UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM TO
	COMMISSION FILE NUMBER	001-38629

EQUITRANS MIDSTREAM CORPORATION

(Exact name of registrant as specified in its charter) 

Pennsylvania	83-0516635
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2200 Energy Drive, Canonsburg, Pennsylvania     15317

(Address of principal executive offices)     (Zip code)

(724) 271-7600

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	ETRN	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐	Emerging Growth Company	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        Yes  ☐  No  ☒

The number of shares of common stock outstanding (in thousands), as of October 31, 2021: 432,501

EQUITRANS MIDSTREAM CORPORATION

Index

			Page No.
Glossary of Commonly Used Terms, Abbreviations and Measurements			3
Part I.	Financial Information:
Item 1.		Financial Statements (Unaudited):
		Statements of Consolidated Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020	5
		Statements of Consolidated Cash Flows for the Nine Months Ended September 30, 2021 and 2020	7
		Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	8
		Statements of Consolidated Equity and Mezzanine Equity for the Three and Nine Months Ended September 30, 2021 and 2020	9
		Notes to Consolidated Financial Statements	11
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.		Controls and Procedures	49
Part II.	Other Information:
Item 1.		Legal Proceedings	50
Item 1A.		Risk Factors	54
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 6.		Exhibits	58
Signature			59

2

EQUITRANS MIDSTREAM CORPORATION

Glossary of Commonly Used Terms, Abbreviations and Measurements

2021 Water Services Agreement – that certain mixed-use water services agreement entered into on October 22, 2021 (the 2021 Water Services Agreement) by the Company and EQT which replaced the Water Services Letter Agreement (as defined below) and certain other existing Pennsylvania water services agreements.

Allowance for Funds Used During Construction (AFUDC) – carrying costs for the construction of certain long-lived regulated assets are capitalized and amortized over the related assets' estimated useful lives. The capitalized amount for construction of regulated assets includes interest cost and a designated cost of equity for financing the construction of these regulated assets.

Appalachian Basin – the area of the United States composed of those portions of West Virginia, Pennsylvania, Ohio, Maryland, Kentucky and Virginia that lie in the Appalachian Mountains.

British thermal unit – a measure of the amount of energy required to raise the temperature of one pound of water one-degree Fahrenheit.

delivery point – the point where gas is delivered into a downstream gathering system or transmission pipeline.

EQM – EQM Midstream Partners, LP and its subsidiaries.

EQT – EQT Corporation (NYSE: EQT) and its subsidiaries.

EQT Global GGA – that certain Gas Gathering and Compression Agreement entered into on February 26, 2020 (the EQT Global GGA Effective Date) by the Company with EQT and certain affiliates of EQT for the provision of certain gas gathering services to EQT in the Marcellus and Utica Shales of Pennsylvania and West Virginia, as subsequently amended.

firm contracts – contracts for gathering, transmission, storage and water services that reserve an agreed upon amount of pipeline or storage capacity regardless of the capacity used by the customer during each month, and generally obligate the customer to pay a fixed, monthly charge.

firm reservation fee revenues – contractually obligated revenues that include fixed monthly charges under firm contracts and fixed volumetric charges under MVC (as defined below) contracts.

gas – natural gas.

minimum volume commitments (MVC or MVCs) – contracts for gathering or water services that obligate the customer to pay for a fixed amount of volumes daily, monthly, annually or over the life of the contract.

Mountain Valley Pipeline (MVP) – an estimated 300-mile, 42-inch diameter natural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day that will span from the Company's existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia, providing access to the growing Southeast demand markets.

Mountain Valley Pipeline, LLC (MVP Joint Venture) – a joint venture among the Company and, as applicable, affiliates of each of NextEra Energy, Inc., Consolidated Edison, Inc. (Con Edison), AltaGas Ltd. and RGC Resources, Inc. that is constructing the MVP and the MVP Southgate (as defined below) projects.

MVP Southgate – a proposed 75-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina.

natural gas liquids (NGLs) – those hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption, condensation, adsorption or other methods in gas processing plants. Natural gas liquids include ethane, propane, butane and iso-butane.

Preferred Interest – the preferred interest that the Company has in EQT Energy Supply, LLC (EES), a subsidiary of EQT.

throughput – the volume of natural gas transported or passing through a pipeline, plant, terminal or other facility during a particular period.

Water Services Letter Agreement – that certain letter agreement entered into on February 26, 2020 by the Company and EQT, pursuant to which EQT agreed to utilize the Company for the provision of water services in Pennsylvania under existing

3

water services agreements and new water services agreements if negotiated between the parties, which letter agreement was replaced by the 2021 Water Services Agreement.

wellhead – the equipment at the surface of a well used to control the well's pressure and the point at which the hydrocarbons and water exit the ground. 

Unless the context otherwise requires, a reference to a “Note” herein refers to the accompanying Notes to Consolidated Financial Statements contained in Part I, "Item 1. Financial Statements."

Abbreviations	Measurements
ASC – Accounting Standards Codification	Btu = one British thermal unit
ASU – Accounting Standards Update	BBtu = billion British thermal units
EPA – U.S. Environmental Protection Agency	Bcf   = billion cubic feet
FASB – Financial Accounting Standards Board	Mcf = thousand cubic feet
FERC – U.S. Federal Energy Regulatory Commission	MMBtu = million British thermal units
GAAP – United States Generally Accepted Accounting Principles	MMcf  = million cubic feet
NGA – Natural Gas Act of 1938	MMgal  = million gallons
NYMEX – New York Mercantile Exchange
NYSE – New York Stock Exchange
SEC – U.S. Securities and Exchange Commission

4

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

EQUITRANS MIDSTREAM CORPORATION

 Statements of Consolidated Comprehensive Income (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Thousands, except per share amounts)
Operating revenues (a)	$	342,074	$	350,000	$	1,070,365	$	1,143,703
Operating expenses:
Operating and maintenance	38,743		33,905		111,004		113,990
Selling, general and administrative	33,560		31,626		104,536		94,186
Transaction costs	—		984		—		23,797
Depreciation	66,021		66,772		203,954		191,271
Amortization of intangible assets	16,204		16,204		48,614		46,990
Impairments of long-lived assets (b)	—		—		56,178		55,581
Total operating expenses	154,528		149,491		524,286		525,815
Operating income	187,546		200,509		546,079		617,888
Equity income (c)	8,461		60,917		14,385		171,233
Other income (d)	21,199		21,864		38,251		39,006
Loss on extinguishment of debt (e)	—		—		41,025		24,864
Net interest expense (a)	94,101		86,411		284,887		219,960
Income before income taxes	123,105		196,879		272,803		583,303
Income tax expense	32,200		28,440		65,180		81,846
Net income	90,905		168,439		207,623		501,457
Net income attributable to noncontrolling interests	3,557		3,973		10,479		210,765
Net income attributable to Equitrans Midstream	87,348		164,466		197,144		290,692
Preferred dividends (f)	14,628		14,628		43,884		44,132
Net income attributable to Equitrans Midstream common shareholders	$	72,720	$	149,838	$	153,260	$	246,560
Earnings per share of common stock attributable to Equitrans Midstream common shareholders - basic (g)	$	0.17	$	0.35	$	0.35	$	0.78
Earnings per share of common stock attributable to Equitrans Midstream common shareholders - diluted (g)	$	0.17	$	0.35	$	0.35	$	0.78
Weighted average common shares outstanding - basic	433,017		432,773		433,001		314,411
Weighted average common shares outstanding - diluted	433,675		432,821		433,412		314,411
Statement of comprehensive income:
Net income	$	90,905	$	168,439	$	207,623	$	501,457
Other comprehensive income, net of tax:
Pension and other post-retirement benefits liability adjustment, net of tax expense of $12, $10, $36, and $30	34		30		103		90
Other comprehensive income	34		30		103		90
Comprehensive income	90,939		168,469		207,726		501,547
Less: Comprehensive income attributable to noncontrolling interests	3,557		3,973		10,479		210,765
Less: Comprehensive income attributable to preferred dividends (f)	14,628		14,628		43,884		44,132
Comprehensive income attributable to Equitrans Midstream common shareholders	$	72,754	$	149,868	$	153,363	$	246,650
Dividends declared per common share	$	0.15	$	0.15	$	0.45	$	0.45

5

(a)Includes related party activity with EQT Corporation (EQT). See Note 6.

(b)See Note 3 for disclosure regarding impairments of long-lived assets.

