of $0.306 per unit
for the second quarter 2018. The quarterly distribution is 19% higher
than the first quarter 2018 and 46% higher than the second quarter 2017.

Due to the timing of the RMP merger, RMP will not declare a cash
distribution for the second quarter 2018.

Calculation of Net Income Attributable to Non-controlling Interest
(NCI)

The results of EQGP, EQM, RMP and Strike Force Midstream LLC (Strike
Force) are consolidated in EQT's results. For the second quarter 2018,
EQT's results reflected earnings of $118.5 million, or $0.45 per diluted
share, attributable to the publicly held partnership interests and the
minority interest in Strike Force.

  Three Months Ended June 30, 2018
Unitholder interest in net   Non-controlling   NCI interest in
(millions)

income (a)

interest (NCI)(b)

EQT earnings
EQM $ 93.0 69.9 % $ 65.0
EQGP $ 91.9 9.4 % $ 8.6
RMP $ 61.2 71.9 % $ 44.0
Strike Force (c) $ 3.5 25.0 % $ 0.9
Total $ 118.5
a)   Excludes pre-acquisition net income allocated to EQT and incentive
distribution rights.
b) Weighted average calculation for the three months ended June 30,
2018.
c) On May 1, 2018, EQM acquired the remaining 25% limited liability
company interest in Strike Force Gathering System. As a result, EQM
owned 100% of Strike Force Gathering System effective as of May 1,
2018. Therefore, Strike Force includes April activity only.

Hedging

As of July 23, 2018, the approximate volumes and prices of the Company's
derivative commodity instruments hedging sales of produced gas for 2018
through 2020 were:

 

2018(a)

  2019   2020
NYMEX Swaps
Total Volume (Bcf) 368 471 365
Average Price per Mcf (NYMEX) $ 3.08 $ 2.99 $ 2.99
 
Collars
Total Volume (Bcf) 62 73
Average Floor Price per Mcf (NYMEX) $ 3.28 $ 3.12 $
Average Cap Price per Mcf (NYMEX) $ 3.79 $ 3.60 $
 
Puts (Long)
Total Volume (Bcf) 4 3
Average Floor Price per Mcf (NYMEX) $ 2.97 $ 3.15 $
(a)   July-December 2018

The Company sold calendar year 2018, 2019, and 2020 calls for
approximately 53, 102, and 127 Bcf, at strike prices of $3.46,
$3.53, and $3.46 per Mcf, respectively. The Company purchased
calendar year 2018, 2019, and 2020 calls for approximately 29, 48,
and 35 Bcf at strike prices of $3.30, $3.37, and $3.36 per Mcf,
respectively.

The Company sold calendar year 2018 and 2019 puts for approximately
6 and 3 Bcf at strike prices of $2.92 and $3.15 per Mcf,
respectively.

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

Well Statistics

Wells Drilled (spud)

  Marcellus   Upper Devonian   Ohio Utica (net)
Q2 2018 35 3 10
2018 Forecast 115 - 120 5 20 - 25
Q3 2018 Forecast 30 - 35 0 2 - 4

  Q2 2018 average lateral lengths: Marcellus 16,200; Upper Devonian
13,300; Ohio Utica 12,200

The 2018 forecast average lateral lengths: Marcellus 13,600; Upper
Devonian 14,400; Ohio Utica 11,700

Wells Turned-in-line (TIL)

  Marcellus   Upper Devonian   Ohio Utica (net)
Q2 2018 44 5 5
2018 Forecast 160 - 170 20 - 25 20 - 25
Q3 2018 Forecast 63 - 68 3 - 5 7 - 12

  Q2 2018 average lateral lengths: Marcellus 8,100; Upper Devonian
11,500; Ohio Utica 10,500

The 2018 forecast average lateral lengths: Marcellus 8,700; Upper
Devonian 11,300; Ohio Utica 11,500

Marcellus Horizontal Well Status (cumulative since inception)*

  As of   As of   As of   As of   As of
6/30/18 3/31/18 12/31/17 9/30/17 6/30/17
Wells drilled (spud) 1,791 1,763 1,743 1,288 1,259
Wells online 1,482 1,444 1,424 1,060 1,028
Wells complete, not online 40 35 21 21 15
Wells drilled, uncompleted 269 284 298 207 216
* Totals may differ from previous presentations to account for
acquisitions, dispositions, wells plugged, or changes in target
formation to / from Marcellus.
 

Ohio Utica Horizontal Well Status*

  As of   As of   As of
6/30/18 3/31/18 12/31/17
Wells drilled (spud) 253 243 227
Wells online 205 203 189
Wells complete, not online 14 2 5
Wells drilled, uncompleted 34 38 33
*

Totals may differ from previous presentations to account for
acquisitions, dispositions, or wells plugged.

Operating Income (Loss)

The Company reports operating income (loss) by segment in this news
release. Other income, interest, income taxes, and unallocated expense
are controlled on a consolidated, corporate-wide basis and are not
allocated to the segments.

The following table reconciles operating income (loss) by segment, as
reported in this news release, to the consolidated operating income
(loss) reported in the Company's financial statements:

  Three Months Ended   Six Months Ended
June 30, June 30,
(thousands) 2018   2017 2018   2017
Operating income (loss):
EQT Production (a) $ (79,846 ) $ 52,884 $ (2,005,645 ) $ 310,433

EQM Gathering

121,631 83,425 252,513 157,129

EQM Transmission

60,642 57,863 140,093 129,467
RMP Gathering 39,614 83,709
RMP Water 23,981 35,351
Unallocated expense and intersegment eliminations (b)   (66,053 )   (4,045 )   (129,568 )   (15,926 )
Operating (loss) income $ 99,969   $ 190,127   $ (1,623,547 ) $ 581,103  
(a)   Impairment of long-lived assets of $0.1 billion and $2.4 billion for
the three and six months ended June 30, 2018, respectively, is
included in EQT Production operating income.
(b) Unallocated expenses consist of compensation expense and
administrative costs, including transaction costs of $19.7 million
for the three months ended June 30, 2018, and $54.5 million for the
six months ended June 30, 2018. Intersegment eliminations include
the profit on water services that are provided to EQT Production and
capitalized as part of development costs of $24.9 million for the
three months ended June 30, 2018, and $47.5 million for the six
months ended June 30, 2018.

