EQT Corp

Previous wording

Results of operations for the period beginning August 22, 2023 through December 31, 2023 include the results of our operation of assets acquired in the Tug Hill and XcL Midstream Acquisition. See Note 6 to the Consolidated Financial Statements for further discussion of the Tug Hill and XcL Midstream Acquisition.

Current wording

Tug Hill and XcL Midstream Acquisition

Previous wording

Our sales volume and operating expenses on a per Mcfe basis during 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 were completed and turned-to-sales as of July 2023, resulting in our third quarter 2023 sales volumes returning to our normalized level of production; however, our sales volume during the second half of 2023 was negatively impacted by approximately 13 Bcfe of curtailments (inclusive of non-operated wells in which we have a working interest) principally in response to lower natural gas prices in the Appalachian Basin. Future supply chain constraints or declines in natural gas prices may result in adjustments to our 2024 planned development schedule or the development schedule of non-operated wells in which we have a working interest. Further, we cannot control or otherwise influence the development schedule of non-operated wells in which we have a working interest. Adjustments to our 2024 planned development schedule or the development schedule of non-operated wells in which we have a working interest, including due to declines in natural gas prices, the pace of well completions, access to sand and water to conduct drilling operations, access to sufficient pipeline takeaway capacity, unscheduled downtime at processing facilities or otherwise, could impact our future sales volume, operating revenues and expenses, per unit metrics and capital expenditures.

Current wording

Low natural gas prices or volatility in the natural gas market may result in adjustments to our 2025 planned development schedule or the development schedule of non-operated wells in which we have a working interest. Further, we cannot control or otherwise influence the development schedule of non-operated wells in which we have a working interest. Adjustments to our 2025 planned development schedule or the development schedule of non-operated wells in which we have a working interest, including due to declines in natural gas prices, the pace of well completions, access to sand and water to conduct drilling operations, access to sufficient pipeline takeaway capacity, unscheduled downtime at processing facilities or otherwise, could impact our future sales volume, operating revenues and expenses, per unit metrics and capital expenditures.

Previous wording

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, then steadily declining into the first half of 2023. The second half of 2023 saw moderate increases in natural gas prices; however, on average, prices in 2023 remained lower than in 2022. We expect commodity prices to be volatile throughout 2024 due to macroeconomic uncertainty and geopolitical tensions, including developments pertaining to Russia's invasion of Ukraine and conflicts in the Middle East. Our revenue, profitability, 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.

Current wording

Lastly, we expect commodity prices to be volatile through 2025 due to macroeconomic uncertainty, changes to the regulatory environment and geopolitical tensions, including developments pertaining to Russia's invasion of Ukraine, conflicts in the Middle East and potential further imposition of domestic and foreign tariffs. Our revenue, profitability, 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.

Previous wording

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.

Current wording

See "Average Realized Price Reconciliation" for a discussion and calculation of our average realized price, which is based on our Production segment's adjusted operating revenues (Production adjusted operating revenues), a non-GAAP supplemental financial measure that has been reconciled from total Production operating revenues in "Non-GAAP Financial Measures Reconciliation." See "Business Segment Results of Operations" for a discussion of segment operating revenues and expenses 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, including by business segment.

Previous wording

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.

Current wording

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 Production adjusted operating revenues, a non-GAAP supplemental financial measure. Production adjusted operating revenues is presented because it is an important measure we use to evaluate period-to-period comparisons of earnings trends. Production adjusted operating revenues should not be considered as an alternative to total Production operating revenues. See "Non-GAAP Financial Measures Reconciliation" for a reconciliation of Production adjusted operating revenues from total Production operating revenues, the most directly comparable financial measure calculated in accordance with United States generally accepted accounting principles (GAAP).

Previous wording

(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.

Current wording

(c)Also referred to in this report as Production adjusted operating revenues, a non-GAAP supplemental financial measure.

Previous wording

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 and processing 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.

