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

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto included in this report. Unless the context otherwise indicates, all references in this report to "EQT," the "Company," "we," "us," or "our" are to EQT Corporation and its subsidiaries, collectively.

CAUTIONARY STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act). Statements that do not relate strictly to historical or current facts are forward-looking and are usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe" and other words of similar meaning, or the negative thereof, in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this Quarterly Report on Form 10-Q include the expectations of our plans, strategies, objectives and growth and anticipated financial and operational performance, including guidance regarding our strategy to develop our reserves; drilling plans and programs, including availability of capital to complete these plans and programs; total resource potential and drilling inventory duration; projected production and sales volume and growth rates; natural gas prices; changes in basis and the impact of commodity prices on our business; potential future impairments of our assets; projected well costs and capital expenditures; infrastructure programs; the cost, capacity, and timing of obtaining regulatory approvals; our ability to successfully implement and execute our operational, organizational, technological and environmental, social and governance (ESG) initiatives, and achieve the anticipated results of such initiatives; projected gathering and compression rates; potential or pending acquisition transactions, including the pending Tug Hill and XcL Midstream Acquisition (defined and discussed in Note 6 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022), or other strategic transactions, the timing thereof and our ability to achieve the intended operational, financial and strategic benefits from any such transactions; the amount and timing of any repayments, redemptions or repurchases of our common stock, outstanding debt securities or other debt instruments; our ability to retire our debt and the timing of such retirements, if any; the projected amount and timing of dividends; projected cash flows and free cash flow and the timing thereof; liquidity and financing requirements, including funding sources and availability; our ability to maintain or improve our credit ratings, leverage levels and financial profile; our hedging strategy and projected margin posting obligations; the effects of litigation, government regulation and tax position; and the expected impact of changes to tax laws.

The forward-looking statements included in this Quarterly Report on Form 10-Q involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking statements on current expectations and assumptions about future events, taking into account all information currently known by us. While we consider 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 our control. These risks and uncertainties include, but are not limited to, volatility of commodity prices; the costs and results of drilling and operations; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; our ability to appropriately allocate capital and other resources among our strategic opportunities; access to and cost of capital, including as a result of rising interest rates and other economic uncertainties; our hedging and other financial contracts; inherent hazards and risks normally incidental to drilling for, producing, transporting and storing natural gas, natural gas liquids (NGLs) and oil; cyber security risks and acts of sabotage; availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and sand and water required to execute our exploration and development plans, including as a result of inflationary pressures; risks associated with operating primarily in the Appalachian Basin and obtaining a substantial amount of our midstream services from Equitrans Midstream Corporation (Equitrans Midstream); the ability to obtain environmental and other permits and the timing thereof; government regulation or action, including regulations pertaining to methane and other greenhouse gas emissions; negative public perception of the fossil fuels industry; increased consumer demand for alternatives to natural gas; environmental and weather risks, including the possible impacts of climate change; and disruptions to our business due to acquisitions and other significant transactions, including the pending Tug Hill and XcL Midstream Acquisition. These and other risks and uncertainties are described under Item 1A., "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022, and may be updated by Part II, Item 1A., "Risk Factors" in subsequent Quarterly Reports on Form 10-Q and other documents we subsequently file from time to time with the Securities and Exchange Commission.

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

EQT CORPORATION AND SUBSIDIARIES

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

Consolidated Results of Operations

Net loss attributable to EQT Corporation for the three months ended June 30, 2023 was $66.6 million, $0.18 per diluted share, compared to net income attributable to EQT Corporation for the same period in 2022 of $891.4 million, $2.19 per diluted share. The change was attributable primarily to decreased sales of natural gas, NGLs and oil, partly offset by a gain on derivatives in 2023 compared to a loss on derivatives in 2022 and income tax benefit in 2023 compared to income tax expense in 2022.

Net income attributable to EQT Corporation for the six months ended June 30, 2023 was $1,151.9 million, $2.94 per diluted share, compared to net loss attributable to EQT Corporation for the same period in 2022 of $624.7 million, $1.68 per diluted share. The change was attributable primarily to a gain on derivatives in 2023 compared to a loss on derivatives in 2022 and impairment of the contract asset in 2022, partly offset by decreased sales of natural gas, NGLs and oil and income tax expense in 2023 compared to income tax benefit in 2022.

See "Sales Volume and Revenues" and "Operating Expenses" for discussions of items affecting operating income and "Other Income Statement Items" for a discussion of other income statement items. See "Investing Activities" under "Capital Resources and Liquidity" for a discussion of capital expenditures.