NON-GAAP DISCLOSURES

Adjusted Net Income Attributable to EQT and Adjusted Earnings per
Diluted Share (adjusted EPS)

Adjusted net income (loss) attributable to EQT and adjusted EPS are
non-GAAP supplemental financial measures that are presented because they
are important measures used by management to evaluate period-to-period
comparisons of earnings trends. Adjusted net income (loss) attributable
to EQT and adjusted EPS should not be considered as alternatives to net
income attributable to EQT or earnings per diluted share (EPS) presented
in accordance with GAAP. Adjusted net income (loss) attributable to EQT
as presented excludes the revenue impact of changes in the fair value of
derivative instruments prior to settlement, asset and lease impairments,
transaction costs and certain other items that impact comparability
between periods. Management utilizes adjusted net income (loss)
attributable to EQT to evaluate earnings trends because the measure
reflects only the impact of settled derivative contracts; thus, the
income from natural gas sales is not impacted by the often-volatile
fluctuations in the fair value of derivatives prior to settlement. The
measure also excludes other items that affect the comparability of
results or that are not indicative of trends in the ongoing business.
Management believes that adjusted net income (loss) attributable to EQT
as presented provides useful information for investors for evaluating
period-over-period earnings.

The table below reconciles adjusted net income (loss) attributable to
EQT and adjusted EPS with net income attributable to EQT and EPS as
derived from the statements of consolidated operations.

  Three Months Ended
June 30,
(thousands, except per share information) 2018   2017
Net (loss) income attributable to EQT, as reported $ 17,806 $ 41,126
Add back / (deduct):
Asset and lease impairments 137,643 2,264
Transaction costs 25,959 5,054
Loss (gain) on derivatives not designated as hedges 53,897 (46,326 )
Net cash settlements received (paid) on derivatives not designated
as hedges
25,513 (11,191 )
Premiums received for derivatives that settled during the period 237 532
Tax impact of non-GAAP items* (54,050 ) 19,966
Loss limitation impact on effective tax rate**   (90,708 )    
Adjusted net income attributable to EQT $ 116,297   $ 11,425  
Diluted weighted average common shares outstanding 265,154 173,582
Diluted EPS, as adjusted $ 0.44 $ 0.07
* Blended tax rates of 22.2% and 40.2% were applied to the items under
the caption "Add back (deduct)" for the three months ended June 30,
2018 and 2017, respectively. This represents the incremental tax
(expense) benefit that would have been incurred had these items been
excluded from net income attributable to EQT.
** The tax benefit that may be recorded in any quarter is limited to
the amount of benefit expected for the entire year. As a result, the
tax benefit recorded in the first quarter 2018 was the entire
benefit forecast for the year at March 31, 2018. At June 30, 2018
the forecast tax benefit for year was higher than at March 31, 2018,
primarily as a result of lower commodity price forecasts for the
second half of the year. As a result, the Company recorded an
additional tax benefit in the second quarter.

Operating Cash Flow, Adjusted Operating Cash Flow Attributable to EQT
and Adjusted Operating Cash Flow Attributable to EQT Production

Operating cash flow, adjusted operating cash flow attributable to EQT
and adjusted operating cash flow attributable to EQT Production are
non-GAAP supplemental financial measures that are presented as
indicators of an oil and gas exploration and production company's
ability to internally fund exploration and development activities and to
service or incur additional debt. EQT includes this information because
management believes that changes in operating assets and liabilities
relate to the timing of cash receipts and disbursements and therefore
may not relate to the period in which the operating activities occurred.
Adjusted operating cash flow attributable to EQT is EQT's net cash
provided by operating activities, less changes in other assets and
liabilities, adjusted to exclude EQM and RMP adjusted EBITDA, plus EQM
and RMP interest expense plus the EQGP, RMP and EQM cash distributions
payable to EQT. Prior to EQT's 2018 operational forecast announcement in
December 2017, the Company's calculation of adjusted operating cash flow
attributable to EQT did not include the addition of EQM's and RMP's
interest expense. The Company believes it is preferable to present this
non-GAAP supplemental financial measure with this adjustment as it
better reflects EQT's cash flows by excluding the cost of debt for EQM
and RMP. EQT has recast all periods presented to be consistent with this
change in the definition of adjusted operating cash flow attributable to
EQT. Management believes that removing the impact on operating cash
flows of the public unitholders of EQGP, EQM and RMP that is otherwise
required to be consolidated in EQT's results provides useful information
to an EQT investor. As used in this news release, adjusted operating
cash flow attributable to EQT Production means the EQT Production
segment's total operating revenues less the EQT Production segment's
cash operating expense, less gains (losses) on derivatives not
designated as hedges, plus net cash settlements received (paid) on
derivatives not designated as hedges, plus premiums received (paid) for
derivatives that settled during the period, plus EQT Production asset
impairments (if applicable). Operating cash flow, adjusted operating
cash flow attributable to EQT, and adjusted operating cash flow
attributable to EQT Production should not be considered as alternatives
to net cash provided by operating activities presented in accordance
with GAAP. The table below reconciles operating cash flow and adjusted
operating cash flow attributable to EQT with net cash provided by
operating activities, as derived from the statements of consolidated
cash flows to be included in EQT's report on Form 10-Q for the three and
six months ended June 30, 2018.