Current wording

Production 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. Production adjusted operating revenues is defined as total Production operating revenues, less the revenue impact of changes in the fair value of derivative instruments prior to settlement and Production net marketing services and other revenues. We believe that Production adjusted operating revenues provides useful information to investors regarding our financial condition and results of operations because it helps facilitate comparisons of operating performance and earnings trends across periods. Production adjusted operating revenues reflects only the impact of settled derivative contracts; thus, the measure excludes the often-volatile revenue impact of changes in the fair value of derivative instruments prior to settlement. The measure also excludes Production net marketing services and other revenues, which consists of costs of, and recoveries on, pipeline capacity releases and other revenues.

Previous wording

Net cash settlements received (paid) on derivatives are included in average realized price but may not be included in operating revenues.

Current wording

(a)For the years ended December 31, 2024 and 2023, composed of net cash settlements received on NYMEX natural gas hedge positions of approximately $1,374 million and $976 million , respectively, and net cash settlements paid on basis and liquids hedge positions of $157 million and $76 million, respectively. Net cash settlements received on derivatives are included in average realized price but may not be included in operating revenues.

Previous wording

Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil decreased for 2023 compared to 2022 due to lower average realized price, partly offset by increased sales volume.

Current wording

Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil decreased for 2024 compared to 2023 by approximately $110 million, of which approximately $640 million was attributable to lower average sales price, which was partly offset by approximately $530 million attributable to increased sales volumes. The average sales price decreased for 2024 compared to 2023 due to a lower NYMEX price, partly offset by lower basis spreads and higher NGLs price. Sales volume increased for 2024 compared to 2023 primarily as a result of sales volume increases of 164 Bcfe from the assets acquired in the Tug Hill and XcL Midstream Acquisition as well as increases from wells turned-in-line, partly offset by sales volume decreases of 107 Bcfe from the Strategic Curtailment and net decreases of 21 Bcfe due to the First NEPA Non-Operated Asset Divestiture. The increase in sales volume had a favorable impact on per unit costs for 2024 compared to 2023.

Previous wording

Gain (loss) on derivatives. For 2023, we recognized a gain on derivatives of $1,838.9 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 2022, we recognized a loss on derivatives of $4,642.9 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.

Current wording

Production gain on derivatives. For 2024, we recognized a gain on derivatives of approximately $68 million related primarily to increases in the fair market value of our NYMEX swaps and options of approximately $377 million due to decreases in NYMEX forward prices, partly offset by decreases in the fair market value of our basis swaps of approximately $309 million. For 2023, we recognized a gain on derivatives of approximately $1,839 million related primarily to increases in the fair market value of our NYMEX swaps and options of approximately $1,830 million due to decreases in NYMEX forward prices as well as increases in the fair market value of our basis swaps of approximately $9 million.

Previous wording

Processing. Processing expense increased on an absolute and per Mcfe basis for 2023 compared to 2022 due primarily to processing expenses for the liquids-rich assets acquired in the Tug Hill and XcL Midstream Acquisition as well as inflation of third-party-contracted processing rates.

Current wording

Processing. Processing expense increased on an absolute and per Mcfe basis for 2024 compared to 2023 due primarily to increased processing expense from the liquids-rich properties acquired in the Tug Hill and XcL Midstream Acquisition of approximately $40 million and increased volumes of gas requiring processing from wells that we turned-in-line in 2024.

Previous wording

Depreciation and depletion. Production depletion expense increased on an absolute basis for 2023 compared to 2022 due to increased sales volume, partly offset by a lower annual depletion rate.

Current wording

Depreciation and depletion. Production depletion expense increased on an absolute and per Mcfe basis for 2024 compared to 2023 due to increased sales volume and higher annual depletion rate.

Previous wording

Loss (gain) on sale/exchange of long-lived assets. During 2023, we recognized a loss on sale/exchange of long-lived assets of $17.4 million related to acreage trade agreements where the carrying value of the acres traded exceeded the fair value of the acres received.

Current wording

(Gain) loss on sale/exchange of long-lived assets. During 2024, we recognized a gain on the First NEPA Non-Operated Asset Divestiture of approximately $299 million and a gain on the Second NEPA Non-Operated Asset Divestiture of approximately $463 million. See Note 7 to the Consolidated Financial Statements. During 2023, we recognized a loss on sale/exchange of long-lived assets of approximately $17 million related to acreage trade agreements where the carrying value of the acres traded exceeded the fair value of the acres received.

