EQT(EQT) - 2025 Q2 - Quarterly Report

markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section encompasses unaudited financial statements, management's discussion, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents unaudited consolidated financial statements, reflecting significant revenue and net income growth post-Equitrans Midstream Merger Condensed Consolidated Operations Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenues** | $2,557,719 | $952,512 | $4,297,569 | $2,364,780 | | **Operating income** | $1,134,038 | $2,971 | $1,630,288 | $185,691 | | **Net income attributable to EQT** | $784,147 | $9,517 | $1,026,286 | $113,005 | | **Diluted EPS** | $1.30 | $0.02 | $1.70 | $0.25 | Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,631,336 | $1,714,679 | | **Net property, plant and equipment** | $31,624,191 | $31,747,818 | | **Total assets** | $39,666,748 | $39,830,255 | | **Total current liabilities** | $2,306,407 | $2,461,549 | | **Total liabilities** | $14,568,898 | $15,552,119 | | **Total equity** | $25,097,850 | $24,278,136 | Condensed Consolidated Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $2,982,866 | $1,477,708 | | **Net cash used in investing activities** | $(1,198,032) | $(879,212) | | **Net cash used in financing activities** | $(1,431,435) | $(649,499) | | **Net change in cash and cash equivalents** | $353,399 | $(51,003) | - Net income attributable to EQT for Q2 2025 was **$784.1 million** (**$1.30/share**), a substantial increase from **$9.5 million** (**$0.02/share**) in Q2 2024. The growth was driven by higher operating revenues, gains on derivatives, and equity earnings from the MVP Joint Venture[196](index=196&type=chunk) - The company expects to spend approximately **$2.30 billion to $2.45 billion** in total capital expenditures in 2025, funded by cash from operations and its revolving credit facility[260](index=260&type=chunk) - Expected sales volume for 2025 is projected to be between **2,300 and 2,400 Bcfe**, including contributions from the **Olympus Energy Acquisition**[260](index=260&type=chunk) - Cash flow from operations increased to **$2.98 billion** for the first six months of 2025, up from **$1.48 billion** in the same period of 2024, due to higher revenues and favorable working capital changes[265](index=265&type=chunk) [Note 2: Financial Information by Business Segment](index=10&type=section&id=Note%202.%20Financial%20Information%20by%20Business%20Segment) Company restructured into Production, Gathering, and Transmission segments post-merger, Production remains primary revenue driver - As a result of the **Equitrans Midstream Merger**, the company changed its internal reporting from one reportable segment to three: Production, Gathering, and Transmission[33](index=33&type=chunk)[34](index=34&type=chunk) Segment Operating Income (Loss) - Q2 2025 (in thousands) | Segment | Operating Income (Loss) | | :--- | :--- | | Production | $1,007,110 | | Gathering | $205,405 | | Transmission | $90,056 | | **Total Segment Operating Income** | **$1,302,571** | Segment Total Assets - June 30, 2025 (in thousands) | Segment | Total Assets | | :--- | :--- | | Production | $22,027,485 | | Gathering | $8,276,505 | | Transmission | $7,635,142 | | **Total Segment Assets** | **$37,939,132** | [Note 3: Revenue from Contracts with Customers](index=16&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) Total revenue significantly increased from natural gas sales and new pipeline revenues post-Equitrans Midstream Merger Disaggregated Revenue from Contracts with Customers - Q2 2025 vs Q2 2024 (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Natural gas sales | $1,539,205 | $730,705 | | NGLs sales | $145,104 | $139,734 | | Total Gathering pipeline revenue | $320,269 | $74,300 | | Total Transmission pipeline revenue | $134,583 | $0 | | **Total revenues from contracts** | **$1,837,676** | **$892,633** | - As of June 30, 2025, the company has approximately **$11.9 billion** in remaining performance obligations from contracts with fixed consideration, primarily related to gathering and transmission firm reservation fees[82](index=82&type=chunk) - The weighted average remaining term for both third-party and affiliate firm gathering and transmission contracts is approximately **11 to 13 years** as of June 30, 2025[84](index=84&type=chunk) [Note 7: Debt](index=24&type=section&id=Note%207.