  Three Months Ended   Six Months Ended
June 30, June 30,
(thousands) 2018   2017 2018   2017
Net cash provided by operating activities $ 636,712 $ 294,177 $ 1,541,124 $ 808,994
Add back / (deduct)
Changes in other assets and liabilities   54,264     42,520     54,504     (24,965 )
Operating cash flow (a non-GAAP measure) $ 690,976 $ 336,697 $ 1,595,628 $ 784,029
(Deduct) / add back:
EQM adjusted EBITDA(1) (209,508 ) (165,238 ) (413,939 ) (333,902 )
RMP adjusted EBITDA(1) (79,693 ) (149,227 )
EQM net interest expense 20,683 8,662 31,399 16,588
RMP net interest expense 2,380 4,334
Cash distribution payable to EQT from EQGP(2) 84,459 50,340 146,305 96,126
Cash distribution payable to EQT from RMP(3) 13,121
Cash distribution payable to EQT from EQM(4)   16,823         16,823      
Adjusted operating cash flow attributable to EQT $ 526,120   $ 230,461   $ 1,244,444   $ 562,841  
(1)   EQM adjusted EBITDA and RMP adjusted EBITDA are non-GAAP
supplemental financial measures reconciled in this section.
(2) Cash distribution payable to EQT for the three and six months ended
June 30, 2018 and 2017, represents the distribution payable from
EQGP to EQT related to the respective period.
(3) Due to the timing of the RMP merger, RMP will not declare a cash
dividend for the second quarter 2018.
(4) Cash distribution payable to EQT for the three and six months ended
June 30, 2018, represents the distribution payable from EQM to EQT
after the drop down of retained midstream assets in the second
quarter 2018.

EQT has not provided projected net cash provided by operating activities
or reconciliations of projected adjusted operating cash flow
attributable to EQT or EQT Production to projected net cash provided by
operating activities, the most comparable financial measure calculated
in accordance with GAAP. EQT is unable to project net cash provided by
operating activities because this metric includes the impact of changes
in operating assets and liabilities related to the timing of cash
receipts and disbursements that may not relate to the period in which
the operating activities occurred. EQT is unable to project these timing
differences with any reasonable degree of accuracy without unreasonable
efforts such as predicting the timing of its and customers' payments,
with accuracy to a specific day, three or more months in advance.
Furthermore, EQT does not provide guidance with respect to its average
realized price, among other items, that impact reconciling items between
net cash provided by operating activities and adjusted operating cash
flow attributable to EQT and EQT Production, as applicable. Natural gas
prices are volatile and out of EQT's control, and the timing of
transactions and the income tax effects of future transactions and other
items are difficult to accurately predict. Therefore, EQT is unable to
provide projected net cash provided by operating activities, or the
related reconciliations of projected adjusted operating cash flow
attributable to EQT and EQT Production to projected net cash provided by
operating activities, without unreasonable effort.

EQT Production Adjusted Operating Revenue

The table below reconciles EQT Production adjusted operating revenues, a
non-GAAP supplemental financial measure, to EQT Production total
operating revenue, as reported in the EQT Production Results of
Operations, its most directly comparable financial measure calculated in
accordance with GAAP. Refer to the Financial Information by Business
Segment footnote to be included in EQT's report on Form 10-Q for the
three and six months ended June 30, 2018, for a reconciliation of EQT
Production total operating revenue to EQT Corporation total operating
revenue.

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

Calculation of EQT Production   Three Months Ended   Six Months Ended
Adjusted Operating Revenue June 30, June 30,
(thousands) 2018   2017 2018   2017
EQT Production total operating revenue, as reported on segment page $ 950,648 $ 631,101 $ 2,262,684 $ 1,459,763
Add back / (deduct):
Loss (gain) on derivatives not designated as hedges 53,897 (46,326 ) (8,695 ) (187,068 )
Net cash settlements received (paid) on derivatives not designated
as hedges
25,513 (11,191 ) (13,116 ) (20,158 )
Premiums received for derivatives that settled during the period 237 532 471 1,058
Pipeline and net marketing services   (13,180 )   (8,061 )   (36,250 )   (22,516 )
EQT Production adjusted operating revenue, a non-GAAP measure $ 1,017,115 $ 566,055 $ 2,205,094 $ 1,231,079
Total sales volumes (MMcfe)   362,540     198,080     719,545     388,014  
Average realized price ($/Mcfe) $ 2.81   $ 2.86   $ 3.06   $ 3.17  

EQT Production Adjusted Operating Income (Loss)

The table below reconciles EQT Production adjusted operating income
(loss), a non-GAAP supplemental financial measure, to EQT Production
operating (loss) income, as reported in the EQT Production Results of
Operations. Refer to the Operating Income (Loss) section in this news
release for a reconciliation of EQT Production total operating (loss)
income to EQT Corporation total operating income (loss), as reported.

EQT Production adjusted operating income (loss) is presented because it
is an important measure used by EQT's management to evaluate
period-over-period comparisons of earnings trends. EQT Production
adjusted operating income (loss) should not be considered as an
alternative to EQT Corporation operating income (loss) presented in
accordance with GAAP. EQT Production adjusted operating income (loss)
excludes the revenue impact of changes in the fair value of derivative
instruments prior to settlement and asset and lease impairments.
Management utilizes EQT Production adjusted operating income (loss) to
evaluate earnings trends because the measure reflects only the impact of
settled derivative contracts and thus the income from natural gas sales
is not impacted by the often volatile fluctuations in the fair value of
derivatives prior to settlement. The measure also excludes certain other
items that affect the comparability of results and are not indicative of
trends in the ongoing business. Management believes that EQT Production
adjusted operating income (loss) as presented provides useful
information for investors for evaluating period-over-period earnings.

