EQT CORPORATION The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto included in this report. Unless the context otherwise indicates, all references in this report to "EQT," the "Company," "we," "us," or "our" are toEQT Corporation and its subsidiaries, collectively. CAUTIONARY STATEMENTS This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and are usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe" and other words of similar meaning, or the negative thereof, in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this Quarterly Report on Form 10-Q include the expectations of our plans, strategies, objectives and growth and anticipated financial and operational performance, including guidance regarding our strategy to develop our reserves; drilling plans and programs, including availability of capital to complete these plans and programs; total resource potential and drilling inventory duration; projected production and sales volume and growth rates; natural gas prices; changes in basis and the impact of commodity prices on our business; potential future impairments of our assets; projected well costs and capital expenditures; infrastructure programs; the cost, capacity, and timing of obtaining regulatory approvals; our ability to successfully implement and execute our operational, organizational, technological and environmental, social and governance (ESG) initiatives, and achieve the anticipated results of such initiatives; projected gathering and compression rates; monetization transactions, including asset sales, joint ventures or other transactions involving our assets, and our planned use of the proceeds from such monetization transactions; potential acquisition transactions or other strategic transactions, the timing thereof and our ability to achieve the intended operational, financial and strategic benefits from any such transactions; the amount and timing of any repayments, redemptions or repurchases of our common stock, outstanding debt securities or other debt instruments; our ability to reduce our debt and the timing of such reductions, if any; the projected amount and timing of dividends; projected cash flows and free cash flow and the timing thereof; liquidity and financing requirements, including funding sources and availability; our ability to maintain or improve our credit ratings, leverage levels and financial profile; our hedging strategy and projected margin posting obligations; the effects of litigation, government regulation and tax position; and the expected impact of changes to tax laws. The forward-looking statements included in this Quarterly Report on Form 10-Q involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking statements on current expectations and assumptions about future events, taking into account all information currently known by us. While we consider these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond our control. These risks and uncertainties include, but are not limited to, volatility of commodity prices; the costs and results of drilling and operations; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; our ability to appropriately allocate capital and resources among our strategic opportunities; access to and cost of capital; our hedging and other financial contracts; inherent hazards and risks normally incidental to drilling for, producing, transporting and storing natural gas, natural gas liquids (NGLs) and oil; cyber security risks; availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and water required to execute our exploration and development plans, including as a result of the COVID-19 pandemic; risks associated with operating primarily in theAppalachian Basin and obtaining a substantial amount of our midstream services from Equitrans Midstream Corporation (Equitrans Midstream); the ability to obtain environmental and other permits and the timing thereof; government regulation or action, including regulations pertaining to methane and other greenhouse gas emissions; negative public perception of the fossil fuels industry; increased consumer demand for alternatives to natural gas; environmental and weather risks, including the possible impacts of climate change; and disruptions to our business due to acquisitions and other significant transactions. These and other risks and uncertainties are described under Item 1A., "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year endedDecember 31, 2021 and set forth in other documents we file from time to time with theSecurities and Exchange Commission . Any forward-looking statement speaks only as of the date on which such statement is made, and we do not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. 18
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EQT CORPORATION AND SUBSIDIARIESManagement's Discussion and Analysis of Financial Condition and Results of
OperationsConsolidated Results of Operations
Net loss attributable toEQT Corporation for the three months endedMarch 31, 2022 was$1,516.0 million ,$4.05 per diluted share, compared to net loss attributable toEQT Corporation for the same period in 2021 of$37.4 million ,$0.13 per diluted share. The change was attributable primarily to the loss on derivatives not designated as hedges and, to a lesser extent, the impairment of our contract asset (discussed in Note 8 to the Condensed Consolidated Financial Statements), increased transportation and processing expense, increased depreciation and depletion and a loss from investments, partly offset by increased sales of natural gas, NGLs and oil and higher income tax benefit.
Results of operations for 2022 include the results of our operation of assets
acquired from
See "Sales Volume and Revenues" and "Operating Expenses" for discussions of items affecting operating income and "Other Income Statement Items" for a discussion of other income statement items. See "Investing Activities" under "Capital Resources and Liquidity" for a discussion of capital expenditures.
Average Realized Price Reconciliation
The following table presents detailed natural gas and liquids operational
information to assist in the understanding of our consolidated operations,
including the calculation of our average realized price ($/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.
