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Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

B. Segment Information

Operating segments are revenue-producing components of the enterprise for which separate financial information is produced internally and are subject to evaluation by the Company’s chief operating decision maker in deciding how to allocate resources.

The Company reports its operations in three segments, which reflect its lines of business.  The EQT Production segment includes the Company’s exploration for, and development and production of, natural gas, natural gas liquids (NGLs) and a limited amount of crude oil in the Appalachian Basin.  EQT Midstream’s operations include the natural gas gathering, transportation, storage and marketing activities of the Company.  Distribution’s operations are primarily composed of the state-regulated natural gas distribution activities of the Company.

Operating segments are evaluated on their contribution to the Company’s consolidated results based on operating income. Interest expense and income taxes are managed on a consolidated basis.  Headquarters’ costs are billed to the operating segments based upon a fixed allocation of the headquarters’ annual operating budget. Actual headquarters’ expenses in excess of budget, which are primarily related to incentive compensation and administrative costs, are not allocated to the operating segments.

Substantially all of the Company’s operating revenues, income from operations and assets are generated or located in the United States.

		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
Revenues from external customers:						(Thousands)
EQT Production		$	196,810			$	119,028			$	369,852			$	263,391
EQT Midstream		131,201				136,995				272,863				291,591
Distribution		69,100				63,349				264,191				285,604
Less: intersegment revenues (a)		(48,111		)		(61,857		)		(102,235		)		(146,431		)
Total		$	349,000			$	257,515			$	804,671			$	694,155
Operating income:
EQT Production		$	99,759			$	41,029			$	182,088			$	114,146
EQT Midstream		52,243				41,714				118,876				94,405
Distribution		8,928				4,290				62,295				51,709
Unallocated expenses (b)		(7,760		)		(8,504		)		(12,462		)		(12,618		)
Total		$	153,170			$	78,529			$	350,797			$	247,642
Reconciliation of operating income to net income:
Gain on disposition		$	–			$	–			$	22,785			$	–
Other income		18,046				2,573				24,850				5,627
Interest expense		33,287				34,080				66,139				68,214
Income taxes		50,175				17,022				122,284				66,990
Net income		$	87,754			$	30,000			$	210,009			$	118,065

		June 30,				December 31,
		2011				2010
		(Thousands)
Segment Assets:
EQT Production		$	4,520,399			$	3,979,676
EQT Midstream		1,854,299				2,076,485
Distribution		788,061				848,419
Total operating segments		7,162,759				6,904,580
Headquarters assets, including cash and short-term investments		130,330				193,858
Total assets		$	7,293,089			$	7,098,438

(a) Intersegment revenues primarily represent natural gas sales from EQT Production to EQT Midstream and transportation activities between EQT Midstream and both EQT Production and Distribution.

(b) Unallocated expenses primarily consist of certain incentive compensation and administrative costs in excess of budget that are not allocated to the operating segments.

		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
		(Thousands)
Depreciation, depletion and amortization:
EQT Production		$	61,899			$	43,468			$	119,733			$	84,378
EQT Midstream		14,296				15,611				29,004				30,535
Distribution		5,923				6,016				11,880				12,010
Other		(232		)		122				(333		)		173
Total		$	81,886			$	65,217			$	160,284			$	127,096
Capital expenditures:
EQT Production (a)		$	317,906			$	483,656			$	544,878			$	662,071
EQT Midstream		46,500				44,293				75,605				78,980
Distribution		8,811				7,750				15,030				11,725
Other		881				321				2,013				771
Total		$	374,098			$	536,020			$	637,526			$	753,547

(a)  Capital expenditures in the EQT Production segment include $92.6 million of liabilities assumed in exchange for producing properties as part of the ANPI transaction discussed in Note K and $230.7 million of undeveloped property which was acquired with EQT common stock in 2010.

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- Definition

This element may be used to capture the complete disclosure of reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10% or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131

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