SecProbe.io

CORRESP
1
filename1.htm

April 28, 2009

Mr. H. Christopher Owings

Assistant Director

Securities and Exchange Commission

CF/AD2 Mail Stop 3561

100 F Street, NE

Washington, D.C. 20549-3561

  Re:

  EQT Corporation

  Form 10-K for Fiscal
  Year Ended December 31, 2008

  Filed February 20,
  2009

  Proxy Statement on
  Schedule 14A

  Filed March 5, 2009

  File No. 1-3551

Dear Mr. Owings:

This letter is in response to your
letter dated April 13, 2009 to EQT Corporation (the Company).  Your letter included 35 comments to which the
Company responded below.  For your
convenience, we have set forth each comment and provided our responses
immediately after each comment.

Form 10-K for the Fiscal Year
Ended December 31, 2008

Item 1. Business, page 7

General, page 7

1.                               SEC COMMENT: In the second
paragraph on page nine we note your statement that “[i]f the capital
markets become unconstrained, the Company believes it has a long-term sales
volume growth potential of greater than 20% per year.”  We note a similar statement on page 43.  Please elaborate upon this statement and your
basis for your belief that if the capital markets become unconstrained you have
a long-term sales volume growth potential of greater than 20% per year.

COMPANY RESPONSE:  During 2008, the Company moved its horizontal
drilling program into large-scale development; drilling approximately 400
horizontal wells (as disclosed in the table on page 9 and in Management’s
Discussion and Analysis of Financial Condition and Results of Operations on page 28)
and obtaining long-term commitments for drilling equipment and

EQT Corporation   I
225 North Shore Drive  I  Pittsburgh, PA   15212-5860

T 412.553.5700   I  F
412.553.5757   I
www.eqt.com

Mr. H. Christopher Owings

April 28, 2009

Page 2

services to maintain and potentially
increase the size of this development program (as disclosed in Management’s
Discussion and Analysis of Financial Condition and Results of Operations on page 47
and the Notes to Consolidated Financial Statements, Note 20, Commitments and
Contingencies on page 97).   Natural
gas sales volumes increased 19% in the fourth quarter of 2008 compared to the
fourth quarter of 2007, primarily as a result of this increased drilling
program (as disclosed in the Form 8-K Current Report filed January 29,
2009, Equitable Resources Reports Year-End Earnings on page 8:  23,100 mcfe natural gas sold in 4Q08 vs.
19,386 mcfe natural gas sold 4Q07, an increase of 19.2%).  As disclosed in Management’s Discussion and
Analysis of Financial Condition and Results of Operations on pages 42-43,
given the current constraints in the capital markets, the Company plans to
drill approximately the same number of horizontal wells in 2009 as in 2008
which is forecast to result in sales volume growth of approximately 15%.  Gas sales volumes increased 18% from first
quarter 2008 to first quarter 2009 excluding the impact of the extra day in
2008. With unconstrained access to capital markets, the Company would have
committed more capital to the horizontal drilling program, increased the number
of horizontal wells drilled and forecast achieving and maintaining long-term
sales volume growth in excess of 20% per year.
The Company’s 3.4 million gross acres of mineral interests in the
Appalachian Basin and 1,215 bcfe of proved undeveloped natural gas reserves
disclosed in Properties on page 20 provide the opportunity to maintain
this increase in the horizontal drilling program for many years.

Item 2. Properties, page 19

2.                               SEC COMMENT: You state that
in 2008 you drilled your first Utica exploratory well but that it will not be
completed until 2010 after you drill another well.  Tell us if you have attributed proved
reserves to these wells and, if so, how much was attributed to each well.

COMPANY RESPONSE:  No
proved reserves are attributed to the drilled but not completed Utica well or
the proposed Utica well.

Item 7. Management’s Discussion and
Analysis of Financial Condition and Results. . . page 27

EQT Production, page 28

Overview, page 28

3.                               SEC COMMENT: Regarding the
Marcellus Shale, please tell us as of December 31, 2008 the following:

Mr. H. Christopher Owings

April 28, 2009

Page 3

·                  how many proved reserves,
if any, you have attributed to the Marcellus Shale;

·                  how many wells you have
drilled into this formation;

·                  how many of these wells are
producing from the Marcellus Shale and the rates they were producing; and

·                  the number of proved
undeveloped reserves and locations you have also classified as proved.