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Management's Discussion and Analysis of Financial Condition and Results of
Operations
Three Months Ended March 31,
2022 2021
(Thousands, unless otherwise noted)
NATURAL GAS
Sales volume (MMcf) 466,136 390,298
NYMEX price ($/MMBtu) $ 4.90 $ 2.69
Btu uplift 0.23 0.15
Natural gas price ($/Mcf) $ 5.13 $ 2.84
Basis ($/Mcf) (a) $ (0.22) $ (0.25)
Cash settled basis swaps not designated as hedges ($/Mcf) (0.21) (0.09)
Average differential, including cash settled basis swaps ($/Mcf)
$ (0.43) $ (0.34)
Average adjusted price ($/Mcf) $ 4.70 $ 2.50
Cash settled derivatives not designated as hedges ($/Mcf) (1.73) (0.01)
Average natural gas price, including cash settled
derivatives ($/Mcf) $ 2.97 $ 2.49
Natural gas sales, including cash settled derivatives $ 1,383,196 $ 972,494
LIQUIDS
NGLs, excluding ethane:
Sales volume (MMcfe) (b) 14,634 14,600
Sales volume (Mbbl) 2,439 2,433
Price ($/Bbl) $ 64.05 $ 37.28
Cash settled derivatives not designated as hedges ($/Bbl) (4.85) (2.99)
Average price, including cash settled derivatives ($/Bbl) $ 59.20 $ 34.29
NGLs sales $ 144,381 $ 83,443 Ethane:
Sales volume (MMcfe) (b) 9,839 8,587 Sales volume (Mbbl) 1,640 1,431 Price ($/Bbl) $ 10.54$ 6.66 Ethane sales $ 17,289$ 9,534 Oil: Sales volume (MMcfe) (b) 1,666 1,705 Sales volume (Mbbl) 278 284 Price ($/Bbl) $ 85.55$ 61.98 Oil sales $ 23,756$ 17,614 Total liquids sales volume (MMcfe) (b) 26,139 24,892 Total liquids sales volume (Mbbl) 4,357 4,148 Total liquids sales $ 185,426$ 110,591 TOTAL
Total natural gas and liquids sales, including cash settled derivatives (c)
$ 1,568,622 $ 1,083,085 Total sales volume (MMcfe) 492,275 415,190 Average realized price ($/Mcfe) $ 3.19$ 2.61 (a)Basis represents the difference between the ultimate sales price for natural gas, including the effects of delivered price benefit or deficit associated with our firm transportation agreements, and theNew York Mercantile Exchange (NYMEX) natural gas price. (b)NGLs, ethane and oil were converted to Mcfe at a rate of six Mcfe per barrel. (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. 20
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Non-GAAP Financial Measures Reconciliation
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 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.
Three Months Ended March 31,
2022 2021
(Thousands, unless otherwise noted)
Total operating revenues $ (579,110) $ 949,923
Add (deduct):
Loss on derivatives not designated as hedges 3,077,637 188,813
Net cash settlements paid on derivatives not designated as hedges
(885,539) (38,140)
Premiums paid for derivatives that settled during the period
(32,463) (9,726)
Net marketing services and other (11,903) (7,785)
Adjusted operating revenues, a non-GAAP financial measure
$ 1,083,085 Total sales volume (MMcfe) 492,275 415,190 Average realized price ($/Mcfe) $ 3.19$ 2.61 Sales Volume and Revenues Three Months Ended March 31, 2022 2021 Change % Change (Thousands, unless otherwise noted) Sales volume by shale (MMcfe): Marcellus 455,427 373,941 81,486 21.8 Ohio Utica 34,206 39,929 (5,723) (14.3) Other 2,642 1,320 1,322 100.2 Total sales volume (a) 492,275 415,190 77,085 18.6 Average daily sales volume (MMcfe/d) 5,470 4,613 857 18.6 Operating revenues: Sales of natural gas, NGLs and oil$ 2,486,624 $ 1,130,951 $ 1,355,673 119.9 Loss on derivatives not designated as hedges (3,077,637) (188,813) (2,888,824) 1,530.0 Net marketing services and other 11,903 7,785 4,118 52.9 Total operating revenues$ (579,110) $ 949,923 $ (1,529,033) (161.0)
(a)NGLs, ethane and oil were converted to Mcfe at a rate of six Mcfe per barrel.
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Operations
Sales of natural gas, NGLs and oil. Sales of natural gas, NGLs and oil increased
for the three months ended March 31, 2022 compared to the same period in 2021
due to a higher average realized price and increased sales volume.
Average realized price for the three months ended March 31, 2022 compared to the
same period in 2021 increased due to higher NYMEX prices and higher liquids
prices, partly offset by unfavorable cash settled derivatives and unfavorable
differential. For the three months ended March 31, 2022 and 2021, we paid $885.5
million and $38.1 million , respectively, of net cash settlements on derivatives
not designated as hedges, which are included in average realized price but may
not be included in operating revenues.
