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EQT Reports Second Quarter 2012 Earnings

Pilot Program to Convert Marcellus Drilling Rigs to Liquefied Natural Gas

On July 5, 2012, EQT announced the conversion of a drilling rig to liquefied natural gas (LNG), displacing the diesel used to power equipment at the well site. EQT is the first operator in the Marcellus Shale to convert a diesel rig to LNG, which will provide a cleaner burning alternative fuel for the region’s drilling operations. The rig is now operating in northern West Virginia and pending evaluation of the pilot program, the Company anticipates converting additional rigs in West Virginia and Pennsylvania. The LNG being used for EQT’s pilot program is produced locally from Marcellus natural gas reserves and is about 40% less expensive than diesel. Compared to diesel, natural gas emits between 20% and 30% less carbon dioxide and has a fraction of the emissions of nitrogen oxides, sulfur oxides, and particulates.

Operating Income

The Company reports operating income by segment in this press release. Interest, income taxes and unallocated income/(expense) are controlled on a consolidated, corporate-wide basis and are not allocated to the segments. The Company’s management reviews and reports segment results for operating revenues and purchased gas costs, net of third-party transportation costs.

The following table reconciles operating income by segment, as reported in this press release, to the consolidated operating income reported in the Company’s financial statements:

  Three Months Ended

June 30,

  Six Months Ended

June 30,

2012   2011 2012   2011
Operating income (thousands):
EQT Production $ 17,704 $ 99,759 $ 77,852 $ 182,088
EQT Midstream 59,750 52,243 115,886 141,661
Distribution 6,376 8,928 43,146 62,295
Unallocated expenses   (2,426 )   (7,760 )   (2,184 )   (12,462 )
Operating income $ 81,404   $ 153,170   $ 234,700   $ 373,582  

Unallocated expense is primarily due to certain incentive compensation and administrative costs that differ from budget and are not allocated to the operating segments.

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