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Segment Information
 3 Months Ended
Mar. 31, 2012
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 which 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 primarily comprise 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. Other income, interest 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.  Differences between budget and actual headquarters’ expenses are not allocated to the operating segments.

 

The Company’s management reviews and reports the EQT Production segment results for operating revenues and purchased gas costs, with third party transportation costs reflected as a deduction from operating revenues. During 2011, because of increased materiality of these costs, the Company determined that consolidated results for these line items are required to be reported on a gross basis with third-party transportation costs recorded as a portion of purchased gas costs.  The consolidated operating revenues, purchased gas costs and total operating expenses for all periods presented have been adjusted to reflect this gross presentation. This adjustment had no impact on consolidated net income, consolidated operating income or on the segment results for any period presented. Management believes this presentation is not material to the overall financial statement presentation.

 

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

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

 

 

(Thousands)

 

Revenues from external customers:

 

 

 

 

 

EQT Production

 

$

195,396

 

$

173,042

 

EQT Midstream

 

122,048

 

141,662

 

Distribution

 

135,421

 

195,091

 

Less: intersegment revenues (a)

 

(2,905

)

(37,100

)

Total

 

$

449,960

 

$

472,695

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

EQT Production (b)

 

$

60,148

 

$

82,329

 

EQT Midstream (b)

 

56,136

 

89,418

 

Distribution

 

36,770

 

53,367

 

Unallocated expenses

 

242

 

(4,702

)

Total

 

$

153,296

 

$

220,412

 

 

 

 

 

 

 

Reconciliation of operating income to net income:

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of nonconsolidated investments

 

$

2,212

 

$

2,358

 

Other income

 

2,469

 

4,446

 

Interest expense

 

41,252

 

32,852

 

Income taxes

 

44,690

 

72,109

 

Total

 

$

72,035

 

$

122,255

 

 

 

 

March 31,

 

December 31,

 

 

 

2012

 

2011

 

 

 

(Thousands)

 

Segment Assets:

 

 

 

 

 

EQT Production

 

$

5,438,619

 

$

5,256,645

 

EQT Midstream

 

1,819,437

 

1,785,089

 

Distribution

 

805,747

 

850,414

 

Total operating segments

 

8,063,803

 

7,892,148

 

Headquarters assets, including cash and short-term investments

 

795,186

 

880,571

 

Total assets

 

$

8,858,989

 

$

8,772,719

 

 

(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. These activities were partly offset by the third-party transportation costs which were recorded in operating revenues and purchased gas costs at the consolidated level.

(b)                     Gains on dispositions of $1.1 million and $22.8 million are included in EQT Production operating income for 2012 and EQT Midstream operating income for 2011, respectively. See Note J.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

 

 

(Thousands)

 

Depreciation, depletion and amortization:

 

 

 

 

 

EQT Production

 

$

86,567

 

$

57,834

 

EQT Midstream

 

14,708

 

14,708

 

Distribution

 

6,243

 

5,957

 

Other

 

7

 

(101

)

Total

 

$

107,525

 

$

78,398

 

 

 

 

 

 

 

Expenditures for segment assets:

 

 

 

 

 

EQT Production

 

$

183,685

 

$

226,972

 

EQT Midstream

 

79,638

 

29,105

 

Distribution

 

5,463

 

6,219

 

Other

 

801

 

1,132

 

Total

 

$

269,587

 

$

263,428