Sales volume increased primarily as a result of sales volume increases from the assets acquired in the Alta Acquisition.
Loss on derivatives not designated as hedges. For the three months endedMarch 31, 2022 and 2021, we recognized a loss on derivatives not designated as hedges of$3,077.6 million and$188.8 million , respectively. The losses were related primarily to decreases in the fair market value of our NYMEX swaps and options due to increases in NYMEX forward prices. Net marketing services and other. Net marketing services and other increased for the three months endedMarch 31, 2022 compared to the same period in 2021 due primarily to third-party gathering revenues recognized on the midstream assets acquired in the Alta Acquisition.
Operating Expenses
The following table presents information on our production-related operating
expenses.
Three Months Ended March 31,
2022 2021 Change % Change
(Thousands, unless otherwise noted)
Operating expenses:
Gathering $ 320,529 $ 280,361 $ 40,168 14.3
Transmission 147,106 124,872 22,234 17.8
Processing 48,469 40,551 7,918 19.5
Lease operating expenses (LOE) 39,829 27,019 12,810 47.4
Production taxes 31,183 20,211 10,972 54.3
Exploration 772 949 (177) (18.7) Selling, general and administrative 69,096 45,006 24,090 53.5
Production depletion$ 416,925 $ 373,008 $ 43,917 11.8 Other depreciation and depletion 5,173 4,108 1,065 25.9 Total depreciation and depletion$ 422,098 $ 377,116 $ 44,982 11.9 Per Unit ($/Mcfe): Gathering$ 0.65 $ 0.68 $ (0.03) (4.4) Transmission 0.30 0.30 - - Processing 0.10 0.10 - - LOE 0.08 0.07 0.01 14.3 Production taxes 0.06 0.05 0.01 20.0 Selling, general and administrative 0.14 0.11 0.03 27.3 Production depletion 0.85 0.90 (0.05) (5.6) 22
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Gathering. Gathering expense increased on an absolute basis for the three months
ended March 31, 2022 compared to the same period in 2021 due primarily to
increased sales volume from the assets acquired in the Alta Acquisition and
higher gathering rates on certain contracts indexed to price. Gathering expense
decreased on a per Mcfe basis for the three months ended March 31, 2022 compared
to the same period in 2021 due primarily to the lower gathering rate structure
on the assets acquired in the Alta Acquisition.
Transmission. Transmission expense increased on an absolute basis for the three
months ended March 31, 2022 compared to the same period in 2021 due primarily to
additional capacity acquired as part of the Alta Acquisition, lower credits
received from and higher rates on the Texas Eastern Transmission Pipeline and
additional capacity acquired on the Rockies Express Pipeline in the third
quarter of 2021.
Processing. Processing expense increased on an absolute basis for the three
months ended March 31, 2022 compared to the same period in 2021 due to increased
liquid sales volume as a result of increased development of liquids-rich areas
throughout 2021.
LOE. LOE increased on an absolute and per Mcfe basis for the three months ended
March 31, 2022 compared to the same period in 2021 due primarily to additional
lease operating costs as a result of the Alta Acquisition.
Production taxes. Production taxes increased on an absolute and per Mcfe basis
for the three months ended March 31, 2022 compared to the same period in 2021
due to increased West Virginia severance taxes, which resulted primarily from
higher prices, and increased Pennsylvania impact fees, which resulted from the
additional wells acquired in the Alta Acquisition, higher prices and inflation.
Selling, general and administrative. Selling, general and administrative expense
increased on an absolute and per Mcfe basis for the three months ended March 31,
2022 compared to the same period in 2021 due primarily to higher long-term
incentive compensation costs as a result of changes in the fair value of awards
and higher litigation expense. Long-term incentive compensation may fluctuate
with changes in our stock price and performance conditions.
Depreciation and depletion. Production depletion expense increased on an
absolute basis for the three months ended March 31, 2022 compared to the same
period in 2021 due to increased sales volume, partly offset by a lower annual
depletion rate. Production depletion expense decreased on a per Mcfe basis for
the three months ended March 31, 2022 compared to the same period in 2021 due to
a lower annual depletion rate.
Impairment of contract asset. During the three months ended March 31, 2022 , we
recognized impairment of our contract asset of $184.9 million . See Note 8 to the
Condensed Consolidated Financial Statements.
Impairment and expiration of leases. During the three months ended
Other operating expenses. Other operating expenses for the three months endedMarch 31, 2022 of$16.3 million were attributable primarily to changes in legal reserves, including settlements. Other operating expenses for the three months endedMarch 31, 2021 of$9.4 million were attributable primarily to transaction costs associated with our acquisition of upstream assets fromChevron U.S.A. Inc. and changes in legal reserves, including settlements.