(c)Represents equity income from Mountain Valley Pipeline, LLC (the MVP Joint Venture). See Note 7.

(d)See Note 9 for disclosures regarding derivative instruments.

(e)See Note 8 for disclosure regarding loss on extinguishment of debt.

(f)See Note 2 for disclosure regarding the Equitrans Midstream Preferred Shares (as defined in Note 2).

(g)See Note 10 for disclosure regarding the Company's calculation of net income per share of common stock (basic and diluted).

The accompanying notes are an integral part of these consolidated financial statements.

6

EQUITRANS MIDSTREAM CORPORATION

Statements of Consolidated Cash Flows (Unaudited)

	Nine Months Ended September 30,
	2021		2020
	(Thousands)
Cash flows from operating activities:
Net income	$	207,623	$	501,457
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	203,954		191,271
Amortization of intangible assets	48,614		46,990
Deferred income taxes	61,267		79,415
Impairments of long-lived assets	56,178		55,581
Equity income	(14,385)		(171,233)
Other income	(38,160)		(38,403)
Loss on extinguishment of debt	41,025		24,864
Non-cash long-term compensation expense	10,590		9,388
Changes in other assets and liabilities:
Accounts receivable	73,348		(11,021)
Accounts payable	(1,765)		3,151
Accrued interest	(48,893)		(5,592)
Deferred revenue	225,315		148,770
Other assets and other liabilities	(2,687)		(10,443)
Net cash provided by operating activities	822,024		824,195
Cash flows from investing activities:
Capital expenditures	(211,072)		(377,592)
Capital contributions to the MVP Joint Venture	(178,953)		(144,264)
Principal payments received on the Preferred Interest (as defined in Note 6)	3,885		3,726
Net cash used in investing activities	(386,140)		(518,130)
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings	457,500		1,965,000
Payments on revolving credit facility borrowings	(600,000)		(2,080,000)
Proceeds from the issuance of long-term debt	1,900,000		1,600,000
Debt discounts, debt issuance costs and credit facility arrangement fees	(29,904)		(26,720)
Payment for retirement of long-term debt	(1,936,250)		(594,000)
Redemption of EQM Series A Preferred Units (as defined in Note 2)	—		(617,338)
Distributions paid to noncontrolling interest EQM unitholders	—		(128,770)
Distributions paid to holders of EQM Series A Preferred Units	—		(61,931)
Dividends paid to holders of Equitrans Midstream Preferred Shares	(43,884)		(2,251)
Dividends paid to common shareholders	(194,624)		(213,524)
Cash Shares and Cash Amount (as defined in Note 5)	—		(52,323)
Distributions to Eureka Midstream Holdings, LLC non-controlling member	(2,500)		—
Net cash used in financing activities	(449,662)		(211,857)
Net change in cash and cash equivalents	(13,778)		94,208
Cash and cash equivalents at beginning of period	208,023		88,322
Cash and cash equivalents at end of period	$	194,245	$	182,530
Cash paid during the period for:
Interest, net of amount capitalized	$	326,456	$	221,918
Non-cash activity during the period for:
Issuance of Equitrans Midstream common stock pursuant to the EQM Merger (as defined in Note 2), net of tax	$	—	$	2,736,229
Issuance of Equitrans Midstream Preferred Shares pursuant to the Restructuring Agreement (as defined in Note 2)	—		667,214
Contract liability	—		121,483

The accompanying notes are an integral part of these consolidated financial statements.

7

EQUITRANS MIDSTREAM CORPORATION

Consolidated Balance Sheets (Unaudited) 

	September 30, 2021		December 31, 2020
	(Thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	194,245	$	208,023
Accounts receivable (net of allowance for credit losses of $2,868 and $4,699 as of September 30, 2021 and December 31, 2020, respectively) (a)	238,542		290,446
Other current assets (a)	53,047		63,268
Total current assets	485,834		561,737
Property, plant and equipment	8,929,199		8,835,652
Less: accumulated depreciation	(1,155,982)		(1,007,756)
Net property, plant and equipment	7,773,217		7,827,896
Investment in unconsolidated entity	3,089,091		2,796,316
Goodwill	486,698		486,698
Net intangible assets	667,976		716,590
Other assets (a)	365,586		336,615
Total assets	$	12,868,402	$	12,725,852
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of revolving credit facility borrowings (b)	$	—	$	302,500
Accounts payable	64,226		72,098
Capital contributions payable to the MVP Joint Venture	108,231		10,723
Accrued interest	77,298		126,191
Accrued liabilities	68,484		83,366
Total current liabilities	318,239		594,878
Long-term liabilities:
Revolving credit facility borrowings (c)	645,000		485,000
Long-term debt	6,432,186		6,443,312
Contract liability (a)(d)	622,992		398,750
Deferred income tax liability	410,128		345,896
Regulatory and other long-term liabilities	98,870		94,902
Total liabilities	8,527,415		8,362,738
Mezzanine equity:
Equitrans Midstream Preferred Shares, 30,018 shares issued and outstanding as of September 30, 2021 and December 31, 2020 (e)	681,842		681,842
Shareholders' equity:
Common stock, no par value, 432,522 and 432,470 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	3,952,896		3,941,295
Retained deficit	(770,769)		(728,959)
Accumulated other comprehensive loss	(2,126)		(2,229)
Total common shareholders' equity	3,180,001		3,210,107
Noncontrolling interests	479,144		471,165
Total shareholders' equity	3,659,145		3,681,272
Total liabilities, mezzanine equity and shareholders' equity	$	12,868,402	$	12,725,852

(a)Includes related party activity with EQT. See Note 6.

(b)Includes aggregate borrowings outstanding on the Former Eureka Credit Facility (as defined in Note 8) as of December 31, 2020. See Note 8 for further detail.

(c)Includes aggregate borrowings outstanding on the Amended EQM Credit Facility (as defined in Note 8) as of September 30, 2021 and on the First Amended EQM Credit Facility (as defined in Note 8) as of December 31, 2020 and aggregate borrowings outstanding on the 2021 Eureka Credit Facility (as defined in Note 8) as of September 30, 2021. See Note 8 for further detail.

(d)See Note 5 for disclosure regarding the Company's contract liabilities.

(e)See Note 2 for disclosures regarding the Equitrans Midstream Preferred Shares.

The accompanying notes are an integral part of these consolidated financial statements.

8

EQUITRANS MIDSTREAM CORPORATION

Statements of Consolidated Shareholders' Equity and Mezzanine Equity (Unaudited)

												Mezzanine
	Common Stock											Equity
						Accumulated						Equitrans
						Other						Midstream
	Shares	No		Retained		Comprehensive		Noncontrolling		Total		Preferred
	Outstanding	Par Value		Deficit		Loss		Interests		Equity		Shares
	(Thousands, except per share and unit amounts)
Balance at January 1, 2020	254,745	$	1,292,804	$	(618,062)	$	(2,026)	$	4,609,364	$	5,282,080	$	—
Other comprehensive income (net of tax):
Net income	—	—		69,732		—		119,828		189,560		—
Pension and other post-retirement benefits liability adjustment, net of tax expense of $10	—	—		—		30		—		30		—
Dividends on common shares ($0.45 per share)	(178)	—		(115,400)		—		—		(115,400)		—
Share-based compensation plans	85	4,500		—		—		285		4,785		—
Distributions paid to noncontrolling interest unitholders ($1.16 per common unit for EQM)	—	—		—		—		(96,526)		(96,526)		—
Distributions paid to holders of EQM Series A Preferred Units ($1.0364 per EQM Series A Preferred Unit)	—	—		—		—		(25,501)		(25,501)		—
Share Purchase Agreements (as defined in Note 5)	(25,300)	—		(190,992)		—		—		(190,992)		—
Adoption of Topic 326	—	—		(3,718)		—		—		(3,718)		—
Balance at March 31, 2020	229,352	$	1,297,304	$	(858,440)	$	(1,996)	$	4,607,450	$	5,044,318	$	—
Other comprehensive income (net of tax):
Net income	—	—		54,243		—		86,964		141,207		2,251
Pension and other post-retirement benefits liability adjustment, net of tax expense of $10	—	—		—		30		—		30		—
Dividends on common shares ($0.15 per share)	—	—		(34,634)		—		—		(34,634)		—
Share-based compensation plans	(20)	1,856		—		—		—		1,856		—
Distributions paid to noncontrolling interest unitholders ($0.3875 per common unit for EQM)	—	—		—		—		(32,244)		(32,244)		—
Distributions paid to holders of EQM Series A Preferred Units ($1.0364 per EQM Series A Preferred Unit)	—	—		—		—		(25,501)		(25,501)		—
Partial period distributions on EQM Series A Preferred Units converted in the EQM Merger	—	—		—		—		(10,929)		(10,929)		—
Redemption of EQM Series A Preferred Units	—	—		(27,253)		—		(590,085)		(617,338)		—
Restructuring Agreement	—	(82,717)		—		—		(579,157)		(661,874)		667,214
EQM Merger	203,137	2,736,229		—		—		(2,993,453)		(257,224)
Balance at June 30, 2020	432,469	$	3,952,672	$	(866,084)	$	(1,966)	$	463,045	$	3,547,667	$	669,465
Other comprehensive income (net of tax):
Net income	—	—		149,838		—		3,973		153,811		14,628
Pension and other post-retirement benefits liability adjustment, net of tax expense of $10	—	—		—		30		—		30		—
Dividends on common shares ($0.15 per share)	—	—		(65,117)		—		—		(65,117)		—
Share-based compensation plans	1	3,262		—		—		—		3,262		—
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.075 per share)	—	—		—		—		—		—		(2,251)
Balance at September 30, 2020	432,470	$	3,955,934	$	(781,363)	$	(1,936)	$	467,018	$	3,639,653	$	681,842