  Three Months Ended   Six Months Ended
June 30, June 30,
(thousands) 2018   2017 2018   2017
EQT Production operating (loss) income, as reported on segment page $ (79,846 ) $ 52,884 $ (2,005,645 ) $ 310,433
Add back / (deduct):
Loss (gain) on derivatives not designated as hedges 53,897 (46,326 ) (8,695 ) (187,068 )
Net cash settlements received (paid) on derivatives not designated
as hedges
25,513 (11,191 ) (13,116 ) (20,158 )
Premiums received for derivatives that settled during the period 237 532 471 1,058
Asset and lease impairments   137,643     2,264     2,470,567     4,101  
EQT Production adjusted operating income (loss) $ 137,444   $ (1,837 ) $ 443,582   $ 108,366  

EQM Adjusted EBITDA

EQM adjusted EBITDA means EQM's net income plus EQM's net interest
expense, depreciation, amortization of intangible assets, preferred
interest payments, non-cash long-term compensation expense and
transaction costs less EQM's equity income, AFUDC-equity and adjusted
EBITDA of assets prior to acquisition. EQM adjusted EBITDA is a non-GAAP
supplemental financial measure that management and external users of
EQT's consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies, use to assess the effects of the
noncontrolling interests in relation to:

  • EQT's operating performance as compared to other companies in its
    industry;
  • the ability of EQT's assets to generate sufficient cash flow to make
    distributions to its investors;
  • EQT's ability to incur and service debt and fund capital expenditures;
    and
  • the viability of acquisitions and other capital expenditure projects
    and the returns on investment of various investment opportunities.

EQT believes that EQM adjusted EBITDA provides useful information to
investors in assessing the impact of the noncontrolling interest in EQM
on EQT's financial condition and results of operations. EQM adjusted
EBITDA should not be considered as an alternative to EQM's net income,
operating income, or any other measure of financial performance or
liquidity presented in accordance with GAAP. EQM adjusted EBITDA has
important limitations as an analytical tool because it excludes some,
but not all, items that affect EQM's net income. Additionally, because
adjusted EBITDA may be defined differently by other companies in EQT's
or EQM's industries, the definition of EQM adjusted EBITDA may not be
comparable to similarly titled measures of other companies, thereby
diminishing the utility of the measure. The table below reconciles EQM
adjusted EBITDA with EQM's net income, as derived from the statements of
consolidated operations to be included in EQM's report on Form 10-Q for
the three and six months ended June 30, 2018.

  Three Months Ended   Six Months Ended
June 30, June 30,
(thousands) 2018   2017 2018   2017
Net income attributable to EQM $ 172,619 $ 139,139 $ 379,452 $ 282,335
Add:
Net interest expense 20,683 8,662 31,399 16,588
Depreciation 28,076 21,400 55,461 41,947
Amortization of intangible assets 10,387 - 20,773
Preferred interest payments 2,746 2,746 5,492 5,492
Non-cash long-term compensation expense 331 225
Transaction costs (1) 3,424 3,424
Less:
Equity income (10,938 ) (5,111 ) (19,749 ) (9,388 )
AFUDC - equity (1,072 ) (1,598 ) (2,137 ) (3,297 )
Adjusted EBITDA attributable to the May 2018 Acquisition (2)   (16,417 )       (60,507 )    
EQM Adjusted EBITDA $ 209,508 $ 165,238 $ 413,939 $ 333,902
(1)   There were no transaction costs for the three and six months ended
June 30, 2017.
(2) Adjusted EBITDA attributable to the May 2018 Acquisition for the
period prior to May 1, 2018 was excluded from EQM's adjusted EBITDA
calculations as these amounts were generated by the May 2018
Acquisition prior to acquisition by EQM; therefore, the amounts
could not have been distributed to EQM's unitholders. Adjusted
EBITDA attributable to the May 2018 Acquisition for the three and
six months ended June 30, 2018 was calculated as net income of $11.4
million and $41.0 million, respectively, plus depreciation of $1.6
million and $5.8 million, respectively, plus amortization of
intangible assets of $3.5 million and $13.8 million, respectively,
less interest income of less than $0.1 million and $0.1 million,
respectively.

RMP Adjusted EBITDA

RMP adjusted EBITDA means RMP's net income plus RMP's net interest
expense, depreciation expense, non-cash compensation expense and
transaction costs. RMP adjusted EBITDA is a non-GAAP supplemental
financial measure that management and external users of EQT's
consolidated financial statements, such as industry analysts, investors,
lenders and rating agencies, use to assess the effects of the
noncontrolling interests in relation to:

  • EQT's operating performance as compared to other companies in its
    industry;
  • the ability of EQT's assets to generate sufficient cash flow to make
    distributions to its investors;
  • EQT's ability to incur and service debt and fund capital expenditures;
    and
  • the viability of acquisitions and other capital expenditure projects
    and the returns on investment of various investment opportunities.

EQT believes that RMP adjusted EBITDA provides useful information to
investors in assessing the impact of the noncontrolling interest in RMP
on EQT's financial condition and results of operations. RMP adjusted
EBITDA should not be considered as an alternative to RMP's net income,
operating income, or any other measure of financial performance or
liquidity presented in accordance with GAAP. RMP adjusted EBITDA has
important limitations as an analytical tool because it excludes some,
but not all, items that affect RMP's net income. Additionally, because
adjusted EBITDA may be defined differently by other companies in EQT's
or RMP's industries, the definition of RMP adjusted EBITDA may not be
comparable to similarly titled measures of other companies, thereby
diminishing the utility of the measure. The table below reconciles RMP
adjusted EBITDA with RMP's net income.

  Three Months Ended   Six Months Ended
June 30, June 30,
(thousands) 2018   2017 2018   2017
Net income attributable to RMP $ 61,213 $ $ 114,730 $
Add:
Net interest expense 2,380 4,334
Depreciation expense 14,034 27,929
Non-cash long-term compensation expense 140 308
Transaction costs   1,926     1,926  
RMP Adjusted EBITDA $ 79,693 $ $ 149,227 $

Second quarter 2018 Webcast Information

The Company's conference call with securities analysts begins at 10:30
a.m. ET today and will be broadcast live via the Company's web site at www.eqt.com,
and on the investor information page of the Company's web site at ir.eqt.com,
with a replay available for seven days following the call.

EQT Midstream Partners, LP and EQT GP Holdings, LP, for which EQT
Corporation is the parent company, will also host a joint conference
call with security analysts today, beginning at 11:30 a.m. ET. The call
will be broadcast live via www.eqtmidstreampartners.com,
with a replay available for seven days following the call.