Previous wording

Impairment and expiration of leases. During 2023 and 2022, we recognized impairment and expiration of leases of $109.4 million and $176.6 million, respectively, related primarily to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Current wording

Impairment and expiration of leases. During 2024 and 2023, we recognized impairment and expiration of leases related to leases that we no longer expect to extend or develop prior to their expiration based on our development plan.

Previous wording

Other operating expenses. Other operating expenses increased for 2023 compared to 2022 due primarily to transaction costs associated with the Tug Hill and XcL Midstream Acquisition, partly offset by decreased legal and environmental reserves, including from settlements. See Note 1 to the Consolidated Financial Statements for a summary of other operating expenses.

Current wording

Other operating expenses. We recognized approximately $13 million and $9 million of other operating expenses for 2024 and 2023, respectively. Other operating expenses increased for 2024 compared to 2023 due primarily to increased rig release expense and increased legal and environmental reserves, including from settlements, partly offset by proceeds received in 2024 from business interruption insurance claim recoveries. See Note 1 to the Consolidated Financial Statements for a summary of consolidated other operating expenses.

Previous wording

Although we cannot provide any assurance, we believe cash flows from operating activities and availability under our revolving 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.

Current wording

Although we cannot provide any assurance, we believe cash flows from operating activities and availability under EQT's revolving credit facility should be sufficient to meet our cash requirements, including, 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.

Previous wording

Purchase Obligations. We have commitments for demand charges under existing long-term contracts and binding precedent agreements with various pipelines, some of which extend up to 20 years or longer. We have entered into agreements to release some of our capacity under these long-term contracts, subject to certain conditions that are currently unsatisfied. We also have commitments for processing capacity in order to extract heavier liquid hydrocarbons from the natural gas stream. In addition, we have commitments to pay for services and materials related to our operations, which primarily include minimum volume commitments to obtain water services and electric hydraulic fracturing services and commitments to purchase equipment, materials and sand. See Note 11 to the Consolidated Financial Statements for further discussion, including details regarding aggregate future payments for these items.

Current wording

We have commitments to pay demand charges under long-term contracts and binding precedent agreements with various pipelines as well as charges for processing capacity to extract heavier liquid hydrocarbons from the natural gas stream. In addition, we have commitments to pay for services related to our operations, including electric hydraulic fracturing services and purchase equipment, materials and sand. See Note 15 to the Consolidated Financial Statements for a summary of aggregated future payments for these commitments.

Previous wording

Unrecognized Tax Benefits. As discussed further in Note 7 to the Consolidated Financial Statements, as of December 31, 2023, we had a total reserve for unrecognized tax benefits of $8.5 million and an additional reserve of $77.0 million that was offset against deferred tax assets for general business tax credit carryforwards and net operating losses (NOLs). We settled our consolidated U.S. federal income tax liability with the IRS through 2017 in January of 2023. We are currently unable to make reasonably reliable estimates of the period of cash settlement of these potential liabilities with taxing authorities.

Current wording

As of December 31, 2024, we had a total reserve for unrecognized tax benefits of $9.0 million and an additional reserve of $60.4 million that was offset against deferred tax assets for general business tax credit carryforwards and net operating losses (NOLs). We settled our consolidated U.S. federal income tax liability with the IRS through 2019 in September 2024. We are currently unable to make reasonably reliable estimates of the period of cash settlement of these potential liabilities with taxing authorities. See Note 9 to the Consolidated Financial Statements for further discussion.

Previous wording

Planned Capital Expenditures and Sales Volume. In 2024, we expect to spend approximately $2.15 billion to $2.35 billion in total capital expenditures. We expect to fund our capital expenditures with cash generated from operations and, if required, borrowings under our revolving 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 2024 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 2024, we expect our sales volume to be 2,200 Bcfe to 2,300 Bcfe.

Current wording

In 2025, we expect to spend approximately $2.3 billion to $2.5 billion on total capital expenditures. We expect to fund our capital expenditures with cash generated from operations and, if required, borrowings under EQT's revolving 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 2025 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 addition, our gathering and transmission businesses are capital intensive, requiring significant investment to develop new facilities and maintain and upgrade existing operations. In 2025, we expect our sales volume to be 2,175 Bcfe to 2,275 Bcfe.