Trends and Uncertainties

Our sales volume and operating expenses on a per Mcfe basis for 2022 and the first half of 2023 were negatively impacted by fewer wells turned-in-line during 2022 compared to our 2022 planned development schedule due to third-party supply chain constraints. In addition, as a result of third-party supply chain constraints in 2022, we shifted the planned development of approximately 30 wells from 2022 to 2023 (the Rescheduled Wells). All of the Rescheduled Wells have been completed and turned-to-sales as of July 20, 2023; however, future supply chain constraints or declines in natural gas prices may result in adjustments to our 2023 planned development schedule. Our sales volume and operating expenses on a per Mcfe basis for the second quarter of 2023 were also negatively impacted by lower-than-expected liquids volumes from unscheduled downtime at an in-basin ethane cracker plant to conduct equipment repairs and maintenance and a delay in the development schedule of certain wells that are not operated by us but in which we have a working interest in the volumes produced from such wells. We cannot control or otherwise influence the development schedule of non-operated wells in which we have a working interest. Adjustments to our 2023 planned development schedule or delays in the development schedule of non-operated wells in which we have a working interest could impact our future sales volume, operating revenues and expenses, per unit metrics and capital expenditures.

The annual inflation rate in the United States was particularly high during 2022, and, although the inflation rate has decreased through the first half of 2023, it still remains elevated compared to historical levels. Inflationary pressures have multiple impacts on our business, including increasing our operating expenses and our cost of capital. While the prices for certain of the raw materials and services we use in our operations have generally decreased from the peak prices experienced during 2022, we will not fully realize the benefit of such reduced prices until we enter into new contracts for such materials and services, and inflationary pressures may cause prices to fluctuate. Additionally, certain of our commitments for demand charges under our existing long-term contracts and processing capacity are subject to consumer price index adjustments. Although we believe our scale and supply chain contracting strategy of using multi-year sand and frac crew contracts allows us to maximize capital and operating efficiencies, future increases in the inflation rate will negatively impact our long-term contracts with consumer price index adjustments.

Additionally, while the prices for natural gas, NGLs and oil have historically been volatile, price volatility was especially pronounced during 2022, with natural gas prices peaking in August 2022 and steadily declining thereafter. While natural gas prices through the first half of 2023 have declined from the high prices experienced during the majority of 2022, we expect commodity price volatility to continue or increase throughout the remainder of 2023 due to macroeconomic uncertainty and geopolitical tensions, including continued developments pertaining to Russia's invasion of Ukraine, which began in February 2022 and has put upward pressure on natural gas and oil prices. Our revenue, profitability, rate of growth, liquidity and financial position will continue to be impacted in the future by the market prices for natural gas and, to a lesser extent, NGLs and oil.

Average Realized Price Reconciliation

The following table presents detailed natural gas and liquids operational information to assist in the understanding of our consolidated operations, including the calculation of our average realized price ($/Mcfe), which is based on adjusted operating revenues, a non-GAAP supplemental financial measure. Adjusted operating revenues is presented because it is an important measure we use to evaluate period-to-period comparisons of earnings trends. Adjusted operating revenues should not be considered as an alternative to total operating revenues. See "Non-GAAP Financial Measures Reconciliation" for a reconciliation of adjusted operating revenues with total operating revenues, the most directly comparable financial measure calculated in accordance with GAAP.

EQT CORPORATION AND SUBSIDIARIES

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
			(Thousands, unless otherwise noted)
NATURAL GAS
Sales volume (MMcf)			449,658						476,723						883,055						942,859
NYMEX price ($/MMBtu)			$	2.10					$	7.16					$	2.76					$	6.05
Btu uplift			0.10						0.38						0.14						0.31
Natural gas price ($/Mcf)			$	2.20					$	7.54					$	2.90					$	6.36
Basis ($/Mcf) (a)			$	(0.50)					$	(0.88)					$	(0.10)					$	(0.56)
Cash settled basis swaps ($/Mcf)			(0.20)						0.01						(0.18)						(0.10)
Average differential, including cash settled basis swaps ($/Mcf)			$	(0.70)					$	(0.87)					$	(0.28)					$	(0.66)
Average adjusted price ($/Mcf)			$	1.50					$	6.67					$	2.62					$	5.70
Cash settled derivatives ($/Mcf)			0.53						(3.66)						0.42						(2.71)
Average natural gas price, including cash settled derivatives ($/Mcf)			$	2.03					$	3.01					$	3.04					$	2.99
Natural gas sales, including cash settled derivatives			$	912,966					$	1,433,018					$	2,688,101					$	2,816,214
LIQUIDS
NGLs, excluding ethane:
Sales volume (MMcfe) (b)			11,679						14,568						25,176						29,202
Sales volume (Mbbl)			1,946						2,428						4,196						4,867
NGLs price ($/Bbl)			$	31.28					$	58.48					$	35.29					$	61.27
Cash settled derivatives ($/Bbl)			(1.21)						(4.67)						(1.83)						(4.76)
Average NGLs price, including cash settled derivatives ($/Bbl)			$	30.07					$	53.81					$	33.46					$	56.51
NGLs sales, including cash settled derivatives			$	58,533					$	130,641					$	140,389					$	275,022
Ethane:
Sales volume (MMcfe) (b)			7,743						8,768						17,670						18,607
Sales volume (Mbbl)			1,291						1,461						2,945						3,101
Ethane price ($/Bbl)			$	5.43					$	17.70					$	6.34					$	13.92
Ethane sales			$	7,008					$	25,865					$	18,660					$	43,154
Oil:
Sales volume (MMcfe) (b)			1,759						1,458						3,743						3,124
Sales volume (Mbbl)			293						243						624						521
Oil price ($/Bbl)			$	49.71					$	91.38					$	54.30					$	88.27
Oil sales			$	14,570					$	22,206					$	33,868					$	45,962
Total liquids sales volume (MMcfe) (b)			21,181						24,794						46,589						50,933
Total liquids sales volume (Mbbl)			3,530						4,132						7,765						8,489
Total liquids sales			$	80,111					$	178,712					$	192,917					$	364,138
TOTAL
Total natural gas and liquids sales, including cash settled derivatives (c)			$	993,077					$	1,611,730					$	2,881,018					$	3,180,352
Total sales volume (MMcfe)			470,839						501,517						929,644						993,792
Average realized price ($/Mcfe)			$	2.11					$	3.21					$	3.10					$	3.20