About EQT Corporation:

EQT Corporation is an integrated energy company with emphasis on
Appalachian area natural gas production, gathering, and transmission.
With more than 130 years of experience and a long-standing history of
good corporate citizenship, EQT is the largest producer of natural gas
in the United States. As a leader in the use of advanced horizontal
drilling technology, EQT is committed to minimizing the impact of
drilling-related activities and reducing its overall environmental
footprint. Through safe and responsible operations, EQT is helping to
meet our nation's growing demand for clean-burning energy, while
continuing to provide a rewarding workplace and enrich the communities
where its employees live and work. EQT owns the general partner interest
and a 91% limited partner interest in EQT GP Holdings, LP. EQT GP
Holdings, LP owns the general partner interest, all the incentive
distribution rights, and a portion of the limited partner interest in
EQT Midstream Partners, LP;.

Visit EQT Corporation at www.EQT.com;
and to learn more about EQT's sustainability efforts, please visit https://csr.eqt.com.

About EQT Midstream Partners

EQT Midstream Partners, LP (EQM) is a growth-oriented limited
partnership formed by EQT Corporation to own, operate, acquire, and
develop midstream assets in the Appalachian Basin. As the third largest
gatherer of natural gas in the United States, EQM provides midstream
services to EQT Corporation and third-party companies through its
strategically located natural gas transmission, storage, and gathering
systems, and water services to support energy development and production
in the Marcellus and Utica regions. EQM owns approximately 950 miles of
FERC-regulated interstate pipelines and approximately 2,130 miles of
high-and low-pressure gathering lines.

For more information on EQM, visit our website at www.eqtmidstreampartners.com

About EQT GP Holdings:

EQT GP Holdings, LP is a limited partnership that owns the general
partner interest, all the incentive distribution rights, and a portion
of the limited partner interests in EQT Midstream Partners, LP. EQT
Corporation owns the general partner interest and a 91% limited partner
interest in EQT GP Holdings, LP.

Visit EQT GP Holdings, LP at www.eqtmidstreampartners.com.

EQT Management speaks to investors from time to time and the analyst
presentation for these discussions, which is updated periodically, is
available via the Company's investor relationship website at http://ir.eqt.com.

Cautionary Statements

The United States Securities and Exchange Commission (SEC) permits oil
and gas companies, in their filings with the SEC, to disclose only
proved, probable and possible reserves that a company anticipates as of
a given date to be economically and legally producible and deliverable
by application of development projects to known accumulations. We use
certain terms, such as "EUR" (estimated ultimate recovery) and "3P"
(proved, probable and possible), that the SEC's guidelines prohibit us
from including in filings with the SEC. These measures are by their
nature more speculative than estimates of reserves prepared in
accordance with SEC definitions and guidelines and accordingly are less
certain.

Total sales volume per day (or daily production) is an operational
estimate of the daily production or sales volume on a typical day
(excluding curtailments).

Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. Statements that do not relate strictly to historical or
current facts are forward-looking. Without limiting the generality of
the foregoing, forward-looking statements contained in this news release
specifically include the expectations of plans, strategies, objectives
and growth and anticipated financial and operational performance of the
Company and its subsidiaries, including guidance regarding the Company's
strategy to develop its reserves; drilling plans and programs (including
the number, type, average length-of-pay or lateral length and location
of wells to be drilled and number and type of drilling rigs); projected
natural gas prices, basis and average differential; total resource
potential, reserves and EUR; projected Company and third party
production sales volume and growth rates (including liquids sales volume
and growth rates); projected unit costs and well costs; projected
pipeline and net marketing services revenues; projected gathering and
transmission volume and growth rates; infrastructure programs (including
the timing, cost and capacity of the transmission and gathering
expansion projects); the cost, capacity, timing of regulatory approvals
and anticipated in-service date of the MVP project; the ultimate terms,
partners and structure of the MVP Joint Venture; technology (including
drilling and completion techniques); acquisition transactions; the
projected general and administrative savings, capital efficiency savings
and other operating efficiencies and synergies resulting from the
acquisition of Rice (the Rice Merger) and the midstream streamlining
transactions, and the Company's ability to achieve the anticipated
synergies and efficiencies; monetization transactions, including asset
sales, joint ventures or other transactions involving the Company's
assets; the impact and outcome of pending and future litigation; whether
the separation of the Company's production and midstream businesses (the
Separation) will be completed and the timing of the Separation; the
projected cash flows resulting from the Company's partnership interests
in EQGP and EQM; internal rate of return (IRR) and returns per well;
projected capital contributions and expenditures; potential future
impairments of the Company's assets; liquidity and financing
requirements, including funding sources and availability; changes in the
Company's or EQM's credit ratings; projected net income attributable to
noncontrolling interests, adjusted operating cash flow attributable to
EQT, adjusted operating cash flow attributable to EQT Production,
EBITDA, revenues and cash-on-hand; hedging strategy; the effects of
government regulation; the amount and timing of any repurchases under
the Company's stock buyback program; projected dividend and distribution
amounts and rates; and tax position, projected effective tax rate and
the impact of changes in tax laws. These forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from projected results. Accordingly, investors should
not place undue reliance on forward-looking statements as a prediction
of actual results. The Company has based these forward-looking
statements on current expectations and assumptions about future events.
While the Company considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks and uncertainties,
many of which are difficult to predict and beyond the Company's control.
The risks and uncertainties that may affect the operations, performance
and results of the Company's business and forward-looking statements
include, but are not limited to, those set forth under Item 1A, "Risk
Factors," of the Company's Form 10-K for the year ended December 31,
2017 as filed with the SEC, as updated by any subsequent Form 10-Qs

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

Information in this news release regarding EQGP and its subsidiaries,
including EQM, and RMP is derived from publicly available information
published or to be published by the partnerships.

2018 GUIDANCE

See the Non-GAAP Disclosures section for important information regarding
the non-GAAP financial measures included in this news release, including
reasons why EQT is unable to provide projections of its 2018 net cash
provided by operating activities, the most comparable financial measure
to adjusted operating cash flow attributable to EQT and EQT Production,
calculated in accordance with GAAP.