Previous wording

Contractual Commitments. We have contractual commitments under our debt agreements, including interest payments and principal repayments. See Note 8 to the Consolidated Financial Statements for further discussion of the contractual commitments under our debt agreements, including the timing of principal repayments.

Current wording

We have contractual commitments under our debt agreements, including interest payments and principal repayments. See Note 10 to the Consolidated Financial Statements for a summary of such contractual commitments, including maturity dates.

Previous wording

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. For a discussion of potential commodity market risks, 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."

Current wording

Our cash flows from operating activities, including changes in working capital, 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. For a discussion of potential commodity market risks, 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."

Previous wording

Net cash used in investing activities was $4,314 million and $1,422 million for 2023 and 2022, respectively. The increase in 2023 compared to 2022 was attributable primarily to cash paid for the Tug Hill and XcL Midstream Acquisition in 2023 and increased capital expenditures.

Current wording

Net cash used in investing activities was $1,580 million and $4,314 million for 2024 and 2023, respectively. The decrease was attributable primarily to the proceeds received from the NEPA Non-Operated Asset Divestitures in 2024 and lower cash paid for acquisitions in 2024 (primarily for the NEPA Gathering System Acquisition) compared to 2023 (primarily for the Tug Hill and XcL Midstream Acquisition), partly offset by increased capital expenditures and capital contributions made to our investment in the MVP Joint Venture of approximately $145 million.

Previous wording

The following table summarizes our capital expenditures.

Current wording

The following table summarizes our capital expenditures by business segment.

Previous wording

(a)Includes capital expenditures for water infrastructure of $35.9 million and $44.5 million for 2023 and 2022, respectively.

Current wording

(a)Capital expenditures for reserve development included capital expenditures for water infrastructure of $79.8 million and $35.9 million for 2024 and 2023, respectively.

Previous wording

(c)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.

Current wording

(b)Represents the net impact of non-cash capital expenditures, including the effect of timing of receivables from working interest partners, accrued capital expenditures, transfers to or from inventory as assets are completed or assigned to a project 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.

Previous wording

Net cash used in financing activities was $243 million and $699 million for 2023 and 2022, respectively. For 2023, the primary uses of financing cash flows were repayment and retirement of debt, payment of dividends and repurchase and retirement of EQT Corporation common stock, and the primary source of financing cash flows was proceeds from the Term Loan Facility borrowings. For 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 proceeds from the issuance of debt.

Current wording

Net cash used in financing activities was $1,126 million and $243 million for 2024 and 2023, respectively. For 2024, the primary uses of financing cash flows were our repayment and retirement of debt, repayment of EQM's revolving credit facility, payment of dividends and cash paid for taxes to net settle share-based incentive awards. For 2024, the primary sources of financing cash flows were net proceeds from the sale of units of the Midstream Joint Venture, proceeds from the issuance of EQT's 5.750% senior notes, net borrowings under EQT's revolving credit facility and proceeds from the net settlement of the Capped Call Transactions (defined in Note 10 to the Consolidated Financial Statements). For 2023, the primary uses of financing cash flows were our repayment and retirement of debt, payment of dividends and repurchase and retirement of EQT common stock, and the primary source of financing cash flows was proceeds from the Term Loan Facility borrowings.

Previous wording

See Note 8 to the Consolidated Financial Statements for further discussion of our debt and borrowings under our revolving credit facility and the Term Loan Facility, including discussion of events that occurred subsequent to December 31, 2023.

Current wording

See Note 10 to the Consolidated Financial Statements for further discussion of our debt.

Previous wording

On February 8, 2024, our Board of Directors declared a quarterly cash dividend of $0.1575 per share of EQT Corporation common stock, payable on March 1, 2024, to shareholders of record at the close of business on February 20, 2024.

Current wording

On February 6, 2025, our Board of Directors declared a quarterly cash dividend of $0.1575 per share of EQT common stock, payable on March 3, 2025, to shareholders of record at the close of business on February 18, 2025.