%20Debt) Total debt decreased to **$8.3 billion** due to repayments, with new EQT notes issued post-Equitrans Midstream Merger Total Debt Outstanding (in thousands) | Date | Principal Value | Carrying Value | | :--- | :--- | :--- | | June 30, 2025 | $8,366,092 | $8,315,037 | | December 31, 2024 | $9,368,516 | $9,324,177 | - During the first six months of 2025, the company repaid, redeemed, or repurchased **$813 million** in principal of various debt tranches[120](index=120&type=chunk)[121](index=121&type=chunk) - On April 2, 2025, the company issued approximately **$3.9 billion** of New EQT Notes in exchange for tendered Existing EQM Notes following the **Equitrans Midstream Merger**[131](index=131&type=chunk) - On July 16, 2025, EQM issued notices for the full redemption of all its outstanding notes (approx. **$92.7 million**), which will be completed by July 31, 2025[122](index=122&type=chunk) [Note 11: Acquisitions](index=29&type=section&id=Note%2011.%20Acquisitions) Company completed **Equitrans Midstream Merger** and **Olympus Energy Acquisition**, adding significant assets and goodwill - On July 1, 2025, EQT completed its acquisition of **Olympus Energy Acquisition** for **$500 million** cash and **25.2 million shares** of EQT common stock[154](index=154&type=chunk)[155](index=155&type=chunk) - The **Equitrans Midstream Merger** was completed on July 22, 2024, with total consideration of **$6.0 billion**, including **$5.5 billion** in equity. The acquisition was accounted for as a business combination, resulting in **$2.06 billion** of goodwill[158](index=158&type=chunk)[159](index=159&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - The goodwill from the **Equitrans Midstream Merger** is attributed to expected synergies from vertical integration (**$1.23B**) and deferred tax liabilities (**$831M**), and was allocated entirely to the Transmission segment[165](index=165&type=chunk) [Note 13: Commitments and Contingencies](index=32&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) Company agreed to a **$167.5 million** settlement in Securities Class Action, expecting **$16 million** insurance recovery - On May 12, 2025, the parties in the Securities Class Action agreed to a settlement where the company will pay **$167.5 million** to the plaintiffs[179](index=179&type=chunk) - As a result of the settlement, the company increased its accrual for estimated loss contingencies by **$150 million** in Q2 2025, resulting in a total reserve of **$167.5 million**[179](index=179&type=chunk) - The company expects to recover approximately **$16 million** of the settlement amount through insurance[179](index=179&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses increased net income from mergers and higher commodity prices, detailing segment performance, capital expenditures, and liquidity - Net income attributable to EQT for Q2 2025 was **$784.1 million** (**$1.30/share**), a substantial increase from **$9.5 million** (**$0.02/share**) in Q2 2024. The growth was driven by higher operating revenues, gains on derivatives, and equity earnings from the MVP Joint Venture[196](index=196&type=chunk) - The company expects to spend approximately **$2.30 billion to $2.45 billion** in total capital expenditures in 2025, funded by cash from operations and its revolving credit facility[260](index=260&type=chunk) - Expected sales volume for 2025 is projected to be between **2,300 and 2,400 Bcfe**, including contributions from the **Olympus Energy Acquisition**[260](index=260&type=chunk) - Cash flow from operations increased to **$2.98 billion** for the first six months of 2025, up from **$1.48 billion** in the same period of 2024, due to higher revenues and favorable working capital changes[265](index=265&type=chunk) [Business Segment Results of Operations](index=40&type=section&id=Business%20Segment%20Results%20of%20Operations) New three-segment structure shows strong Q2 2025 performance, with Production income soaring and new Gathering and Transmission segments contributing Production Segment Operating Results - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total sales volume (MMcfe) | 568,227 | 507,512 | 12.0% | | Average sales price ($/Mcfe) | $2.99 | $1.75 | 70.9% | | Total operating revenues (thousands) | $2,420,542 | $949,396 | 155.0% | | Operating income (loss) (thousands) | $1,007,110 | $(7,012) | 14,462.7% | Gathering Segment Operating Results - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total