PRODUCTION   Q3 2018  

2nd half 2018

Total production sales volume (Bcfe) 370 – 380 770 – 790
Liquids sales volume, excluding ethane (Mbbls) 2,580 –2,700 5,125 – 5,275
Ethane sales volume (Mbbls) 1,220 – 1,320 2,500 – 2,650
Total liquids sales volume (Mbbls) 3,800 – 4,020 7,625 – 7,925
 
Marcellus / Utica Rigs 8 – 10
Top-hole rigs 3 – 4
Frac Crews 6 – 10
 
Unit Costs ($ / Mcfe)
Gathering to EQM and RMP $ 0.50 – 0.52
Transmission to EQM $ 0.11 – 0.13
Third-party gathering and transmission $ 0.39 – 0.41
Processing $ 0.08 – 0.10
LOE, excluding production taxes $ 0.05 – 0.07
Production taxes $ 0.05 – 0.07
SG&A $ 0.09 – 0.11
DD&A $ 1.05 – 1.07
Development costs ($ / Mcfe) $

0.40 – 0.42

Average differential ($ / Mcf) $ (0.60) – (0.50) $ (0.50) – (0.35)
Pipeline and net marketing services ($MM) $ 0 – 5

$

0 – 5
 
FINANCIAL ($MM)
Net income attributable to noncontrolling interest ($MM) $

110 – 120

$

255 – 265

 
ADJUSTED OPERATING CASH FLOW ($MM) Full-year 2018
Adjusted operating cash flow attributable to EQT Production $ 2,300 – 2,400
Distributions to EQT from EQM, EQGP and RMP $ 350 – 400
Interest, taxes, and other items $ 0 – 50
Adjusted operating cash flow attributable to EQT $ 2,700 – 2,800

Based on current NYMEX natural gas prices of $2.86
Adjusted
operating cash flow does not include the proceeds, costs or tax impacts
of the separation.

 
EQT CORPORATION AND SUBSIDIARIES
Statements of Consolidated Operations
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 (a) 2017 2018 (a) 2017
(Thousands except per share amounts)
Revenues:
Sales of natural gas, oil and NGLs $ 991,365 $ 576,714 $ 2,217,739 $ 1,250,179
Pipeline, water and net marketing services 117,203 65,702 261,820 145,664
(Loss) gain on derivatives not designated as hedges   (53,897 )   46,326   8,695     187,068
Total operating revenues 1,054,671 688,742 2,488,254 1,582,911
 
Operating expenses:
Transportation and processing 200,050 134,818 390,190 268,524
Operation and maintenance 25,302 18,315 52,326 35,132
Production 47,881 44,276 106,720 89,948
Exploration 21,182 3,481 26,286 6,603
Selling, general and administrative 77,813 52,670 130,428 124,628
Depreciation and depletion 417,672 240,817 855,565 472,735
Impairment / loss on sale of long-lived assets 118,114 2,447,159
Transaction costs 25,959 4,238 61,670 4,238
Amortization of intangible assets   20,729       41,457    
Total operating expenses   954,702     498,615   4,111,801     1,001,808
 
Operating income (loss) 99,969 190,127 (1,623,547 ) 581,103
 
Other income 11,752 6,305 21,337 9,354
Interest expense   77,004     44,078   147,017     86,733
Income (loss) before income taxes 34,717 152,354 (1,749,227 ) 503,724
Income tax (benefit) expense   (101,629 )   29,709   (440,594 )   130,374
Net income (loss) 136,346 122,645 (1,308,633 ) 373,350
Less: Net income attributable to noncontrolling interests   118,540     81,519   259,555     168,232
Net income (loss) attributable to EQT Corporation $ 17,806   $ 41,126 $ (1,568,188 ) $ 205,118
 
Earnings per share of common stock attributable to EQT Corporation:
Basic:
Weighted average common stock outstanding   265,030     173,462   264,920     173,320
Net income (loss) $ 0.07   $ 0.24 $ (5.92 ) $ 1.18
 
Diluted:
Weighted average common stock outstanding   265,154     173,582   264,920     173,525
Net income (loss) $ 0.07   $ 0.24 $ (5.92 ) $ 1.18
Dividends declared per common share $ 0.03   $ 0.03 $ 0.06   $ 0.06
(a)   For the three months and six months ended June 30, 2018, the EQT
Statements of Consolidated Operations include the results of
operations acquired in the Rice Merger, which occurred on November
13, 2017.
 

EQT CORPORATION AND SUBSIDIARIES
PRICE RECONCILIATION
  Three Months Ended   Six Months Ended
June 30, June 30,
in thousands (unless noted) 2018 (e)   2017 2018 (e)   2017
NATURAL GAS
Sales volume (MMcf) 334,135 167,682 663,539 332,146
NYMEX price ($/MMBtu) (a) $ 2.80 $ 3.18 $ 2.89 $ 3.25
Btu uplift   0.18     0.26     0.19     0.27  
Natural gas price ($/Mcf) $ 2.98 $ 3.44 $ 3.08 $ 3.52
 
Basis ($/Mcf) (b) (0.42 ) (0.60 ) (0.15 ) (0.39 )
Cash settled basis swaps (not designated as hedges) ($/Mcf)   (0.01 )   (0.04 )   (0.08 )    
Average differential, including cash settled basis swaps ($/Mcf) $ (0.43 ) $ (0.64 ) $ (0.23 ) $ (0.39 )
 
Average adjusted price ($/Mcf) $ 2.55 $ 2.80 $ 2.85 $ 3.13
Cash settled derivatives (cash flow hedges) ($/Mcf) 0.02 0.01
Cash settled derivatives (not designated as hedges) ($/Mcf)   0.09     (0.02 )   0.07     (0.05 )
Average natural gas price, including cash settled derivatives ($/Mcf) $ 2.64 $ 2.80 $ 2.92 $ 3.09
Natural gas sales, including cash settled derivatives $ 884,543 $ 469,165 $ 1,939,608 $ 1,028,364
 