(a)Basis represents the difference between the ultimate sales price for natural gas, including the effects of delivered price benefit or deficit associated with our firm transportation agreements, and the New York Mercantile Exchange (NYMEX) natural gas price.

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

(c)Total natural gas and liquids sales, including cash settled derivatives, is also referred to in this report as adjusted operating revenues, a non-GAAP supplemental financial measure.

EQT CORPORATION AND SUBSIDIARIES

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

Non-GAAP Financial Measures Reconciliation

The table below reconciles adjusted operating revenues, a non-GAAP supplemental financial measure, with total operating revenues, its most directly comparable financial measure calculated in accordance with GAAP. Adjusted operating revenues (also referred to in this report as total natural gas and liquids sales, including cash settled derivatives) is presented because it is an important measure we use to evaluate period-to-period comparisons of earnings trends. Adjusted operating revenues excludes the revenue impacts of changes in the fair value of derivative instruments prior to settlement and net marketing services and other. We use adjusted operating revenues to evaluate earnings trends because, as a result of the measure's exclusion of the often-volatile changes in the fair value of derivative instruments prior to settlement, the measure reflects only the impact of settled derivative contracts. Net marketing services and other consists of the costs of, and recoveries on, pipeline capacity releases, revenues for gathering services provided to third parties and other revenues. Because we consider net marketing services and other to be unrelated to our natural gas and liquids production activities, adjusted operating revenues excludes net marketing services and other. We believe that adjusted operating revenues provides useful information to investors for evaluating period-to-period comparisons of earnings trends.

			Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
			(Thousands, unless otherwise noted)
Total operating revenues			$	1,018,751					$	2,527,508					$	3,679,822					$	1,948,398
(Deduct) add:
(Gain) loss on derivatives			(164,386)						845,095						(989,238)						3,922,732
Net cash settlements received (paid) on derivatives			212,247						(1,753,732)						369,247						(2,639,271)
Premiums (paid) received for derivatives that settled during the period			(67,495)						251						(166,912)						(32,212)
Net marketing services and other			(6,040)						(7,392)						(11,901)						(19,295)
Adjusted operating revenues, a non-GAAP financial measure			$	993,077					$	1,611,730					$	2,881,018					$	3,180,352
Total sales volume (MMcfe)			470,839						501,517						929,644						993,792
Average realized price ($/Mcfe)			$	2.11					$	3.21					$	3.10					$	3.20

EQT CORPORATION AND SUBSIDIARIES

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

Sales Volume and Revenues

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

			Three Months Ended June 30,
			2023						2022						Change						% Change
			(Thousands, unless otherwise noted)
Sales volume by shale (MMcfe):
Marcellus			449,434						465,715						(16,281)						(3.5)
Ohio Utica			19,495						33,469						(13,974)						(41.8)
Other			1,910						2,333						(423)						(18.1)
Total sales volume			470,839						501,517						(30,678)						(6.1)
Average daily sales volume (MMcfe/d)			5,174						5,511						(337)						(6.1)
Operating revenues:
Sales of natural gas, NGLs and oil			$	848,325					$	3,365,211					$	(2,516,886)					(74.8)
Gain (loss) on derivatives			164,386						(845,095)						1,009,481						(119.5)
Net marketing services and other			6,040						7,392						(1,352)						(18.3)
Total operating revenues			$	1,018,751					$	2,527,508					$	(1,508,757)					(59.7)

Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil decreased for the three months ended June 30, 2023 compared to the same period in 2022 due to decreased sales volume and lower average realized price.

Sales volume decreased for the three months ended June 30, 2023 primarily as a result of sales volume decreases from natural decline of producing wells, fewer wells turned-in-line throughout 2022 as a result of third-party supply chain constraints and a delay in the development schedule of certain non-operated wells in which we have a working interest, partly offset by increased volumes from our operated wells as a result efficiencies realized within our drilling and completions operations. The assets that we intend to acquire in the pending Tug Hill and XcL Midstream Acquisition, which is subject to regulatory approvals, are currently producing approximately 800 MMcfe per day of sales volume, 20% of which is liquids sales volume.