9

												Mezzanine
												Equity
	Common Stock
						Accumulated						Equitrans
						Other						Midstream
	Shares	No		Retained		Comprehensive		Noncontrolling		Total		Preferred
	Outstanding	Par Value		Deficit		Loss		Interests		Equity		Shares
	(Thousands, except per share amounts)
Balance at January 1, 2021	432,470	$	3,941,295	$	(728,959)	$	(2,229)	$	471,165	$	3,681,272	$	681,842
Other comprehensive income (net of tax):
Net income	—	—		58,055		—		3,914		61,969		14,628
Pension and other post-retirement benefits liability adjustment, net of tax expense of $12	—	—		—		34		—		34		—
Dividends on common shares ($0.15 per share)	—	—		(64,984)		—		—		(64,984)		—
Share-based compensation plans, net	28	4,662		—		—		—		4,662		—
Distributions paid to noncontrolling interest in Eureka Midstream Holdings, LLC	—	—		—		—		(2,500)		(2,500)		—
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)	—	—		—		—		—		—		(14,628)
Balance at March 31, 2021	432,498	$	3,945,957	$	(735,888)	$	(2,195)	$	472,579	$	3,680,453	$	681,842
Other comprehensive income (net of tax):
Net income	—	—		22,485		—		3,008		25,493		14,628
Pension and other post-retirement benefits liability adjustment, net of tax expense of $12	—	—		—		35		—		35		—
Dividends on common shares ($0.15 per share)	—	—		(64,750)		—		—		(64,750)		—
Share-based compensation plans, net	7	3,635		—		—		—		3,635		—
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)	—	—		—		—		—		—		(14,628)
Balance at June 30, 2021	432,505	$	3,949,592	$	(778,153)	$	(2,160)	$	475,587	$	3,644,866	$	681,842
Other comprehensive income (net of tax):
Net income	—	—		72,720		—		3,557		76,277		14,628
Pension and other post-retirement benefits liability adjustment, net of tax expense of $12	—	—		—		34		—		34		—
Dividends on common shares ($0.15 per share)	—	—		(65,336)		—		—		(65,336)		—
Share-based compensation plans	17	3,304		—		—		—		3,304		—
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)	—	—		—		—		—		—		(14,628)
Balance at September 30, 2021	432,522	$	3,952,896	$	(770,769)	$	(2,126)	$	479,144	$	3,659,145	$	681,842

The accompanying notes are an integral part of these consolidated financial statements.

10

EQUITRANS MIDSTREAM CORPORATION

Notes to Consolidated Financial Statements (Unaudited)

1.    Financial Statements

Nature of Business. The Company provides midstream services to its customers in Pennsylvania, West Virginia and Ohio through its three primary assets: the gathering system, which includes predominantly dry gas gathering systems of high-pressure gathering lines; the transmission system, which includes FERC-regulated interstate pipelines and storage systems; and the water network, which consists of water pipelines, impoundment facilities, above ground storage facilities, pumping stations, take point facilities and measurement facilities that provide water delivery, gathering and storage services that support well completion activities and produced water flowback for recycling.

Basis of Presentation. References in these financial statements to Equitrans Midstream or the Company refer collectively to Equitrans Midstream Corporation and its consolidated subsidiaries for all periods presented, unless otherwise indicated.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) for interim financial information and with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements include all adjustments (consisting of only normal, recurring adjustments, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of the Company as of September 30, 2021, the results of its operations and equity for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020. The consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements at that date, but it does not include all of the information and notes required by GAAP for complete financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which includes all disclosures required by GAAP.

Due to, among other things, the seasonal nature of the Company's utility customer contracts, as well as producers’ well completion activities and varying needs for fresh and produced water (which are partially driven by horizontal lateral lengths and the number of completion stages per well), the interim statements for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

For further information, refer to the Company's annual consolidated financial statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, as well as Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein.

The consolidated financial statements as of and for the three and nine months ended September 30, 2021 and 2020, and the consolidated balance sheet at December 31, 2020, reflect the closing of the EQM Merger and the Restructuring (each as defined in Note 2). See Note 2 for further information.

Recently Issued Accounting Standards.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for the Amended EQM Credit Facility and the 2021 Eureka Credit Facility (each as defined in Note 8), as well as for each dividend following March 31, 2024 for the Equitrans Midstream Preferred Shares, which each use the London Inter-Bank Offered Rate (LIBOR) as a reference rate. The ASU was effective immediately but is only available through December 31, 2022. The Company is currently evaluating the potential impact of this standard on its financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments will be effective for fiscal years beginning after December 15, 2021. Early adoption is permitted for fiscal years beginning after December 15, 2020. Adoption of the guidance must commence at the beginning of the annual fiscal year. The Company is currently evaluating the potential impact of this standard on its financial statements.

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2.    Investments in Consolidated, Non-Wholly Owned Entities

EQM Merger. On June 17, 2020, pursuant to that certain Agreement and Plan of Merger, dated as of February 26, 2020, by and among the Company, EQM LP Corporation, a wholly owned subsidiary of the Company (EQM LP), LS Merger Sub, LLC, a wholly owned subsidiary of EQM LP (Merger Sub), EQM and EQGP Services, LLC, the general partner of EQM (the EQM General Partner), Merger Sub merged with and into EQM (the EQM Merger), with EQM continuing and surviving as an indirect, wholly owned subsidiary of the Company. Upon consummation of the EQM Merger, the Company acquired all of the outstanding EQM common units representing limited partner interests in EQM (EQM common units) that the Company and its subsidiaries did not already own. Following the closing of the EQM Merger, EQM was no longer a publicly traded entity.

At the effective time of the EQM Merger (the Effective Time), subject to applicable tax withholding, (i) each outstanding EQM common unit, other than EQM common units owned by the Company and its subsidiaries, was converted into the right to receive 2.44 shares of Equitrans Midstream common stock (the Merger Consideration); (ii) (x) $600.0 million aggregate principal amount of the Series A Perpetual Convertible Preferred Units representing limited partner interests in EQM (such units, EQM Series A Preferred Units) issued and outstanding immediately prior to the Effective Time were redeemed by EQM for cash at 101% of the EQM Series A Preferred Unit purchase price of $48.77 per such unit (the EQM Series A Preferred Unit Purchase Price) plus any accrued and unpaid distribution amounts and partial period distribution amounts, and (y) immediately following such redemption, each remaining issued and outstanding EQM Series A Preferred Unit was exchanged for 2.44 shares of a newly authorized and created series of preferred stock, without par value, of Equitrans Midstream, convertible into Equitrans Midstream common stock (the Equitrans Midstream Preferred Shares) on a one for one basis, in each case, in connection with the occurrence of the "Series A Change of Control" (as defined in the Fourth Amended and Restated Agreement of Limited Partnership of EQM (as amended, the Former EQM Partnership Agreement)) that occurred upon the closing of the EQM Merger; and (iii) each outstanding phantom unit relating to an EQM common unit issued pursuant to the Amended and Restated EQGP Services, LLC 2012 Long-Term Incentive Plan, dated as of February 22, 2019 (the EQM LTIP), and any other award issued pursuant to the EQM LTIP, whether vested or unvested, was converted into the right to receive, with respect to each EQM common unit subject thereto, the Merger Consideration (plus any accrued but unpaid amounts in relation to distribution equivalent rights). The limited partner interests in EQM owned by the Company and its subsidiaries remained outstanding as limited partner interests in the surviving entity. The EQM General Partner continued to own the non-economic general partner interest in the surviving entity.