COMPANY RESPONSE:  As
disclosed in the Company’s press release on natural gas reserves issued January 29,
2009 (which was neither furnished to nor filed with the SEC), total proved
reserves as of December 31, 2008 for Marcellus Shale were 77 bcfe, of
which 23 bcfe were proved developed reserves and 54 bcfe were proved
undeveloped (PUD) reserves.

As of December 31, 2008, 23 wells had been drilled in
this formation as disclosed in the table on page 9 of the Company’s Form 10-K
for the year ended December 31, 2008.

Of the 23 wells drilled in 2008, 12
were producing as of December 31, 2008, at rates ranging from 100 mcfd to
1,000 mcfd.

As of December 31, 2008 there
were a total of approximately 50 proved undeveloped locations included in the
Company’s reserve report with total net reserves of 54 bcfe.

Equitable Distribution, page 37

Overview, page 37

4.          SEC COMMENT:  Please expand this
section to elaborate on known material trends and uncertainties that will have,
or are reasonably likely to have, a
material impact on your revenues or income or result in your liquidity
decreasing or increasing in any material way. In doing so, provide additional
information about the quality and variability your earnings and cash flows so
that investors can ascertain the likelihood of the extent past performance is
indicative of future performance. In addition, please discuss in reasonable
detail:

·                  economic or industry-wide factors
relevant to your company, and

·                  material opportunities,
challenges and risks in
the short and long term and the actions you are taking to address them.

For example, we note your
disclosure on page 12 that states you saw

Mr. H. Christopher Owings

April 28, 2009

Page 4

a reduction in FRAC spreads
and in your storage and commercial margins in the latter half of 2008. Please
explain what market condition caused these reductions, the effect these
reductions will have on your profit margins and if you expect further
reductions or an increase in these spreads. We also note your statement on page 39
and elsewhere in your filing that a continued downturn will raise your bad debt
expense. To the extent material, you should discuss the impact this possible
bad debt expense may have on your operations and liquidity. See Item 303 of
Regulation S-K and
SEC Release No. 33-8350.

COMPANY RESPONSE:  With respect to the Company’s Equitable
Distribution segment, known material trends and uncertainties are discussed in
the Outlook portion of Management’s Discussion and Analysis of Financial
Condition and Results of Operations on page 39.  These trends and uncertainties include the
base rate case for the Company’s Equitable Gas subsidiary which was pending as
of the filing date of the Form 10-K and the potential impact of a
prolonged economic downturn on customer usage and collections.  There are no other known material trends and
uncertainties that will have, or are reasonably
likely to have, a material impact on revenues or income or result in liquidity
decreasing or increasing in any material way related to this segment.

The Company believes any likely
changes to either usage or collections will not have a material impact on the
operations, financial position or liquidity of the Company.  In 2008, distribution bad debt expense was
$5.6 million, which represents 1.2% of EQT Corporation operating income. As
discussed on page 37 of the Company’s Form 10-K, Equitable Gas
Company’s tariff provides a recovery mechanism for customer assistance program
expenses, including bad debt expense, for customers who have an inability to
pay. For these reasons, the Company does not believe that bad debt expense will
increase to the point that it would have a material impact on operations or
liquidity.  Further, the Company had not
yet experienced significant changes in either usage or collections as of the
filing date of the Form 10-K; therefore providing information as to the
materiality of potential changes which might be caused by a prolonged economic
downturn was viewed as speculative and not meaningful.  In future filings, if they have had or are
expected to have a material impact on operations or liquidity, the Company will
provide in its Distribution segment operations analysis information regarding
changes in usage or collections, their impact on net revenues and operating
income and the outlook for these items and related financial results.  Until these items have or the Company expects
them to have a material impact, the Company does not plan to discuss the impact
of possible bad debt expenses in future filings.

Mr. H. Christopher Owings

April 28, 2009

Page 5

As discussed on page 12 of the
Company’s Form 10-K for the year ended December 31, 2008, in a discussion
of the markets and customers of the Midstream segment, the frac spread
represents the price differential, on a per unit energy basis, between liquid
hydrocarbons and natural gas.  The
decline in the frac spread in the second half of 2008 was the result of
declines in the overall commodity market which affected crude oil, propane and
other hydrocarbon products more quickly than natural gas.  This decline in the frac spread resulted in
reduced net revenues and operating income for the Company’s natural gas
processing operations.  Overall, the
natural gas processing business is a relatively small part of the Company’s
business, with 2008 net operating revenues of $18.8 million, or 2% of total EQT
net operating revenues. In future filings, if it has had or is expected to have
a material impact on operations or liquidity, the Company will discuss in its
Midstream segment operations analysis the specific market conditions affecting
the frac spread, its impact on net revenues and operating income and the outlook
for the spread and related financial results.
Until these items have or the Company expects them to have a material
impact, the Company does not plan to discuss changes in the frac spread in
future filings.