Other Income Statement Items
Loss (income) from investments. For the three months endedMarch 31, 2022 , we recognized a loss from investments due primarily to a loss on our investment in Equitrans Midstream, which resulted from a decrease in Equitrans Midstream's stock price to$8.44 as ofMarch 31, 2022 from$10.34 as ofDecember 31, 2021 , partly offset by a gain on our investment in the Investment Fund (defined in Note 4 to the Condensed Consolidated Financial Statements) and equity earnings on our investment inLaurel Mountain Midstream LLC . For the three months endedMarch 31, 2021 , we recognized gains on our investments in the Investment Fund and Equitrans Midstream. Loss on debt extinguishment. During the three months endedMarch 31, 2022 , we recognized a loss on debt extinguishment of$6.9 million due to the repayment of our 3.00% senior notes. During the three months endedMarch 31, 2021 , we recognized a loss on debt extinguishment of$4.4 million due to the repayment of our 4.875% senior notes. See Note 6 to the Condensed Consolidated Financial Statements. 23
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Interest expense. Interest expense decreased for the three months ended
Income tax benefit. See Note 5 to the Condensed Consolidated Financial Statements.
Capital Resources and Liquidity
Although we cannot provide any assurance, we believe cash flows from operating activities and availability under our 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. Planned Capital Expenditures and Sales Volume. In 2022, we expect to spend approximately$1.30 to$1.45 billion in total capital expenditures, excluding amounts attributable to noncontrolling interest. We expect to fund our capital expenditures with cash generated from operations and, if required, borrowings under our credit facility. Because we are the operator of a high percentage of our developed acreage, the amount and timing of these capital expenditures are largely discretionary. We could choose to defer a portion of these planned 2022 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. Sales volume in 2022 is expected to be 1,950 Bcfe to 2,050 Bcfe. Operating Activities. Net cash provided by operating activities was$1,021 million for the three months endedMarch 31, 2022 compared to$400 million for the same period in 2021. The increase was due primarily to higher cash operating revenues and favorable timing of working capital payments, partly offset by net cash settlements paid on derivatives not designated as hedges and higher cash operating expenses. 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. 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" in our Annual Report on For m 10-K for the year endedDecember 31, 2021 .
Investing Activities. Net cash used in investing activities was
The following table summarizes our capital expenditures.
Three Months Ended March 31,
2022 2021
(Millions)
Reserve development $ 229 $ 189
Land and lease (a) 49 23
Capitalized overhead 12 13
Capitalized interest 6 4
Other production infrastructure 13 5
Other 1 4
Total capital expenditures 310 238
(Deduct) add: Non-cash items (b) (18) 13
Total cash capital expenditures $ 292 $
251
(a)Capital expenditures attributable to noncontrolling interest were
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(b)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.
Financing Activities. Net cash used in financing activities was $827 million for
the three months ended March 31, 2022 compared to $130 million for the same
period in 2021. For the three months ended March 31, 2022 , the primary use of
financing cash flows was repayment and retirement of debt, repurchase and
retirement of EQT common stock and payment of dividends, and the primary source
of financing cash flows was net proceeds from credit facility borrowings. For
the three months ended March 31, 2021 , the primary use of financing cash flows
was net repayments of debt.
See Note 6 to the Condensed Consolidated Financial Statements for further discussion of our debt and borrowings under our credit facility.
OnApril 20, 2022 , our Board of Directors declared a quarterly cash dividend of$0.125 per share of EQT common stock, payable onJune 1, 2022 , to shareholders of record at the close of business onMay 11, 2022 .
During
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 cash purchases in the open market or privately negotiated transactions. The amounts involved in any such transactions may be material.
Security Ratings and Financing Triggers
The table below reflects the credit ratings and rating outlooks assigned to our debt instruments as ofApril 22, 2022 . 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 Condensed Consolidated Financial Statements for a description of what is deemed investment grade. Rating agency Senior notes Outlook Moody's Investors Service (Moody's) Ba1 Stable Standard & Poor's Ratings Service (S&P) BBB- Stable Fitch Ratings Service (Fitch) BBB- Stable 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 credit facility, the interest rate on our 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 over the counter (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. As ofApril 22, 2022 , we had sufficient unused borrowing capacity, net of letters of credit, under our credit facility to satisfy any requests for margin deposit or other collateral that our counterparties are permitted to request of us pursuant to our OTC derivative instruments, midstream services contracts and other contracts. As ofApril 22, 2022 , such assurances could be up to approximately$1.0 billion , inclusive of letters of credit, OTC derivative instrument margin deposits and other collateral posted of approximately$0.8 billion in the aggregate. See Notes 3 and 6 to the Condensed Consolidated Financial Statements for further information. 25
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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 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 the 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 credit facility contains financial covenants that require us to have a total
debt to total capitalization ratio no greater than 65%. The calculation of this
ratio excludes the effects of accumulated other comprehensive loss. As of
March 31, 2022 , we were in compliance with all debt provisions and covenants
under our debt agreements.