No fractional shares of Equitrans Midstream common stock were issued in the EQM Merger; instead, all fractions of Equitrans Midstream common stock to which an EQM common unitholder otherwise would have been entitled were aggregated and the resulting fraction was rounded up to the nearest whole share of Equitrans Midstream common stock.

In connection with the EQM Merger at the Effective Time, the Company's omnibus and secondment agreements with EQM and certain other subsidiaries of the Company terminated, subject to the survival of certain license rights and indemnification obligations.

Because the Company controlled EQM both before and after the EQM Merger, the increase in the Company’s ownership interest in EQM resulting from the EQM Merger was accounted for as an equity transaction and reflected as a reduction of the noncontrolling interest associated with public ownership of EQM common units, offset by an increase in common stock, no par value, during the second quarter of 2020. No gain or loss was recognized in the Company’s statements of consolidated comprehensive income as a result of the EQM Merger. In addition, the tax effects of the EQM Merger were reported as adjustments to deferred income taxes and Equitrans Midstream common stock, consistent with ASC 740, Income Taxes.

Immediately prior to the completion of the EQM Merger, the public limited partners collectively owned a 40.1% interest in EQM, excluding the impact of the EQM Series A Preferred Units. The publicly-owned EQM common units were reflected within noncontrolling interest in the Company's consolidated balance sheets prior to completion of the EQM Merger. The portion of EQM earnings attributable to publicly held EQM common units prior to completion of the EQM Merger was reflected in net income attributable to noncontrolling interests in the Company's statements of consolidated comprehensive income.

During the second quarter of 2020, as a result of the EQM Merger, the Company recorded, in the aggregate, a $2.7 billion increase of common stock, no par value, a decrease in noncontrolling interest of $3.0 billion and an increase in deferred tax liability of $257.2 million.

The Company recorded $1.0 million and $23.8 million in expenses related to the EQM Merger and the EQT Global GGA (as defined in Note 3) during the three and nine months ended September 30, 2020, respectively. The expenses primarily included advisor, legal and accounting fees related to the transactions and are included in transaction costs in the statements of consolidated comprehensive income.

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Preferred Restructuring Agreement. On February 26, 2020, the Company and EQM entered into a Preferred Restructuring Agreement (the Restructuring Agreement) with all of the holders of the EQM Series A Preferred Units (such investors, collectively, the Investors), pursuant to which, at the Effective Time: (i) EQM redeemed $600 million aggregate principal amount of the Investors' EQM Series A Preferred Units issued and outstanding immediately prior to the Restructuring Closing (as defined below), which occurred substantially concurrent with the closing of the EQM Merger, for cash at 101% of the EQM Series A Preferred Unit Purchase Price plus any accrued and unpaid distribution amounts and partial period distribution amounts, and (ii) immediately following such redemption, each remaining issued and outstanding EQM Series A Preferred Unit was exchanged for 2.44 Equitrans Midstream Preferred Shares, in each case, in connection with the occurrence of the “Series A Change of Control” (as defined in the Former EQM Partnership Agreement) that occurred upon the closing of the EQM Merger (collectively, the Restructuring and, the closing of the Restructuring, the Restructuring Closing). The Equitrans Midstream Preferred Shares issued were not registered under the Securities Act of 1933, as amended (the Securities Act), in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

On June 17, 2020, the Company paid cash of $617.3 million to redeem $600 million aggregate principal amount of the Investors’ EQM Series A Preferred Units and pay partial period distributions on such EQM Series A Preferred Units. At the time of the redemption, the carrying value of the EQM Series A Preferred Units was $590.1 million, resulting in a premium over the carrying value of $27.3 million. The premium represented a return similar to distributions to the holders of the EQM Series A Preferred Units and, as such, reduced net income attributable to Equitrans Midstream common shareholders, and was recorded in retained earnings (deficit) in the statements of consolidated shareholders' equity and mezzanine equity.

On August 13, 2020, pursuant to the terms of the Restated Articles (as defined below), the Company paid $10.9 million in the aggregate to holders of Equitrans Midstream Preferred Shares related to forgone partial period distributions on the EQM Series A Preferred Units that were converted into Equitrans Midstream Preferred Shares in connection with the EQM Merger.

The Company's Second Amended and Restated Articles of Incorporation (the Restated Articles) set forth the designations, rights and preferences of the Equitrans Midstream Preferred Shares. The Equitrans Midstream Preferred Shares were a new class of securities as of June 2020. They rank pari passu with any other outstanding class or series of preferred stock of the Company and senior to Equitrans Midstream common stock with respect to dividend rights and rights upon liquidation. The Equitrans Midstream Preferred Shares vote on an as-converted basis with Equitrans Midstream common stock and have certain other class voting rights with respect to any amendment to the Restated Articles that would be adverse (other than in a de minimis manner) to any of the rights, preferences or privileges of the Equitrans Midstream Preferred Shares.

The holders of the Equitrans Midstream Preferred Shares receive cumulative quarterly dividends at a rate per annum of 9.75% for each quarter ending on or before March 31, 2024, and thereafter quarterly dividends at a rate per annum equal to the sum of (i) three-month LIBOR as of the LIBOR Determination Date (as defined in the Restated Articles) in respect of the applicable quarter and (ii) 8.15%; provided that such rate per annum in respect of periods after March 31, 2024 will not be less than 10.50%. The Company is not permitted to pay any dividends on any junior securities, including on Equitrans Midstream common stock, prior to paying the quarterly dividends payable to the Equitrans Midstream Preferred Shares, including any previously accrued and unpaid dividends.

Each holder of the Equitrans Midstream Preferred Shares may elect to convert all or any portion of the Equitrans Midstream Preferred Shares owned by it into Equitrans Midstream common stock initially on a one-for-one basis, subject to certain anti-dilution adjustments and an adjustment for any dividends that have accrued but not been paid when due and partial period dividends (referred to as the conversion rate), at any time (but not more often than once per fiscal quarter), provided that any conversion involves an aggregate number of Equitrans Midstream Preferred Shares of at least $20.0 million (calculated based on the closing price of Equitrans Midstream common stock on the trading day preceding notice of the conversion) or such lesser amount if such conversion relates to all of a holder’s remaining Equitrans Midstream Preferred Shares or if such conversion is approved by the Company's Board of Directors (Board).

So long as the holders of the Equitrans Midstream Preferred Shares have not elected to convert all of their Equitrans Midstream Preferred Shares into Equitrans Midstream common stock, the Company may elect to convert all of the Equitrans Midstream Preferred Shares into Equitrans Midstream common stock, at the then-applicable conversion rate, if (i) the shares of Equitrans Midstream common stock are listed for, or admitted to, trading on a national securities exchange, (ii) the closing price per share of Equitrans Midstream common stock on the national securities exchange on which the shares of Equitrans Midstream common stock are listed for, or admitted to, trading exceeds $27.99 for the 20 consecutive trading days immediately preceding notice of the conversion, (iii) the average daily trading volume of the Equitrans Midstream common stock on the national securities exchange on which the shares of Equitrans Midstream common stock are listed for, or admitted to, trading exceeds 1,000,000 shares (subject to certain adjustments) of Equitrans Midstream common stock for the 20 consecutive trading days immediately preceding notice of the conversion, (iv) the Company has an effective registration statement on file with the SEC

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covering resales of the shares of Equitrans Midstream common stock to be received by such holders upon any such conversion and (v) the Company has paid all prior accumulated and unpaid dividends in cash in full to the holders.

Upon certain events involving a Change of Control (as defined in the Restated Articles) in which more than 90% of the consideration payable to the Company, or to the holders of Equitrans Midstream common stock, is payable in cash, the Equitrans Midstream Preferred Shares will automatically convert into Equitrans Midstream common stock at a conversion ratio equal to the greater of (i) the quotient of (a) the sum of (x) $19.99 (such price, the Equitrans Midstream Preferred Share Issue Price) plus (y) any accrued and unpaid dividends as of such date, including any partial period dividends, with respect to the Equitrans Midstream Preferred Shares, divided by (b) the Equitrans Midstream Preferred Share Issue Price and (ii) the quotient of (a) the sum of (x)(1) the Equitrans Midstream Preferred Share Issue Price multiplied by (2) 110% plus (y) any accrued and unpaid dividends on such date, including any partial period dividends with respect to the Equitrans Midstream Preferred Shares, divided by (b) the volume weighted average price of the shares of Equitrans Midstream common stock for the 30-day period ending immediately prior to the execution of definitive documentation relating to the Change of Control.