Average realized price decreased for the three months ended June 30, 2023 compared to the same period in 2022 due to lower NYMEX and liquids prices, partly offset by favorable cash settled derivatives and favorable differential. For the three months ended June 30, 2023, we received $212.2 million of net cash settlements on derivatives, composed of $304.8 million of net cash settlements received on our NYMEX natural gas hedge positions and $92.6 million of net cash settlements paid on our basis and liquids hedge positions. For the same period in 2022, we paid $1,753.7 million of net cash settlements on derivatives, composed of $1,747.2 million of net cash settlements paid on our NYMEX natural gas hedge positions and $6.5 million of net cash settlements paid on our basis and liquids hedge positions. Net cash settlements received (paid) on derivatives are included in average realized price but may not be included in operating revenues. For the three months ended June 30, 2023 and 2022, we paid $67.5 million and received $0.3 million, respectively, of premiums for derivatives that settled during the period.

Gain (loss) on derivatives. For the three months ended June 30, 2023, we recognized a gain on derivatives of $164.4 million related primarily to increases in the fair market value of our basis swaps, which were in a liability position as of March 31, 2023, partly offset by a loss on the derivative liability related to the Henry Hub Cash Bonus (defined and discussed in Note 4 to the Condensed Consolidated Financial Statements). For the same period in 2022, we recognized a loss on derivatives of $845.1 million related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices.

EQT CORPORATION AND SUBSIDIARIES

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

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

			Six Months Ended June 30,
			2023						2022						Change						% Change
			(Thousands, unless otherwise noted)
Sales volume by shale (MMcfe):
Marcellus			883,780						921,142						(37,362)						(4.1)
Ohio Utica			42,680						67,675						(24,995)						(36.9)
Other			3,184						4,975						(1,791)						(36.0)
Total sales volume			929,644						993,792						(64,148)						(6.5)
Average daily sales volume (MMcfe/d)			5,136						5,491						(355)						(6.5)
Operating revenues:
Sales of natural gas, NGLs and oil			$	2,678,683					$	5,851,835					$	(3,173,152)					(54.2)
Gain (loss) on derivatives			989,238						(3,922,732)						4,911,970						(125.2)
Net marketing services and other			11,901						19,295						(7,394)						(38.3)
Total operating revenues			$	3,679,822					$	1,948,398					$	1,731,424					88.9

Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil decreased for the six months ended June 30, 2023 compared to the same period in 2022 due to decreased sales volume and lower average realized price.

Sales volume decreased for the six months ended June 30, 2023 primarily as a result of sales volume decreases from natural decline of producing wells, fewer wells turned-in-line throughout 2022 as a result of third-party supply chain constraints and a delay in the development schedule of certain non-operated wells in which we have a working interest, partly offset by increased volumes from our operated wells as a result efficiencies realized within our drilling and completions operations. The assets that we intend to acquire in the pending Tug Hill and XcL Midstream Acquisition, which is subject to regulatory approvals, are currently producing approximately 800 MMcfe per day of sales volume, 20% of which is liquids sales volume.

Average realized price decreased for the six months ended June 30, 2023 compared to the same period in 2022 due to lower NYMEX and liquids prices, partly offset by favorable cash settled derivatives and favorable differential. For the six months ended June 30, 2023 and 2022, we received $369.2 million, composed of $539.0 million of net cash settlements received on our NYMEX natural gas hedge positions and $169.8 million of net cash settlements paid on our basis and liquids hedge positions. For the same period in 2022, we paid $2,639.3 million of net cash settlements on derivatives, composed of $2,522.3 million of net cash settlements paid on our NYMEX natural gas hedge positions and $117.0 million of net cash settlements paid on our basis and liquids hedge positions. Net cash settlements received (paid) on derivatives are included in average realized price but may not be included in operating revenues. For the six months ended June 30, 2023 and 2022, we paid premiums for derivatives that settled during the period of $166.9 million and $32.2 million, respectively.

Gain (loss) on derivatives. For the six months ended June 30, 2023, we recognized a gain on derivatives of $989.2 million related primarily to increases in the fair market value of our NYMEX swaps and options due to decreases in NYMEX forward prices, partly offset by a loss on the derivative liability related to the Henry Hub Cash Bonus. For the same period in 2022, we recognized a loss on derivatives of $3,922.7 million related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices, partly offset by a gain on the derivative liability related to the Henry Hub Cash Bonus.