gathered volume (BBtu/d) | 9,827 | 1,555 | 532% | | Total operating revenues (thousands) | $320,269 | $74,300 | 331% | | Operating income (thousands) | $205,405 | $53,871 | 281% | Transmission Segment Operating Results - Q2 2025 | Metric | Q2 2025 | | :--- | :--- | | Total transmission pipeline throughput (BBtu/d) | 4,279 | | Total operating revenues (thousands) | $134,583 | | Operating income (thousands) | $90,056 | [Capital Resources and Liquidity](index=50&type=section&id=Capital%20Resources%20and%20Liquidity) Operating cash flow and credit facilities are sufficient for **$2.3-$2.45 billion** 2025 capital expenditures and debt service - The company plans total capital expenditures of **$2,300 million to $2,450 million** for 2025[260](index=260&type=chunk) - On July 1, 2025, the company funded the **$500 million** cash portion of the **Olympus Energy Acquisition** with cash on hand and borrowings under its revolving credit facility[262](index=262&type=chunk) - During the first six months of 2025, financing activities included repayment of debt, dividends, and **$152 million** in distributions to the Midstream Joint Venture's Class B Unitholder[272](index=272&type=chunk)[273](index=273&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.1575 per share**, payable on September 2, 2025[274](index=274&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Company manages natural gas and NGL price volatility through hedging; a **10%** price decrease would increase derivative fair value by **$146 million** - A hypothetical **10% decrease** in the NYMEX natural gas price as of June 30, 2025, would increase the fair value of the company's natural gas derivative instruments by approximately **$146 million**[296](index=296&type=chunk) - A hypothetical **10% increase** in the NYMEX natural gas price as of June 30, 2025, would decrease the fair value of the company's natural gas derivative instruments by approximately **$144 million**[296](index=296&type=chunk) - A **1% increase** in interest rates on borrowings under its revolving credit facilities during the first six months of 2025 would have increased interest expense by approximately **$2 million**[299](index=299&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were **effective**, with ongoing integration of **Equitrans Midstream Corporation's** internal controls - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were **effective** as of the end of the reporting period[306](index=306&type=chunk) - The company is in the process of integrating the internal controls of **Equitrans Midstream Corporation**, which was acquired on July 22, 2024. This integration process may result in changes to internal controls[307](index=307&type=chunk) [PART II. OTHER INFORMATION](index=57&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) Investigations into the Pratt Storage Field incident remain open, with a subsidiary facing a criminal complaint, no material adverse impact expected - Regarding the 2018 Pratt Storage Field incident, investigations by the Pennsylvania Public Utilities Commission and PHMSA are still open[311](index=311&type=chunk) - On October 30, 2023, Equitrans, L.P. received a criminal complaint from the PA Attorney General's Office for alleged violations of the Clean Streams Law related to the Pratt Incident. The company does not expect the resolution to have a material adverse impact[313](index=313&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There are **no material changes** to the risk factors previously disclosed in the Annual Report on Form 10-K for 2024 - There are **no material changes** to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[314](index=314&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) **No equity securities were repurchased** in Q2 2025, with **$1.4 billion** remaining under the extended **$2 billion** share repurchase program - **No equity securities were repurchased** during the second quarter of 2025[315](index=315&type=chunk) - The Board of Directors extended the **$2 billion Share Repurchase Program** to expire on **December 31, 2026**[316](index=316&type=chunk) - As of June 30, 2025, approximately **$1.4 billion** remains available for purchase under the Share Repurchase Program[316](index=316&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including supplemental indentures, registration rights agreements, and officer certifications