In connection with other Change of Control events that do not satisfy the 90% cash consideration threshold described above, in addition to certain other conditions, each holder of Equitrans Midstream Preferred Shares may elect to (i) convert all, but not less than all, of its Equitrans Midstream Preferred Shares into Equitrans Midstream common stock at the then-applicable conversion rate, (ii) if the Company is not the surviving entity (or if the Company is the surviving entity, but Equitrans Midstream common stock will cease to be listed), require the Company to use commercially reasonable efforts to cause the surviving entity in any such transaction to deliver, in exchange for such holder's Equitrans Midstream Preferred Shares, a substantially equivalent security that has rights, preferences and privileges substantially equivalent to the Equitrans Midstream Preferred Shares (or if the Company is unable to cause such substantially equivalent securities to be issued, to exercise the option described in clause (i) or (iv) hereof or elect to convert such Equitrans Midstream Preferred Shares at a conversion ratio reflecting a multiple of invested capital), (iii) if the Company is the surviving entity, continue to hold the Equitrans Midstream Preferred Shares or (iv) require the Company to redeem the Equitrans Midstream Preferred Shares at a price per share equal to 101% of the Equitrans Midstream Preferred Share Issue Price, plus accrued and unpaid dividends, including any partial period dividends, on the applicable Equitrans Midstream Preferred Shares as of such date, which redemption price may be payable in cash, Equitrans Midstream common stock or a combination thereof at the election of the Board (and, if payable in Equitrans Midstream common stock, such Equitrans Midstream common stock will be issued at 95% of the volume-weighted average price of Equitrans Midstream common stock for the 20-day period ending on the fifth trading day immediately preceding the consummation of the Change of Control). Any holder of Equitrans Midstream Preferred Shares that requires the Company to redeem its Equitrans Midstream Preferred Shares pursuant to clause (iv) above will have the right to withdraw such election with respect to all, but not less than all, of its Equitrans Midstream Preferred Shares at any time prior to the fifth trading day immediately preceding the consummation of the Change of Control and instead elect to be treated in accordance with any of clauses (i), (ii) or (iii) above.

At any time on or after January 1, 2024, the Company will have the right, subject to applicable law, to redeem the Equitrans Midstream Preferred Shares, in whole or in part, by paying cash for each Equitrans Midstream Preferred Share to be redeemed in an amount equal to the greater of (a) the sum of (i)(1) the Equitrans Midstream Preferred Share Issue Price multiplied by (2) 110%, plus (ii) any accrued and unpaid dividends, including partial period dividends, with respect to the Equitrans Midstream Preferred Shares as of such date and (b) the amount the holder of such Equitrans Midstream Preferred Share would receive if such holder had converted such Equitrans Midstream Preferred Share into shares of Equitrans Midstream common stock at the then-applicable conversion ratio and the Company liquidated immediately thereafter.

Pursuant to the terms of the Restructuring Agreement, in connection with the Restructuring Closing, the Company entered into a registration rights agreement with the Investors (the Registration Rights Agreement) pursuant to which, among other things, the Company gave the Investors certain rights to require the Company to file and maintain one or more registration statements with respect to the resale of the Equitrans Midstream Preferred Shares and the shares of Equitrans Midstream common stock that are issuable upon conversion of the Equitrans Midstream Preferred Shares, and certain Investors have the right to require the Company to initiate underwritten offerings for the Equitrans Midstream Preferred Shares and the shares of Equitrans Midstream common stock that are issuable upon conversion of the Equitrans Midstream Preferred Shares.

During the second quarter of 2020, as a result of the Restructuring Closing, the Company recorded an increase in mezzanine equity of $667.2 million, a decrease in noncontrolling interest of $579.2 million and a decrease in common stock, no par value, of $82.7 million, net of deferred taxes of $5.3 million.

The Equitrans Midstream Preferred Shares are considered redeemable securities under GAAP due to the possibility of redemption outside the Company’s control. They are therefore presented as temporary equity in the mezzanine equity section of the Company’s consolidated balance sheets and are not considered to be a component of shareholders’ equity on the consolidated balance sheets. The Equitrans Midstream Preferred Shares were recorded at fair value as of the date of issuance,

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and income allocations increase the carrying value and declared dividends decrease the carrying value of the Equitrans Midstream Preferred Shares. As the Equitrans Midstream Preferred Shares are not currently redeemable and not probable of becoming redeemable, adjustment to the initial carrying amount is not necessary and would only be required if it becomes probable that the Equitrans Midstream Preferred Shares would become redeemable.

3.     Impairments of Long-Lived Assets

Goodwill. On February 26, 2020 (the EQT Global GGA Effective Date), the Company entered into a Gas Gathering and Compression Agreement (as amended, the EQT Global GGA) with EQT for the provision of certain gas gathering services to EQT in the Marcellus and Utica Shales of Pennsylvania and West Virginia (as further discussed in Note 5). Prior to the EQT Global GGA Effective Date, the Company operated three reportable operating segments and seven reporting units, which are one level below the operating segment level and are generally based on how segment management reviews the Company's operating results. Commencing with the EQT Global GGA Effective Date, the Company reduced its reporting units from seven to six and maintained its three reportable operating segments. As of the EQT Global GGA Effective Date, the only reporting unit to which the Company had goodwill recorded related to the Pennsylvania gathering assets acquired in connection with EQM's acquisition of Rice Midstream Partners LP and its general partner in July 2018 (RMP PA Gas Gathering reporting unit). As a result of the EQT Global GGA, the assets under, and operations associated with, the RMP PA Gas Gathering reporting unit and the reporting unit associated with the gas gathering and compression activities of EQM Gathering Opco, LLC, an indirect wholly owned subsidiary of the Company (EQM Opco reporting unit), were combined to service a collective minimum volume commitment (MVC) under the agreement. Therefore, effective on the EQT Global GGA Effective Date, the RMP PA Gas Gathering reporting unit was merged with and into the EQM Opco reporting unit, with the EQM Opco reporting unit surviving.

As of September 30, 2021, the Company's goodwill balance was associated entirely with the EQM Opco reporting unit. During the three and nine months ended September 30, 2021, no impairment indicators were identified that would indicate, in management's judgment, that it is more likely than not that the fair value of the EQM Opco reporting unit was less than its carrying value. However, the EQM Opco reporting unit is susceptible to impairment risk from future adverse market or economic conditions and Company-specific qualitative factors, contractual changes or modifications or other adverse factors such as unexpected future production curtailments by the Company's customers that have contracts with volumetric-based fees. Any such adverse changes in the future could reduce the underlying cash flows used to estimate fair value and could result in a decline in fair value that could trigger future impairment charges relating to the EQM Opco reporting unit.

Long-lived Assets. As of March 31, 2020, the Company performed a recoverability test of the Hornet Midstream Holdings, LLC (Hornet Midstream) long-lived assets due to decreased producer activity. As a result of the recoverability test, management determined that the carrying value of the Hornet Midstream long-lived assets (which consisted of gathering assets and customer-related intangible assets) was not recoverable under ASC 360, Impairment Testing: Long-Lived Assets Classified as Held and Used. During the first quarter of 2020, the Company estimated the fair value of the Hornet Midstream asset group and determined that the fair value was less than the assets’ carrying value, which resulted in impairment charges of approximately $37.9 million to the gathering assets and approximately $17.7 million to the customer-related intangible assets both within the Company’s Gathering segment. The non-cash impairment charges were recognized during the first quarter of 2020 and are included in the impairments of long-lived assets line on the statements of consolidated comprehensive income.

As of June 30, 2021, the Company performed a recoverability test of the Equitrans Water Services (OH) LLC (Ohio Water) long-lived assets due to decreased producer activity in Ohio within the Company's Water segment. As a result of the recoverability test, management determined that the carrying value of the Ohio Water long-lived assets was not recoverable under ASC 360, Impairment Testing: Long-Lived Assets Classified as Held and Used. The Company estimated the fair value of the Ohio Water asset group and determined that the fair value was less than the assets’ carrying value, which resulted in impairment charges of approximately $56.2 million to the Ohio Water assets within the Company's Water segment. The non-cash impairment charge was recognized during the second quarter of 2021 and is included in the impairments of long-lived assets line on the statements of consolidated comprehensive income.