EQT CORPORATION AND SUBSIDIARIES

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

Operating Expenses

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

			Three Months Ended June 30,
			2023						2022						Change						% Change
			(Thousands, unless otherwise noted)
Operating expenses:
Gathering			$	318,491					$	339,100					$	(20,609)					(6.1)
Transmission			153,152						149,383						3,769						2.5
Processing			51,519						51,221						298						0.6
Lease operating expenses (LOE)			35,552						42,814						(7,262)						(17.0)
Production taxes			19,486						39,742						(20,256)						(51.0)
Exploration			1,203						1,741						(538)						(30.9)
Selling, general and administrative			60,163						59,276						887						1.5
Production depletion			$	390,504					$	423,935					$	(33,431)					(7.9)
Other depreciation and depletion			5,180						5,208						(28)						(0.5)
Total depreciation and depletion			$	395,684					$	429,143					$	(33,459)					(7.8)
Per Unit ($/Mcfe):
Gathering			$	0.68					$	0.68					$	—					—
Transmission			0.33						0.30						0.03						10.0
Processing			0.11						0.10						0.01						10.0
LOE			0.08						0.09						(0.01)						(11.1)
Production taxes			0.04						0.08						(0.04)						(50.0)
Selling, general and administrative			0.13						0.12						0.01						8.3
Production depletion			0.83						0.85						(0.02)						(2.4)

Operating expenses on a per Mcfe basis for the three months ended June 30, 2023 compared to the same period in 2022 were negatively impacted by decreased sales volume.

Gathering. Gathering expense decreased on an absolute basis for the three months ended June 30, 2023 compared to the same period in 2022 due primarily to decreased sales volume and lower gathering rates on certain contracts indexed to price.

Transmission. Transmission expense increased on an absolute and per Mcfe basis for the three months ended June 30, 2023 compared to the same period in 2022 due primarily to additional capacity acquired subsequent to June 2022, partly offset by credits received from the Texas Eastern Transmission Pipeline.

LOE. LOE decreased on an absolute and per Mcfe basis for the three months ended June 30, 2023 compared to the same period in 2022 due primarily to lower salt water disposal costs and increased recycling. Saltwater disposal costs and recycle rates were favorably impacted by increased usage of our internally developed produced water gathering and storage system, which was placed in service during the fourth quarter of 2022.

Production taxes. Production taxes decreased on an absolute and per Mcfe basis for the three months ended June 30, 2023 compared to the same period in 2022 due to lower West Virginia severance taxes and Pennsylvania impact fees, which resulted primarily from lower prices.

Depreciation and depletion. Production depletion expense decreased on an absolute and per Mcfe basis for the three months ended June 30, 2023 compared to the same period in 2022 due to a lower annual depletion rate and decreased sales volume.

EQT CORPORATION AND SUBSIDIARIES

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

Impairment and expiration of leases. During the three months ended June 30, 2023 and 2022, we recognized impairment and expiration of leases of $5.3 million and $47.0 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Other operating expenses. Other operating expenses increased for the three months ended June 30, 2023 compared to the same period in 2022 due primarily to transaction costs associated with the pending Tug Hill and XcL Midstream Acquisition in 2023, partly offset by decreased environmental and legal reserves, including from settlements.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

			Six Months Ended June 30,
			2023						2022						Change						% Change
			(Thousands, unless otherwise noted)
Operating expenses:
Gathering			$	625,755					$	659,629					$	(33,874)					(5.1)
Transmission			307,079						296,489						10,590						3.6
Processing			105,312						99,690						5,622						5.6
LOE			64,016						82,643						(18,627)						(22.5)
Production taxes			38,962						70,925						(31,963)						(45.1)
Exploration			2,155						2,513						(358)						(14.2)
Selling, general and administrative			112,057						128,372						(16,315)						(12.7)
Production depletion			$	772,886					$	840,860					$	(67,974)					(8.1)
Other depreciation and depletion			10,483						10,381						102						1.0
Total depreciation and depletion			$	783,369					$	851,241					$	(67,872)					(8.0)
Per Unit ($/Mcfe):
Gathering			$	0.67					$	0.66					$	0.01					1.5
Transmission			0.33						0.30						0.03						10.0
Processing			0.11						0.10						0.01						10.0
LOE			0.07						0.08						(0.01)						(12.5)
Production taxes			0.04						0.07						(0.03)						(42.9)
Selling, general and administrative			0.12						0.13						(0.01)						(7.7)
Production depletion			0.83						0.85						(0.02)						(2.4)

Operating expenses on a per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 were negatively impacted by decreased sales volume.

Gathering. Gathering expense decreased on an absolute basis for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to decreased sales volume and lower gathering rates on certain contracts indexed to price.

Transmission. Transmission expense increased on an absolute and per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to additional capacity acquired subsequent to June 2022, partly offset by credits received from the Texas Eastern Transmission Pipeline.

Processing. Processing expense increased on an absolute and per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to inflation of contracted processing rates.

EQT CORPORATION AND SUBSIDIARIES

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

LOE. LOE decreased on an absolute and per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to lower salt water disposal costs and increased recycling. Saltwater disposal costs and recycle rates were favorably impacted by increased usage of our internally developed produced water gathering and storage system, which was placed in service during the fourth quarter of 2022.

Production taxes. Production taxes decreased on an absolute and per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 due to lower West Virginia severance taxes and Pennsylvania impact fees, which resulted primarily from lower prices.