LIQUIDS
NGLs (excluding ethane):
Sales volume (MMcfe) (c) 18,944 18,895 37,335 36,035
Sales volume (Mbbls) 3,157 3,149 6,222 6,006
Price ($/Bbl) $ 36.39 $ 24.03 $ 36.94 $ 27.54
Cash settled derivatives (not designated as hedges) ($/Bbl)   (0.91 )   (0.32 )   (1.06 )   (0.43 )
Average NGL price, including cash settled derivatives ($/Bbl) $ 35.48 $ 23.71 $ 35.88 $ 27.11
 
NGL sales 112,034 $ 74,653 $ 223,270 $ 162,850
Ethane:
Sales volume (MMcfe) (c) 8,414 9,771 16,411 16,744
Sales volume (Mbbls) 1,402 1,629 2,735 2,791
Price ($/Bbl) $ 7.67   $ 6.76   $ 7.78   $ 6.72  
Ethane sales 10,754 $ 11,007 $ 21,286 $ 18,739
Oil:
Sales volume (MMcfe) (c) 1,047 1,732 2,260 3,089
Sales volume (Mbbls) 175 289 377 515
Price ($/Bbl) $ 56.04   $ 38.91   $ 55.56   $ 41.04  
Oil sales 9,784 $ 11,230 $ 20,930 $ 21,126
 
Total liquids sales volume (MMcfe) (c) 28,405 30,398 56,006 55,868
Total liquids sales volume (Mbbls) 4,734 5,067 9,334 9,312
 
Liquids sales $ 132,572 $ 96,890 $ 265,486 $ 202,715
 
TOTAL PRODUCTION
Total natural gas & liquids sales, including cash settled
derivatives (d)
$ 1,017,115 $ 566,055 $ 2,205,094 $ 1,231,079
Total sales volume (MMcfe) 362,540 198,080 719,545 388,014
 
Average realized price ($/Mcfe) $ 2.81 $ 2.86 $ 3.06 $ 3.17
(a)   The Company's volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $2.80 and $3.18 for
the three months ended June 30, 2018 and 2017, respectively, and
$2.90 and $3.25 for the six months ended June 30, 2018 and 2017,
respectively).
(b) Basis represents the difference between the ultimate sales price for
natural gas and the NYMEX natural gas price.
(c) NGLs, ethane and crude oil were converted to Mcfe at the rate of six
Mcfe per barrel for all periods.
(d) Also referred to in this report as EQT Production adjusted operating
revenues, a non–GAAP supplemental financial measure.
(e) EQT Production includes the results of production operations
acquired in the Rice Merger, which occurred on November 13, 2017.
 

EQT PRODUCTION
RESULTS OF OPERATIONS
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 (a) 2017 2018 (a) 2017
OPERATIONAL DATA
Sales volume detail (MMcfe):
Marcellus (b) 294,129 175,103 582,902 341,472
Ohio Utica 47,796 121 95,306 251
Other   20,615     22,856   41,337     46,291
Total production sales volumes (c) 362,540 198,080 719,545 388,014
 
Average daily sales volumes (MMcfe/d) 3,984 2,177 3,975 2,144
 
Average realized price ($/Mcfe) $ 2.81 $ 2.86 $ 3.06 $ 3.17
 
Gathering to EQM Gathering and RMP Gathering ($/Mcfe) $ 0.49 $ 0.48 $ 0.50 $ 0.48
Transmission to EQM Transmission ($/Mcfe) $ 0.13 $ 0.22 $ 0.13 $ 0.23
Third party gathering and transmission ($/Mcfe) $ 0.42 $ 0.44 $ 0.42 $ 0.46
Processing ($/Mcfe) $ 0.13 $ 0.24 $ 0.13 $ 0.23
Lease operating expenses (LOE), excluding production taxes ($/Mcfe) $ 0.08 $ 0.13 $ 0.09 $ 0.13
Production taxes ($/Mcfe) $ 0.06 $ 0.09 $ 0.06 $ 0.10
Production depletion ($/Mcfe) $ 1.00 $ 1.04 $ 1.03 $ 1.04
 
Depreciation and depletion(thousands):
Production depletion $ 362,819 $ 205,524 $ 743,283 $ 402,986
Other depreciation and depletion   11,963     13,687   27,352     27,322
Total depreciation and depletion $ 374,782 $ 219,211 $ 770,635 $ 430,308
 
Capital expenditures (thousands) (d) $ 739,183 $ 455,721 $ 1,369,941 $ 1,401,179
 
FINANCIAL DATA (thousands)
Revenues:
Sales of natural gas, oil and NGLs $ 991,365 $ 576,714 $ 2,217,739 $ 1,250,179
Pipeline and net marketing services 13,180 8,061 36,250 22,516
(Loss) gain on derivatives not designated as hedges   (53,897 )   46,326   8,695     187,068
Total operating revenues 950,648 631,101 2,262,684 1,459,763
 
Operating expenses:
Gathering 194,751 110,965 388,369 217,880
Transmission 187,158 116,209 365,174 234,805
Processing 46,160 46,819 91,183 89,579
LOE, excluding production taxes 27,457 25,917 61,589 51,111
Production taxes 20,406 18,359 44,908 38,837
Exploration 21,182 3,481 26,286 6,603
Selling, general and administrative (SG&A) 40,484 37,256 73,026 80,207
Depreciation and depletion 374,782 219,211 770,635 430,308
Impairment/loss on sale of long–lived assets   118,114       2,447,159    
Total operating expenses   1,030,494     578,217   4,268,329     1,149,330
Operating (loss) income $ (79,846 ) $ 52,884 $ (2,005,645 ) $ 310,433
(a)   Operational data for EQT Production includes results of operations
for production operations acquired from Rice , which occurred on
November 13, 2017. Results have been recast for the May 2018
acquisition and reflect the results of the assets sold to EQM as
though they were owned by EQM since acquired from Rice.
(b) Includes Upper Devonian wells.
(c) NGLs, ethane and crude oil were converted to Mcfe at the rate of six
Mcfe per barrel for all periods.
(d) Expenditures for segment assets in the EQT Production segment
included $41.3 million and $47.0 million for fill–ins and bolt–ons
associated with legacy EQT acreage for the three months ended June
30, 2018 and 2017, respectively, and $78.1 million and $89.7 million
for fill-ins and bolt–ons associated with legacy EQT acreage for the
six months ended June 30, 2018 and 2017, respectively. The three and
six months ended June 30, 2017 included $141.7 million and $811.2
million of cash capital expenditures for acquisitions, respectively,
and $9.7 million of non–cash capital expenditures for the six months
ended June 30, 2017, related to acquisitions.
 