Equity Method Investment. During 2020, the MVP Joint Venture received certain adverse court rulings in the U.S. Fourth Circuit Court of Appeals as described in Part II, “Item 1. Legal Proceedings” of this Quarterly Report on Form 10-Q. As a result, the Company evaluated its equity method investment in the MVP Joint Venture for impairment during the fourth quarter of 2020 and determined that the fair value of the investment continued to exceed the carrying value and, therefore, no impairment was necessary. The Company estimated the fair value of its investment in the MVP Joint Venture using an income approach that primarily considered probability-weighted scenarios of discounted future net cash flows based on the most recent estimate of total project costs and revenues as of December 31, 2020. These scenarios reflected assumptions and judgments regarding various future court decisions and regulatory authorizations and the impact that those decisions and authorizations may have on the timing and extent of the Company’s investment, including scenarios assuming the full resolution of permitting

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issues. The Company’s analysis took into account, among other things, growth expectations from additional compression expansion opportunities. The Company generally used an after-tax discount rate of 5.5% in the analysis derived based on a market participant approach. Based on the Company’s expectations for the MVP Joint Venture's projects, and taking into account, among other things, regulatory considerations, public support for the MVP project by the Chairman of the U.S. Senate Committee on Energy and Natural Resources, and other publicly available information, the Company assigned higher probabilities for scenarios under which the Company received all required legal and regulatory approvals and authorizations and certain compression expansion opportunities are realized. A low probability was assigned to the scenario under which the project is cancelled.

The Company evaluated its equity method investment in the MVP Joint Venture as of September 30, 2021 and determined that there was not an other-than-temporary decline in value. There is risk that the carrying value of the Company's investment in the MVP Joint Venture may be impaired in the future. There are ongoing legal and regulatory matters that must be resolved before each of the MVP and MVP Southgate projects can be completed. Assumptions and estimates utilized in assessing the Company’s investment in the MVP Joint Venture for impairment may change depending on the nature or timing of resolutions to these legal or regulatory matters or based on other relevant developments. Adverse changes in circumstances relevant to the likelihood of project completion could prompt the Company, in future assessments, to apply a lower probability of project completion. Such changes in assumptions or estimates (including probability) could have a material adverse effect on the fair value of the Company's investment in the MVP Joint Venture and potentially result in an impairment, the results of which could have a material adverse effect on the Company's results of operations and financial position.

4.    Financial Information by Business Segment

The Company reports its operations in three segments that reflect its three lines of business of Gathering, Transmission and Water, which reflects the manner in which management evaluates the business for making operating decisions and assessing performance.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Thousands)
Revenues from customers:
Gathering	$	243,816	$	232,651	$	733,844	$	764,229
Transmission	90,886		93,329		295,203		288,869
Water	7,372		24,020		41,318		90,605
Total operating revenues	$	342,074	$	350,000	$	1,070,365	$	1,143,703
Operating income:
Gathering (a)	$	132,582	$	129,186	$	399,309	$	400,647
Transmission	59,703		63,460		203,153		201,714
Water (b)	(4,414)		10,118		(55,577)		40,173
Headquarters (c)	(325)		(2,255)		(806)		(24,646)
Total operating income	$	187,546	$	200,509	$	546,079	$	617,888
Reconciliation of operating income to net income:
Equity income (d)	$	8,461	$	60,917	$	14,385	$	171,233
Other income (e)	21,199		21,864		38,251		39,006
Loss on extinguishment of debt	—		—		41,025		24,864
Net interest expense	94,101		86,411		284,887		219,960
Income tax expense	32,200		28,440		65,180		81,846
Net income	$	90,905	$	168,439	$	207,623	$	501,457

(a)Impairments of long-lived assets of $55.6 million for the nine months ended September 30, 2020 were included in Gathering operating income. See Note 3 for further information.

(b)Impairments of long-lived assets of $56.2 million for the nine months ended September 30, 2021 were included in Water operating income. See Note 3 for further information.

(c)Includes transaction costs and other unallocated corporate expenses.

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(d)Equity income is included in the Transmission segment.

(e)Includes unrealized gains on derivative instruments recorded in the Gathering segment.

	September 30, 2021		December 31, 2020
	(Thousands)
Segment assets:
Gathering	$	7,706,463	$	7,739,836
Transmission (a)	4,617,136		4,357,382
Water	133,871		185,802
Total operating segments	12,457,470		12,283,020
Headquarters, including cash	410,932		442,832
Total assets	$	12,868,402	$	12,725,852

(a)The equity investment in the MVP Joint Venture is included in the Transmission segment.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Thousands)
Depreciation:
Gathering	$	47,441	$	44,648	$	140,899	$	126,915
Transmission	13,835		13,659		41,461		40,787
Water	4,364		8,105		20,740		22,720
Headquarters	381		360		854		849
Total	$	66,021	$	66,772	$	203,954	$	191,271
Expenditures for segment assets:
Gathering (a)	$	62,916	$	90,452	$	170,709	$	303,063
Transmission (b)	5,755		6,721		17,050		32,983
Water	10,803		2,530		20,430		8,377
Headquarters	83		447		1,455		3,234
Total (c)	$	79,557	$	100,150	$	209,644	$	347,657

(a)Includes capital expenditures related to the noncontrolling interest in Eureka Midstream Holdings, LLC (Eureka Midstream) of approximately $4.8 million and $10.6 million for the three and nine months ended September 30, 2021, respectively, and approximately $13.5 million and $37.1 million for the three and nine months ended September 30, 2020, respectively.

(b)Transmission capital expenditures do not include aggregate capital contributions made to the MVP Joint Venture for the MVP and MVP Southgate projects of $94.3 million and $179.0 million for the three and nine months ended September 30, 2021, respectively, and $65.6 million and $144.3 million for the three and nine months ended September 30, 2020, respectively.

(c)The Company accrues capital expenditures when the work has been completed but the associated bills have not yet been paid. Accrued capital expenditures are excluded from the statements of consolidated cash flows until they are paid. The net impact of non-cash capital expenditures, including the effect of accrued capital expenditures, transfers to/from inventory as assets are completed/assigned to a project and capitalized share-based compensation costs, was $1.2 million and $1.4 million for the three and nine months ended September 30, 2021, respectively, and $8.3 million and $29.9 million for the three and nine months ended September 30, 2020, respectively.

5.    Revenue from Contracts with Customers

For the three and nine months ended September 30, 2021 and 2020, all revenues recognized on the Company's statements of consolidated comprehensive income are from contracts with customers. As of September 30, 2021 and December 31, 2020, all receivables recorded on the Company's consolidated balance sheets represented performance obligations that have been satisfied and for which an unconditional right to consideration exists.

Summary of disaggregated revenues. The tables below provide disaggregated revenue information by business segment.

	Three Months Ended September 30, 2021
	Gathering		Transmission		Water		Total
	(Thousands)
Firm reservation fee revenues (a)	$	151,004	$	84,053	$	1,061	$	236,118
Volumetric-based fee revenues	92,812		6,833		6,311		105,956
Total operating revenues	$	243,816	$	90,886	$	7,372	$	342,074
	Three Months Ended September 30, 2020
	Gathering		Transmission		Water		Total
	(Thousands)
Firm reservation fee revenues (a)	$	145,533	$	84,612	$	9,005	$	239,150
Volumetric-based fee revenues	87,118		8,717		15,015		110,850
Total operating revenues	$	232,651	$	93,329	$	24,020	$	350,000
	Nine Months Ended September 30, 2021
	Gathering		Transmission		Water		Total
	(Thousands)
Firm reservation fee revenues (a)	$	448,556	$	269,239	$	3,834	$	721,629
Volumetric-based fee revenues	285,288		25,964		37,484		348,736
Total operating revenues	$	733,844	$	295,203	$	41,318	$	1,070,365
	Nine Months Ended September 30, 2020
	Gathering		Transmission		Water		Total
	(Thousands)
Firm reservation fee revenues (a)	$	446,721	$	267,973	$	32,788	$	747,482
Volumetric-based fee revenues	317,508		20,896		57,817		396,221
Total operating revenues	$	764,229	$	288,869	$	90,605	$	1,143,703

(a) Firm reservation fee revenues associated with Gathering and Water included MVC unbilled revenues of approximately $5.5 million and $0.5 million, respectively, for the three months ended September 30, 2021, approximately $12.4 million and $1.5 million, respectively, for the nine months ended September 30, 2021, approximately $2.6 million and $1.9 million, respectively, for the three months ended September 30, 2020 and approximately $13.7 million and $11.4 million, respectively, for the nine months ended September 30, 2020.