See Note 6 to the Condensed Consolidated Financial Statements for a discussion of borrowings under our credit facility.
Commodity Risk Management
The substantial majority of our commodity risk management program is related to hedging sales of our produced natural gas. The overall objective of our hedging program is to protect cash flows from undue exposure to the risk of changing commodity prices. The derivative commodity instruments that we use are primarily swap, collar and option agreements. The following table summarizes the approximate volume and prices of our NYMEX hedge positions as ofApril 22, 2022 . The difference between the fixed price and NYMEX price is included in average differential presented in our price reconciliation in "Average Realized Price Reconciliation." The fixed price natural gas sales agreements can be physically or financially settled. Q2 2022 (a) Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2024 Hedged Volume (MMDth) 329 286 287 185 233 236 204 17 Hedged Volume (MMDth/d) 3.6 3.1 3.1 2.1 2.6 2.6 2.2 - Swaps, including Futures Volume (MMDth) 296 253 232 - 41 42 42 2 Avg. Price ($/Dth)$ 2.63 $ 2.34 $ 2.40 $ -$ 2.53 $ 2.53 $ 2.53 $ 2.67 Calls - Net Short Volume (MMDth) 101 102 102 162 192 194 127 15 Avg. Short Strike ($/Dth)$ 3.00 $ 3.05 $ 3.02 $ 8.07 $ 4.16 $ 4.16 $ 4.18 $ 3.11 Puts - Net Long Volume (MMDth) 32 32 54 184 191 193 162 15 Avg. Long Strike ($/Dth)$ 2.78 $ 2.68 $ 2.68 $ 3.77 $ 2.73 $ 2.73 $ 2.85 $ 2.45 Fixed Price Sales Volume (MMDth) 0.9 0.9 0.9 0.9 0.9 0.9 0.3 - Avg. Price ($/Dth)$ 2.38 $ 2.38 $ 2.38 $ 2.38 $ 2.38 $ 2.38 $ 2.38 $ - (a)April 1 through June 30 . For 2022 (April 1 through December 31 ), 2023 and 2024, we have natural gas sales agreements for approximately 14 MMDth, 88 MMDth and 11 MMDth, respectively, that include average NYMEX ceiling prices of$3.17 ,$2.84 and$3.21 , respectively. We entered into 455 MMDth per day of NYMEX swaps at a weighted average price of$6.05 that offset existing NYMEX swaps related to the first quarter of 2023 with a weighted average price of$2.53 . These positions have been excluded from the table above.
We have also entered into derivative instruments to hedge basis. We may use other contractual agreements to implement our commodity hedging strategy from time to time.
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See Item 3., "Quantitative and Qualitative Disclosures About Market Risk" and
Note 3 to the Condensed Consolidated Financial Statements for further discussion
of our hedging program.
Commitments and Contingencies
In the ordinary course of business, various legal and regulatory claims and
proceedings are pending or threatened against us. While the amounts claimed may
be substantial, we are unable to predict with certainty the ultimate outcome of
such claims and proceedings. We accrue legal and other direct costs related to
loss contingencies when actually incurred. We have established reserves that we
believe to be appropriate for pending matters and, after consultation with
counsel and giving appropriate consideration to available insurance, we believe
that the ultimate outcome of any pending matter involving us will not materially
affect our financial condition, results of operations or liquidity. See Note 16
to the Consolidated Financial Statements and Part I, Item 3., "Legal
Proceedings" in our Annual Report on Form 10-K for the year ended
December 31, 2021 for a discussion of our commitments and contingencies.
Recently Issued Accounting Standards
Our recently issued accounting standards are described in Note 1 to the Condensed Consolidated Financial Statements.
Critical Accounting Policies and Estimates
Our critical accounting policies, including a discussion regarding the estimation uncertainty and the impact that our critical accounting estimates have had, or are reasonably likely to have, on our financial condition or results of operations, are described in Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021. The application of our critical accounting policies may require us to make judgments and estimates about the amounts reflected in the Condensed Consolidated Financial Statements. We use historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.
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