EQM GATHERING
RESULTS OF OPERATIONS
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 (a) 2017 2018 (a) 2017
FINANCIAL DATA (Thousands, other than per day amounts)
Firm reservation fee revenues $ 111,702 $ 101,858 $ 221,635 $ 196,129
Volumetric based fee revenues:
Usage fees under firm contracts (b) 9,956 6,479 22,064 11,300
Usage fees under interruptible contracts (c)   58,958     3,808   116,545     7,045
Total volumetric based fee revenues   68,914     10,287   138,609     18,345
Total operating revenues   180,616     112,145   360,244     214,474
 
Operating expenses:
Operating and maintenance 15,777 10,293 27,686 20,633
SG&A 17,175 8,872 28,682 18,297
Depreciation 15,646 9,555 30,590 18,415
Amortization of intangible assets   10,387       20,773    
Total operating expenses   58,985     28,720   107,731     57,345
 
Operating income $ 121,631   $ 83,425 $ 252,513   $ 157,129
 
OPERATIONAL DATA
Gathered volumes (BBtu per day)
Firm capacity reservation 2,007 1,780 1,986 1,754
Volumetric based services (d)   2,494     281   2,514     253
Total gathered volumes 4,501 2,061 4,500 2,007
 
Capital expenditures $ 139,099 $ 53,708 $ 252,297 $ 102,546
(a)   Includes the pre-acquisition results of the May 2018 Acquisition.
The recast is for the period the acquired businesses were under the
common control of EQT, which began on November 13, 2017 as a result
of the Rice Merger.
(b) Includes fees on volumes gathered in excess of firm contracted
capacity.
(c) Includes volumes from contracts under which EQM has agreed to hold
capacity available but for which it does not receive a capacity
reservation fee.
(d) Includes volumes gathered under interruptible contracts and volumes
gathered in excess of firm contracted capacity.
 

EQM TRANSMISSION
RESULTS OF OPERATIONS
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
FINANCIAL DATA (Thousands, other than per day amounts)
Firm reservation fee revenues $ 82,222 $ 79,512 $ 179,997 $ 171,786
Volumetric based fee revenues:
Usage fees under firm contracts (a) 4,828 3,503 8,650 6,360
Usage fees under interruptible contracts   2,095   1,655   7,432   4,267
Total volumetric based fee revenues   6,923   5,158   16,082   10,627
Total operating revenues   89,145   84,670   196,079   182,413
 
Operating expenses:
Operating and maintenance 8,810 8,022 16,361 14,499
SG&A 7,263 6,940 14,754 14,915
Depreciation   12,430   11,845   24,871   23,532
Total operating expenses   28,503   26,807   55,986   52,946
 
Operating income $ 60,642 $ 57,863 $ 140,093 $ 129,467
 
Equity Income $ 10,938 $ 5,111 $ 19,749 $ 9,388
 
OPERATIONAL DATA
Transmission pipeline throughput (BBtu per day)
Firm capacity reservation 2,826 2,218 2,821 2,171
Volumetric based services (b)   41   21   41   24
Total transmission pipeline throughput 2,867 2,239 2,862 2,195
 
Average contracted firm transmission reservation commitments (BBtu
per day)
3,607 3,341 3,873 3,542
 
Capital expenditures $ 27,962 $ 29,978 $ 46,891 $ 51,367
(a)   Includes fees on volumes transported in excess of firm contracted
capacity as well as commodity charges and fees on all volumes
transported under firm contracts.
(b) Includes volumes transported under interruptible contracts and
volumes transported in excess of firm contracted capacity.
 

RMP GATHERING
RESULTS OF OPERATIONS
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 (a) 2017 2018 (a) 2017
FINANCIAL DATA (Thousands, other than per day amounts)
Operating revenues:
Gathering revenues $ 52,966 $ $ 105,696 $
Compression revenues   9,315     18,086  
Total operating revenues 62,281 123,782
 
Operating expenses:
Operation and maintenance expense 7,092 10,281
General and administrative expense 7,339 13,432
Depreciation expense   8,236     16,360  
Total operating expenses   22,667     40,073  
 
Operating income $ 39,614 $ $ 83,709 $
 
OPERATIONAL DATA
Gathered volumes (BBtu/d) 1,708 1,703
Compression volumes (BBtu/d) 1,313 1,281
 
Capital expenditures $ 47,358 $ $ 68,298 $
(a)   This table sets forth selected financial and operational data for
RMP Gathering. The Company acquired RMP Gathering on November 13,
2017, as part of the Rice Merger.
 

RMP WATER
RESULTS OF OPERATIONS
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 (a) 2017 2018 (a) 2017
FINANCIAL DATA (Thousands, other than per day amounts)
Water services revenues $ 42,655 $ $ 65,618 $
 
Operating expenses:
Operation and maintenance expense 11,591 16,302
General and administrative expense 1,285 2,396
Depreciation expense   5,798     11,569  
Total operating expenses   18,674     30,267  
 
Operating income $ 23,981 $ $ 35,351 $
 
OPERATIONAL DATA
Water services volumes (MMgal) 701 1,135
 
Capital expenditures $ 7,002 $ $ 9,377 $
(a) This table sets forth selected financial and operational data for
RMP Water. The Company acquired RMP Water on November 13, 2017, as
part of the Rice Merger.

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