Contract assets. The Company recognizes contract assets primarily in instances where billing occurs subsequent to revenue recognition and the Company's right to invoice the customer is conditioned on something other than the passage of time. The Company's contract assets primarily consist of revenue recognized under contracts containing MVCs (whereby management has concluded (i) it is probable there will be a MVC deficiency payment at the end of the then-current MVC period, which is typically the period beginning at the inception of such contracts through the successive twelve-month periods after that date, and (ii) that a significant reversal of revenue recognized currently for the future MVC deficiency payment will not occur), as well as certain other contractual commitments. As a result, the Company's contract assets related to the Company's future MVC deficiency payments are generally expected to be collected within the next twelve months and are primarily included in other current assets in the Company's consolidated balance sheets until such time as the MVC deficiency payments are invoiced to the customer.

The following table presents changes in the Company's unbilled revenue balance during the nine months ended September 30, 2021 and 2020:

	Unbilled Revenue
	2021		2020
	(Thousands)
Balance as of beginning of period	$	18,618	$	—
Revenue recognized in excess of amounts invoiced (a)	21,908		25,086
Minimum volume commitments invoiced (b)	(23,373)		—
Amortization (c)	(78)		—
Balance as of end of period	$	17,075	$	25,086

(a)Primarily includes revenues associated with unbilled MVCs that are generally included in firm reservation fee revenues within the Gathering and Water segments, as described in the Summary of Disaggregated Revenues table above, and other contractual commitments of approximately $6.4 million during the nine months ended September 30, 2021.

(b)Unbilled revenues are transferred to accounts receivable once the Company has an unconditional right to consideration from the customer.

(c)Amortization of capitalized contract costs paid to customers over the expected life of the agreement.

Contract liabilities. The Company's contract liabilities consisted of deferred revenue primarily associated with the EQT Global GGA, including advance payments from EQT associated with the Rate Relief Shares (as defined below) acquired by the Company as consideration for certain commercial terms and the initial fair value of the Henry Hub cash bonus payment provision (as defined below). The contract liabilities are classified as current or non-current according to when such amounts are expected to be recognized. As of September 30, 2021, total contract liabilities were $624.1 million, of which $1.1 million was classified as current and recorded in accrued liabilities and $623 million was classified as non-current and recorded in contract liability on the Company's consolidated balance sheets. As of December 31, 2020, the contract liabilities were $398.8 million, which was recorded in contract liability on the Company's consolidated balance sheets.

Contracts requiring advance payments and the recognition of contract liabilities are evaluated to determine whether the advance payments provide the Company with a significant financing benefit. This determination requires significant judgment and is based on the combined effect of the expected length of time between when the Company transfers the promised goods or services to the customer and when the customer pays for those goods or services and the prevailing interest rates.

The following table presents changes in the Company's contract liability balances during the nine months ended September 30, 2021 and 2020:

	Contract Liability
	2021		2020
	(Thousands)
Balance as of beginning of period	$	398,750	$	—
Amounts recorded during the period (a)	225,583		321,775
Amounts transferred during the period (b)	(268)		—
Balance as of end of period	$	624,065	$	321,775

(a)Includes deferred billed revenue during the nine months ended September 30, 2021 and 2020 associated with the EQT Global GGA.

(b)Deferred revenues are recognized as revenue upon satisfaction of the Company's performance obligation to the customer.

Summary of remaining performance obligations. The following table summarizes the estimated transaction price allocated to the Company's remaining performance obligations under all contracts with firm reservation fees and MVCs as of September 30, 2021 that the Company will invoice or transfer from contract liabilities and recognize in future periods.

		2021(a)		2022		2023		2024		2025		Thereafter		Total
	(Thousands)
Gathering firm reservation fees		$	22,204	$	124,168	$	158,652	$	157,148	$	149,626	$	1,329,341	$	1,941,139
Gathering revenues supported by MVCs		127,397		546,734		593,693		554,327		563,596		4,813,080		7,198,827
Transmission firm reservation fees		94,964		370,983		346,970		284,898		249,107		2,404,935		3,751,857
Water revenues supported by MVCs		500		31,250		37,500		37,500		37,500		231,250		375,500
Total (b)		$	245,065	$	1,073,135	$	1,136,815	$	1,033,873	$	999,829	$	8,778,606	$	13,267,323

(a)    October 1, 2021 through December 31, 2021.

(b)    Includes assumptions regarding timing for placing certain projects in-service, including the MVP in summer 2022. Delays in the in-service dates for projects may substantially alter the remaining performance obligations for certain contracts with firm reservation fees and/or MVCs. The MVP Joint Venture is accounted for as an equity investment and those amounts are not included in the table above.

Based on total projected contractual revenues, including projected contractual revenues from future capacity expected from expansion projects that are not yet fully constructed for which the Company has executed firm contracts, the Company's firm gathering contracts and firm transmission and storage contracts had, in each case, weighted average remaining terms of approximately 14 years as of September 30, 2021.

EQT Global GGA. On the EQT Global GGA Effective Date, the Company entered into the EQT Global GGA with EQT for the provision by the Company of certain gas gathering services to EQT in the Marcellus and Utica Shales of Pennsylvania and West Virginia. Pursuant to the EQT Global GGA, EQT is subject to an initial annual MVC of 3.0 Bcf per day that gradually steps up to 4.0 Bcf per day for several years following the in-service date of the MVP. The EQT Global GGA runs from the EQT Global GGA Effective Date through December 31, 2035, and will renew annually thereafter unless terminated by EQT or the Company pursuant to its terms. Pursuant to the EQT Global GGA, the Company has certain obligations to build connections to connect EQT wells to the Company's gathering system, which are subject to geographical limitations in relation to the dedicated area in Pennsylvania and West Virginia, as well as the distance of such connections to the Company's then-existing gathering system. Management has estimated the total consideration expected to be received over the life of the EQT Global GGA, including gathering MVC revenue with a declining rate structure, the fair value of the Rate Relief Shares (as defined below) and the initial fair value of the Henry Hub cash bonus payment provision. The total consideration is allocated proportionally to the performance obligation under the contract, which is to provide daily MVC capacity over the life of the contract, in order to recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. The performance obligations will be satisfied during the life of the contract based on a units of production methodology for the daily MVC capacity provided to EQT. Due to the declining rate structure, there will be periods during which the billable gathering MVC revenue will exceed the allocated consideration to the performance obligation, which will result in billable gathering MVC revenue being deferred to the contract liability. The deferred consideration amounts are deferred until recognized in revenue when the associated performance obligation has been satisfied and are classified as current or non-current according to when such amounts are expected to be recognized. In addition to the estimated total consideration allocated to the daily MVC, the EQT Global GGA includes other fees based on variable or volumetric-based services that will be recognized in the period the services are provided. The Company applied judgment in determining the balance sheet classification of the elements of the EQT Global GGA and Share Purchase Agreements (as defined below) under the applicable accounting guidance.

The EQT Global GGA provides for potential cash bonus payments payable by EQT to the Company during the period beginning on the first day of the calendar quarter in which the MVP in-service date occurs through the calendar quarter ending December 31, 2024 (the Henry Hub cash bonus payment provision). The potential cash bonus payments are conditioned upon the quarterly average of certain Henry Hub natural gas prices exceeding certain price thresholds. The Henry Hub cash bonus payment provision meets the definition of an embedded derivative that was required to be bifurcated from the host contract and accounted for separately in accordance with ASC 815, Derivatives and Hedging. The embedded derivative was recorded as a derivative asset at its estimated fair value at inception of approximately $51.5 million and as part of the contract liability to be included in the total consideration to be allocated to the performance obligation under ASC 606. Subsequent changes to the fair value of the derivative instrument through the end of the contract are recognized in other income on the Company's statements of consolidated comprehensive income.