Selling, general and administrative. Selling, general and administrative expense decreased on an absolute and per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to lower long-term incentive compensation costs as a result of changes in the fair value of awards. Long-term incentive compensation may fluctuate with changes in our stock price and performance conditions.

Depreciation and depletion. Production depletion expense decreased on an absolute and per Mcfe basis for the six months ended June 30, 2023 compared to the same period in 2022 due to a lower annual depletion rate and decreased sales volume.

Loss (gain) on sale/exchange of long-lived assets. During the six months ended June 30, 2023, we recognized a loss on sale/exchange of long-lived assets of $16.3 million related to acreage trade agreements where the carrying value of the acres traded exceeded the fair value of the acres received.

Impairment of contract asset. During the six months ended June 30, 2022, we recognized impairment of our contract asset of $184.9 million. See Note 8 to the Condensed Consolidated Financial Statements.

Impairment and expiration of leases. During the six months ended June 30, 2023 and 2022, we recognized impairment and expiration of leases of $15.9 million and $77.0 million, respectively, related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Other operating expenses. Other operating expenses increased for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to transaction costs associated with the pending Tug Hill and XcL Midstream Acquisition in 2023, partly offset by decreased legal reserves, including from settlements.

Other Income Statement Items

(Income) loss from investments. For the three months ended June 30, 2023, we recognized income from investments due primarily to equity earnings on our equity method investments. For the three months ended June 30, 2022, we recognized income from investments due primarily to equity earnings on our equity method investments, partly offset by a loss on our sale of our investment in Equitrans Midstream.

For the six months ended June 30, 2023, we recognized income from investments due to a gain on our investment in the Investment Fund (defined in Note 4 to the Condensed Consolidated Financial Statements) and equity earnings on our equity method investments. For the six months ended June 30, 2022, we recognized a loss from investments due primarily to a loss on our sale of our investment in Equitrans Midstream, partly offset by a gain on our investment in the Investment Fund and equity earnings on our equity method investments.

Dividend and other income. Dividend and other income decreased for the three months ended June 30, 2023 compared to the same period in 2022 due primarily to lower dividends received on our investment in the Investment Fund. Dividend and other income decreased for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to lower dividends received on our investment in the Investment Fund as well as dividends received on our investment in Equitrans Midstream in 2022.

EQT CORPORATION AND SUBSIDIARIES

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

Loss (gain) on debt extinguishment. During the three months ended June 30, 2023, we recognized a loss on debt extinguishment of $5.5 million due to debt repayment and repurchases at a premium to par value. During the six months ended June 30, 2023, we recognized a gain on debt extinguishment of $1.1 million due to debt repayment and repurchases at a discount to par value during the first quarter of 2023, partly offset by the loss recognized during the three months ended June 30, 2023. During the three and six months ended June 30, 2022, we recognized a loss on debt extinguishment of $104.3 million and $111.3 million, respectively, due primarily to the repayment and repurchases of our Convertible Notes (defined and discussed in Note 6 to the Condensed Consolidated Financial Statements). See Note 6 to the Condensed Consolidated Financial Statements.

Interest expense, net. Interest expense, net decreased for the three and six months ended June 30, 2023 compared to the same periods in 2022 due primarily to higher interest income earned as well as reduced interest expense due to a reduction of our letters of credit balances.

Income tax (benefit) expense. See Note 5 to the Condensed Consolidated Financial Statements.

Capital Resources and Liquidity

Although we cannot provide any assurance, we believe cash flows from operating activities and availability under our credit facility should be sufficient to meet our cash requirements inclusive of, but not limited to, normal operating needs, debt service obligations, planned capital expenditures and commitments for at least the next twelve months and, based on current expectations, for the long term.

Planned Capital Expenditures and Sales Volume. In 2023, we expect to spend approximately $1.7 billion to $1.9 billion in total capital expenditures, excluding amounts attributable to noncontrolling interest and amounts attributable to the assets expected to be acquired in the pending Tug Hill and XcL Midstream Acquisition. We expect to fund our capital expenditures with cash generated from operations and, if required, borrowings under our credit facility. Because we are the operator of a high percentage of our developed acreage, the amount and timing of certain of our capital expenditures is largely discretionary. We could choose to defer a portion of our planned 2023 capital expenditures depending on a variety of factors, including prevailing and anticipated prices for natural gas, NGLs and oil; the availability of necessary equipment, infrastructure and capital; the receipt and timing of required regulatory permits and approvals; and drilling, completion and acquisition costs. In 2023, we expect our sales volume to be 1,900 Bcfe to 2,000 Bcfe, excluding amounts attributable to the assets expected to be acquired in the pending Tug Hill and XcL Midstream Acquisition.

Operating Activities. Net cash provided by operating activities was $2,100 million for the six months ended June 30, 2023 compared to $1,252 million for the same period in 2022. The increase was due primarily to net cash settlements received on derivatives in 2023 compared to net cash settlements paid on derivatives in 2022, favorable changes in working capital driven by declining accounts receivable and lower margin postings as well as lower cash operating expenses, partly offset by lower cash operating revenues.