Previous wording

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 8 to the Consolidated Financial Statements for discussion of redemptions and repurchases of debt and Note 9 to the Consolidated Financial Statements for discussion of repurchases of EQT Corporation common stock.

Current wording

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 10 to the Consolidated Financial Statements for discussion of redemptions and repurchases of debt and Note 12 to the Consolidated Financial Statements for discussion of repurchases of EQT common stock.

Previous wording

The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as of December 31, 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 Consolidated Financial Statements for a description of what is deemed investment grade.

Current wording

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 independently 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 4 to the Consolidated Financial Statements for a description of what is deemed investment grade.

Previous wording

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 revolving credit facility, the interest rate on the Term Loan Facility 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 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.

Current wording

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 revolving credit facilities, the interest rate on our senior notes with adjustable rates, the rates available on new debt, our pool of investors and funding sources, the borrowing costs and margin deposit requirements on our 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.

Previous wording

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 revolving credit facility and the 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 our 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 revolving credit facility and the Term Loan Facility contain financial covenants that require us to have a total debt-to-total capitalization ratio no greater than 65%. As of December 31, 2023, we were in compliance with all debt provisions and covenants under our debt agreements.

Current wording

Our debt agreements and other financial obligations contain various provisions that, if not complied with, could result in default or event of default under EQT's revolving credit facility and Eureka's revolving credit facility, mandatory partial or full repayment of amounts outstanding, reduced loan capacity or other similar actions. The most significant covenants and events of default under our 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. EQT's revolving credit facility contains financial covenants that require us to have a total debt to total capitalization ratio no greater than 65%. As of December 31, 2024, we were in compliance with all EQT, Eureka and EQM debt provisions and covenants under our debt agreements.

Previous wording

See Note 8 to the Consolidated Financial Statements for a discussion of borrowings under our revolving credit facility and the Term Loan Facility.

Current wording

See Note 10 to the Consolidated Financial Statements for a discussion of borrowings under EQT's revolving credit facility and Eureka's revolving credit facility.

Previous wording

Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements. Management's discussion and analysis of the Consolidated Financial Statements and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. The following critical accounting estimates, which were reviewed by the Audit Committee of our Board of Directors (the Audit Committee), relate to our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Actual results could differ from our estimates.

Current wording

Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements. Management's discussion and analysis of the Consolidated Financial Statements and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. The following critical accounting estimates, which were reviewed by the Audit Committee of our Board of Directors, relate to our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Actual results could differ from our estimates.

Previous wording

We believe oil and gas reserves is a "critical accounting estimate" because we must periodically reevaluate proved reserves along with estimates of future production rates, production costs and the timing of development expenditures. Future results of operations and the strength of our Consolidated Balance Sheet for any quarterly or annual period could be materially affected by changes in our assumptions. Based on proved reserves as of December 31, 2023, we estimate that a 1% change in proved reserves would decrease or increase 2024 depletion expense by approximately $15 million and $27 million, respectively, based on current production estimates for 2024.

Current wording

We believe oil and gas reserves is a "critical accounting estimate" because we must periodically reevaluate proved reserves along with estimates of future production rates, production costs and the timing of development expenditures. Future results of operations and the strength of our Consolidated Balance Sheet for any quarterly or annual period could be materially affected by changes in our assumptions. Based on proved reserves as of December 31, 2024, we estimate that a 1% change in proved reserves would decrease or increase 2025 depletion expense by approximately $10 million and $21 million, respectively, based on current production estimates for 2025.

Previous wording

We believe income taxes are "critical accounting estimates" because we must assess the likelihood that our deferred tax assets will be recovered from future taxable income and exercise judgment on the amount of financial statement benefit recorded for uncertain tax positions. To the extent that a valuation allowance or uncertain tax position is established or increased or decreased during a period, we record an expense or benefit in income tax expense in our Statements of Consolidated Operations. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. A change to future taxable income or tax planning strategies could impact our ability to utilize deferred tax assets, which would increase or decrease our income tax expense and taxes paid. An estimate of the sensitivity to changes in our assumptions is not practicable given the numerous assumptions that can materially affect our estimates.