The Company believes that it has
addressed in its Form 10-K and will continue to address in future filings,
all known material trends and uncertainties that will have, or are reasonably likely to have, a
material impact on revenues or income or result in liquidity decreasing or
increasing in any material way related to any segment or to the Company as a
whole.

Fiscal Year-Ended December 31,
2008 vs. December 31, 2007, page 38

5.                               SEC COMMENT: We note your
statement on page 38 that your commercial and industrial revenues
increased, in part, due to an increase in usage by one industrial customer.
Please state whether you expect this customer’s increased level of usage to
continue and if not, the effect it would have upon your commercial and
industrial revenues.

COMPANY RESPONSE:
High volume industrial sales have very low margins and did not
significantly impact total net operating revenues. (See page 39 of the Form 10-K.)
The Company includes the description of the changes in industrial sales levels
in order to explain the variances in commercial and industrial sales volume and
total operating revenues in the operational and financial data table on page 38,
despite the fact that these increases in usage have very little impact on net
operating revenue. The Company is unable to predict the level of usage for this
customer as its usage varies depending on the customer’s production process and
industry dynamics.  However, the Company
does not expect future fluctuations in industrial customer usage to

Mr. H. Christopher Owings

April 28, 2009

Page 6

have a material impact on net operating revenues as these
industrial sales have low profit margins. In future filings, the Company will
include the reminder that large volume industrial sales have very low margins
in each period in which the revenue and sales volume fluctuations occur.

Other items, page 45

Pension Plans, page 46

6.                               SEC COMMENT: We note that
you made cash contributions to your pension plan of approximately $3.4 million,
$1.3 million and $1.8 million during 2008, 2007 and 2006. We also note that you
expect to make a cash payment of $15 million to your pension in 2009, a notable
increase over previous years. Please describe the reason for this increase and
the impact, if any, that recent market conditions have had on your pension
funding obligations.

COMPANY RESPONSE:  The $15 million pension funding obligation
for 2009 included $5 million in final payments for the settlement of pension
obligations described by the Company on page 46 and $10 million of
expected contributions, including those necessary to meet requirements of the
80% funding level, as described on page 47, in Management’s Discussion and
Analysis of Financial Condition and Results of Operations.  A portion of the $10 million expected
contribution was as a result of losses sustained by the Plan as a result of
current market conditions. In general, the Company does not consider pension
obligations, including liabilities, expenses and cash contributions to be
material to the financial statements because: the pension and other
post-retirement benefit liabilities and assets recognized in the Consolidated
Balance Sheet represent only 2% of total liabilities and 1% of total assets,
the expected pension contributions of $15 million for 2009, including final
funding of the 2008 Kentucky West Virginia Gas Company employee settlement, are
less than 1% of 2008 cash provided by operating activities,  and the 2008 benefit cost for pensions and
other post-retirement benefit plans, excluding the settlement of the former
Kentucky West Virginia plan, was only 1% of 2008 income from continuing
operations before income taxes.  The
impact of recent market conditions is identified for investors in the loss on
plan assets of $16.8 million which is disclosed in Notes to Consolidated
Financial Statements, Note 14, Pension and Other Post-retirement Benefit Plans
on page 87.  Because only 35 of the
Company’s nearly 1700 employees are eligible for defined benefit pension
benefits, the Company does not expect that pension obligations or fluctuations
in funding requirements will become material in the future. In future filings,
if material changes in funding obligations occur, the Company will clearly
state the underlying conditions which result in material changes.

Mr. H. Christopher Owings

April 28, 2009

Page 7

Financial Statements for the Fiscal
Year Ended December 31, 2008

Statements of Consolidated Income, page 58

7.                               SEC COMMENT:  We note your presentation of Cost of Sales
and the subtotal titled Net Operating Revenues and have the following comments:

·                  Please tell us, and disclose to your readers somewhere appropriate in
your filing, a description of the types of costs that you classify as Cost of
Sales.

·                  If your Cost of Sales are solely the costs that you capitalize as
Inventory, which we read on page 63, are comprised of natural gas stored
underground and materials and supplies, please tell us how you considered
whether you incur any other costs in providing your products and services that
should be capitalized as Inven