Our cash flows from operating activities are affected by movements in the market price for commodities. We are unable to predict such movements outside of the current market view as reflected in forward strip pricing. Refer to Item 1A., "Risk Factors – Natural gas, NGLs and oil price volatility, or a prolonged period of low natural gas, NGLs and oil prices, may have an adverse effect on our revenue, profitability, future rate of growth, liquidity and financial position" in our Annual Report on Form 10-K for the year ended December 31, 2022.

Investing Activities. Net cash used in investing activities was $984 million for the six months ended June 30, 2023 compared to $508 million for the same period in 2022. The increase was attributable primarily to increased capital expenditures.

EQT CORPORATION AND SUBSIDIARIES

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

The following table summarizes our capital expenditures.

			Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
			(Millions)
Reserve development			$	399					$	297					$	792					$	526
Land and lease (a)			24						39						60						88
Capitalized overhead			15						13						29						25
Capitalized interest			9						6						19						12
Other production infrastructure			18						19						32						32
Other			8						2						10						3
Total capital expenditures			473						376						942						686
Add (deduct): Non-cash items (b)			14						17						40						(1)
Total cash capital expenditures			$	487					$	393					$	982					$	685

(a)Capital expenditures attributable to noncontrolling interest were $3.1 million and $2.5 million for the three months ended June 30, 2023 and 2022, respectively, and $8.5 million and $4.4 million for the six months ended June 30, 2023 and 2022, respectively.

(b)Represents the net impact of non-cash capital expenditures, including the effect of timing of receivables from working interest partners, accrued capital expenditures and capitalized share-based compensation costs. The impact of accrued capital expenditures includes the current period estimate, net of the reversal of the prior period accrual.

Financing Activities. Net cash used in financing activities was $1,359 million for the six months ended June 30, 2023 compared to $814 million for the same period in 2022. For the six months ended June 30, 2023, the primary uses of financing cash flows were repayment and retirement of debt, repurchase and retirement of EQT Corporation common stock and payment of dividends. For the six months ended June 30, 2022, the primary uses of financing cash flows were repayment and retirement of debt, repurchase and retirement of EQT Corporation common stock and payment of dividends, and the primary source of financing cash flows was net proceeds from credit facility borrowings.

See Note 6 to the Condensed Consolidated Financial Statements for further discussion of our debt and borrowings under our credit facility.

On July 19, 2023, our Board of Directors declared a quarterly cash dividend of $0.15 per share of EQT Corporation common stock, payable on September 1, 2023, to shareholders of record at the close of business on August 9, 2023.

Depending on our actual and anticipated sources and uses of liquidity, prevailing market conditions and other factors, we may from time to time seek to redeem or repurchase our outstanding debt or equity securities through tender offers or other cash purchases in the open market or privately negotiated transactions. The amounts involved in any such transactions may be material. See Note 6 to the Condensed Consolidated Financial Statements for discussion of redemptions and repurchases of debt.

EQT CORPORATION AND SUBSIDIARIES

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

Security Ratings and Financing Triggers

The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as of July 21, 2023. Our credit ratings and rating outlooks are subject to revision or withdrawal at any time by the assigning rating agency, and each rating should be evaluated independent from any other rating. We cannot ensure that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by a rating agency if, in the rating agency's judgment, circumstances so warrant. See Note 3 to the Condensed Consolidated Financial Statements for a description of what is deemed investment grade.

Rating agency						Senior notes						Outlook
Moody's Investors Service (Moody's)						Ba1						Positive
Standard & Poor's Ratings Service (S&P)						BBB–						Stable
Fitch Ratings Service (Fitch)						BBB–						Stable

Changes in credit ratings may affect our access to the capital markets, the cost of short-term debt through interest rates and fees under our credit facility, the interest rate on our Term Loan Facility (defined in Note 6 to the Condensed Consolidated Financial Statements) and senior notes with adjustable rates, the rates available on new long-term debt, our pool of investors and funding sources, the borrowing costs and margin deposit requirements on our over the counter (OTC) derivative instruments and credit assurance requirements, including collateral, in support of our midstream service contracts, joint venture arrangements or construction contracts. Margin deposits on our OTC derivative instruments are also subject to factors other than credit rating, such as natural gas prices and credit thresholds set forth in the agreements between us and our hedging counterparties.

As of July 21, 2023, we had sufficient unused borrowing capacity, net of letters of credit, under our credit facility to satisfy any requests for margin deposit or other collateral that our counterparties are permitted to request of us pursuant to our OTC derivative instruments, midstream services contracts and other contracts. As of July 21, 2023, such assurances could be up to approximately $0.6 billion, inclusive of letters of credit, OTC derivative instrument margin deposits and other collateral posted of approximately $0.2 billion in the aggregate. See Notes 3 and 6 to the Condensed Consolidated Financial Statements for further information.