Current wording

We believe income taxes is a "critical accounting estimate" because we must assess the likelihood that our deferred tax assets will be recovered from future taxable income and exercise judgment on the amount of financial statement benefit recorded for uncertain tax positions. When evaluating whether or not a valuation allowance should be established, we exercise judgment on whether it is more likely than not (a likelihood of more than 50%) that a portion or all of our deferred tax assets will not be realized. To determine whether a valuation allowance is needed, we consider all available evidence, both positive and negative, including carrybacks, tax planning strategies, reversals of deferred tax assets and liabilities and forecasted future taxable income. To determine the amount of financial statement benefit recorded for uncertain tax positions, we consider the amounts and probabilities of outcomes that could be realized upon ultimate settlement of an uncertain tax position using facts, circumstances and information available at the reporting date. To the extent that a valuation allowance or uncertain tax position is established or increased or decreased during a period, we record an income tax expense or benefit in our Statements of Consolidated Operations.

Previous wording

We believe derivative instruments are "critical accounting estimates" because our financial condition and results of operations can be significantly impacted by changes in the market value of our derivative instruments due to the volatility of both NYMEX natural gas prices and basis. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. Refer to Item 7A., "Quantitative and Qualitative Disclosures about Market Risk" for discussion of a hypothetical increase or decrease of 10% in the market price of natural gas.

Current wording

We believe derivative instruments is a "critical accounting estimate" because our financial condition and results of operations can be significantly impacted by changes in the market value of our derivative instruments due to the volatility of both NYMEX natural gas prices and basis. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. Refer to Item 7A., "Quantitative and Qualitative Disclosures about Market Risk" for discussion of a hypothetical increase or decrease of 10% in the market price of natural gas.

Previous wording

We believe contingencies and asset retirement obligations are "critical accounting estimates" because we must assess the probability of loss related to contingencies and the expected amount and timing of asset retirement obligation settlement. In addition, we must determine the estimated present value of future liabilities. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. If we incur losses related to contingencies that are higher than we expect, we could incur additional costs to settle such obligations. If the expected amount and timing of our asset retirement obligations change, we will be required to adjust the carrying value of our liabilities in future periods. An estimate of the sensitivity to changes in our assumptions is not practicable given the numerous assumptions that can materially affect our estimates.

Current wording

We believe contingencies and asset retirement obligations is a "critical accounting estimate" because we must assess the probability of loss related to contingencies and the expected amount and timing of asset retirement obligation settlement. In addition, we must determine the estimated present value of future liabilities. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. If we incur losses related to contingencies that are higher than we expect, we could incur additional costs to settle such obligations. If the expected amount and timing of our asset retirement obligations change, we will be required to adjust the carrying value of our liabilities in future periods. An estimate of the sensitivity to changes in our assumptions is not practicable given the numerous assumptions that can materially affect our estimates.

Previous wording

Business Combinations. Accounting for a business combination requires a company to record the identifiable assets and liabilities acquired at fair value. In the third quarter of 2023, we completed the Tug Hill and XcL Midstream Acquisition, and in the third quarter of 2021, we completed the Alta Acquisition (defined and discussed in Note 6 to the Consolidated Financial Statements). See Note 6 to the Consolidated Financial Statements for a discussion of the most significant assumptions used to estimate the fair value of the assets acquired and liabilities assumed.

Current wording

Business Combinations. Accounting for a business combination requires a company to record the identifiable assets and liabilities acquired at fair value. In the third quarter of 2024, we completed the Equitrans Midstream Merger. See Note 6 to the Consolidated Financial Statements for a discussion of the most significant assumptions used to estimate the fair value of the assets acquired and liabilities assumed in the Equitrans Midstream Merger.

Previous wording

We believe business combinations are "critical accounting estimates" because the valuation of acquired assets and assumed liabilities involves significant judgment about future events. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. An estimate of the sensitivity to changes in our assumptions is not practicable given the numerous assumptions that can materially affect our estimates.

Current wording

We believe business combinations is a "critical accounting estimate" because the valuation of acquired assets and assumed liabilities involves significant judgment about future events. Future results of operations for any quarterly or annual period could be materially affected by changes in our assumptions. An estimate of the sensitivity to changes in our assumptions is not practicable given the numerous assumptions that can materially affect our estimates.