Our debt agreements and other financial obligations contain various provisions that, if not complied with, could result in default or event of default under our credit facility and Term Loan Facility, mandatory partial or full repayment of amounts outstanding, reduced loan capacity or other similar actions. The most significant covenants and events of default under the debt agreements relate to maintenance of a debt-to-total capitalization ratio, limitations on transactions with affiliates, insolvency events, nonpayment of scheduled principal or interest payments, acceleration of other financial obligations and change of control provisions. Our credit facility and Term Loan Facility contain financial covenants that require us to have a total debt to total capitalization ratio no greater than 65%. As of June 30, 2023, we were in compliance with all debt provisions and covenants under our debt agreements.

See Note 6 to the Condensed Consolidated Financial Statements for a discussion of borrowings under our credit facility. As of June 30, 2023, we had not yet borrowed, and thus, had no borrowings, under the Term Loan Facility.

EQT CORPORATION AND SUBSIDIARIES

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

Commodity Risk Management

The substantial majority of our commodity risk management program is related to hedging sales of our produced natural gas. The overall objective of our hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices. The derivative commodity instruments that we use are primarily swap, collar and option agreements. The following table summarizes the approximate volume and prices of our NYMEX hedge positions as of July 21, 2023. The difference between the fixed price and NYMEX price is included in average differential presented in our price reconciliation in "Average Realized Price Reconciliation." The fixed price natural gas sales agreements can be physically or financially settled.

			Q3 2023 (a)						Q4 2023												Q1 2024						Q2 2024						Q3 2024						Q4 2024
Hedged Volume (MMDth)			299						313												210						175						177						77
Hedged Volume (MMDth/d)			3.3						3.4												2.3						1.9						1.9						0.8
Swaps – Long
Volume (MMDth)			43						14												—						—						—						—
Avg. Price ($/Dth)			$	4.72					$	4.77											$	—					$	—					$	—					$	—
Swaps – Short
Volume (MMDth)			43						62												98						127						128						44
Avg. Price ($/Dth)			$	2.54					$	2.79											$	3.60					$	3.26					$	3.26					$	3.26
Calls – Long
Volume (MMDth)			40						40												13						13						13						13
Avg. Strike ($/Dth)			$	2.72					$	2.72											$	3.20					$	3.20					$	3.20					$	3.20
Calls – Short
Volume (MMDth)			303						197												125						61						62						46
Avg. Strike ($/Dth)			$	4.85					$	4.69											$	6.21					$	4.22					$	4.22					$	4.27
Puts – Long
Volume (MMDth)			298						265												112						48						49						33
Avg. Strike ($/Dth)			$	3.41					$	3.53											$	4.31					$	3.93					$	3.93					$	4.04
Fixed Price Sales
Volume (MMDth)			1						—												—						—						—						—
Avg. Price ($/Dth)			$	2.38					$	—											$	—					$	—					$	—					$	—
Option Premiums
Cash Settlement of Deferred Premiums (millions)			$	(70)					$	(92)											$	(13)					$	(4)					$	(4)					$	—

(a)July 1 through September 30.

We have also entered into derivative instruments to hedge basis. We may use other contractual agreements to implement our commodity hedging strategy from time to time.

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

Commitments and Contingencies

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against us. While the amounts claimed may be substantial, we are unable to predict with certainty the ultimate outcome of such claims and proceedings. We evaluate our legal proceedings, including litigation and regulatory and governmental investigations and inquiries, on a regular basis and accrue a liability for such matters when we believe that a loss is probable and the amount of the loss can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changed circumstances. In the event we determine that (i) a loss is probable but the amount of the loss cannot be reasonably estimated, or (ii) a loss is less likely than probable but is reasonably possible, then we are required to disclose the matter in our Annual Report on Form 10-K or this Quarterly Report on Form 10-Q, as applicable, although we are not required to accrue such loss.

EQT CORPORATION AND SUBSIDIARIES

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

When able, we determine an estimate of reasonably possible losses or ranges of reasonably possible losses, whether in excess of any related accrued liability or where there is no accrued liability, for legal proceedings. In instances where such estimates can be made, any such estimates are based on our analysis of currently available information and are subject to significant judgment and a variety of assumptions and uncertainties and may change as new information is obtained. See Note 13 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of our commitments and contingencies, including certain pending legal and regulatory proceedings and other contingent matters. As of June 30, 2023, there have been no material changes to such matters as disclosed therein. See also Part II, "Other Information," Item 1., "Legal Proceedings," for a description of certain other pending environmental matters for which we accrued contingent liabilities.

Additionally, in the normal course of business, we are subject to various other pending and threatened legal proceedings in which claims for monetary damages or other relief are asserted. We do not anticipate, at the present time, that the ultimate aggregate liability, if any, arising out of such other legal proceedings will have a material adverse effect on our financial position, results of operations or liquidity.

Critical Accounting Policies and Estimates

Our critical accounting policies, including a discussion regarding the estimation uncertainty and the impact that our critical accounting estimates have had, or are reasonably likely to have, on our financial condition or results of operations, are described in Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022. The application of our critical accounting policies may require us to make judgments and estimates about the amounts reflected in the Condensed Consolidated Financial Statements. We use historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.