The gathering MVC fees payable by EQT to the Company set forth in the EQT Global GGA are subject to potential reductions for certain contract years as set forth in the EQT Global GGA, conditioned upon the in-service date of the MVP, which provide for estimated aggregate fee relief of approximately $270 million in the first year after the in-service date of the MVP, approximately $230 million in the second year after the in-service date of the MVP and approximately $35 million in the third year after the in-service date of the MVP. In addition, commencing on January 1, 2022 and continuing until the earlier of (i) the

in-service date of the MVP and (ii) December 31, 2022, EQT will have an option to forgo approximately $145 million of the gathering fee relief in the first year after the MVP in-service date and approximately $90 million of the gathering fee relief in the second year after the MVP in-service date in exchange for a cash payment from the Company to EQT in the amount of approximately $196 million (the EQT Cash Option). As consideration for the additional rate relief subject to the EQT Cash Option, the Company purchased shares of its common stock (see Rate Relief Shares discussed and defined below) from EQT. The consideration received for future contractual rate relief associated with the Rate Relief Shares was recorded at a fair value of approximately $121.5 million as a contract liability in accordance with ASC 606 and will be recognized as revenue over the life of the contract.

Water Services Letter Agreement and 2021 Water Services Agreement. On February 26, 2020, the Company entered into a letter agreement with EQT relating to the provision of water services in Pennsylvania (such letter agreement, the Water Services Letter Agreement). Subject to the effect of the 2021 Water Services Agreement (defined below), the Water Services Letter Agreement would have been effective as of the first day of the first month following the MVP in-service date and would have expired on the fifth anniversary of such date. During each year of the Water Services Letter Agreement, EQT had agreed to pay the Company a minimum $60 million per year Annual Revenue Commitment (ARC) for volumetric water services provided in Pennsylvania, all in accordance with existing water service agreements and new water service agreements entered into between the parties pursuant to the Water Services Letter Agreement (or the related agreements).

On October 22, 2021, the Company and EQT entered into a new 10-year, mixed-use water services agreement covering operations within a dedicated area in southwestern Pennsylvania (2021 Water Services Agreement). The 2021 Water Services Agreement, which replaces the Water Services Letter Agreement and certain other existing Pennsylvania water services agreements, will become effective with the earlier of the commencement of water delivery service to a certain EQT well pad (anticipated in late February 2022) or April 1, 2022. Pursuant to the 2021 Water Services Agreement, EQT has agreed to pay the Company a minimum ARC for water services equal to $40 million in each of the first five years of the 10-year contract term and equal to $35 million per year for the remaining five years of the contract term.

Share Purchase Agreements. On February 26, 2020, the Company entered into two share purchase agreements (the Share Purchase Agreements) with EQT, pursuant to which the Company agreed to (i) purchase 4,769,496 shares of Equitrans Midstream common stock (the Cash Shares) from EQT in exchange for approximately $46 million in cash, (ii) purchase 20,530,256 shares of Equitrans Midstream common stock (the Rate Relief Shares and, together with the Cash Shares, the Share Purchases) from EQT in exchange for a promissory note in the aggregate principal amount of approximately $196 million (which EQT subsequently assigned to EQM as consideration for certain commercial terms under the EQT Global GGA), and (iii) pay EQT cash in the amount of approximately $7 million (the Cash Amount). On March 5, 2020, the Company completed the Share Purchases and paid the Cash Amount. The Company used proceeds from the EQM Credit Facility (as defined in Note 8) to fund the purchase of the Cash Shares and to pay the Cash Amount in addition to other uses of proceeds. After the closing of the Share Purchases, the Company retired the Cash Shares and the Rate Relief Shares. Additionally, the Company recorded a $17.2 million deferred tax liability in conjunction with the Rate Relief Shares. On September 29, 2020, the Company made a prepayment to EQM of all principal, interest, fees and other obligations outstanding under the promissory note EQT assigned to EQM and the promissory note was terminated.

6.    Related Party Transactions

As of September 30, 2021, EQT remained a related party of the Company due to its ownership of 25,296,026 shares of Equitrans Midstream common stock, which represented an approximately 5.8% ownership interest in the Company, excluding the impact of the Equitrans Midstream Preferred Shares. In the ordinary course of business, the Company engaged, and continues to engage, as applicable, in transactions with EQT and its affiliates, including, but not limited to, entering into new or amending existing gathering agreements, transportation service and precedent agreements, storage agreements and water services agreements.

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The following table summarizes the Company's related party transactions.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Thousands)
Operating revenues	$	220,781	$	222,700	$	668,837	$	741,200
Equity income	8,461		60,917		14,385		171,233
Interest income from the preferred interest in EQT Energy Supply, LLC (the Preferred Interest)	1,433		1,504		4,353		4,566
Capital contributions to the MVP Joint Venture	(94,298)		(65,630)		(178,953)		(144,264)
Principal payments received on the Preferred Interest	1,313		1,259		3,885		3,726

The following table summarizes the Company's related party receivables and payables.

	September 30, 2021		December 31, 2020
	(Thousands)
Accounts receivable	$	184,946	$	199,674
Contract asset	1,500		2,207
Investment in unconsolidated entity	3,089,091		2,796,316
Preferred Interest	101,170		105,056
Capital contributions payable to the MVP Joint Venture	108,231		10,723

Credit Letter Agreement. On February 26, 2020, in connection with the execution of the EQT Global GGA, the Company and EQT entered into a letter agreement (the Credit Letter Agreement) pursuant to which, among other things, (a) the Company agreed to relieve certain credit posting requirements for EQT, in an amount up to approximately $250 million, under its commercial agreements with EQT, subject to EQT maintaining a minimum credit rating from two of three rating agencies of (i) Ba3 with Moody’s Investors Service (Moody's), (ii) BB- with S&P Global Ratings (S&P) and (iii) BB- with Fitch Investor Services (Fitch) and (b) the Company agreed to use commercially reasonable good faith efforts to negotiate similar credit support arrangements for EQT in respect of its commitments to the MVP Joint Venture.

EQT Global GGA. See Note 5 for further detail.

Water Services Letter Agreement and 2021 Water Services Agreement. See Note 5 for further detail.

Share Purchase Agreements. See Note 5 for further detail.

7.    Investment in Unconsolidated Entity

The MVP Joint Venture is constructing the Mountain Valley Pipeline (MVP), an estimated 300-mile natural gas interstate pipeline that will span from northern West Virginia to southern Virginia. The Company will operate the MVP and owned a 46.6% interest in the MVP project as of September 30, 2021. On November 4, 2019, Consolidated Edison, Inc. (Con Edison) exercised an option to cap its investment in the construction of the MVP project at approximately $530 million (excluding AFUDC). The Company and NextEra Energy, Inc. are obligated to, and RGC Resources, Inc., another member of the MVP Joint Venture owning an interest in the MVP project, has opted to, fund the shortfall in Con Edison's capital contributions, on a pro rata basis. Such funding by the Company and funding by other members has and will correspondingly increase the Company's and such other funding members' respective interests in the MVP project and decrease Con Edison's interest in the MVP project. As a result, based on the project's targeted cost of approximately $6.2 billion (excluding AFUDC), the Company's equity ownership in the MVP project will progressively increase from approximately 46.6% to approximately 47.8%. The MVP Joint Venture is a variable interest entity because it has insufficient equity to finance its activities during the construction stage of the project. The Company is not the primary beneficiary of the MVP Joint Venture because the Company does not have the power to direct the activities that most significantly affect the MVP Joint Venture's economic performance. Certain business decisions, such as decisions to make distributions of cash, require a greater than 66 2/3% ownership interest approval, and no one member owns more than a 66 2/3% interest.

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In April 2018, the MVP Joint Venture announced the MVP Southgate project, a proposed 75-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. The Company will operate the MVP Southgate pipeline and owned a 47.2% interest in the MVP Southgate project as of September 30, 2021.

In August 2021, the MVP Joint Venture issued a capital call notice for the funding of the MVP project to MVP Holdco, LLC (MVP Holdco), a wholly owned subsidiary of the Company, for $108.1 million, of which $35.4 million and $40.0 million was paid in October 2021 and November 2021, respectively, and $32.7 million is expected to be paid in December 2021. The capital contributions payable and the corresponding increase to the investment balance are reflected on the consolidated balance sheet as of September 30, 2021.

Pursuant to the MVP Joint Venture's limited liability company agreement, MVP Holdco is obligated to provide performance assurances, which may take the form of a guarantee from EQM (provided that EQM's debt is rated as investment grade in accordance with the requirements of the MVP Joint Venture's limited liability company agreement), a letter of credit or cash collateral, in favor of the MVP Joint Venture to provide assurance as to the funding of MVP Holdco's proportionate share of the construction budget for the MVP project.

In addition, pursuant to the MVP Joint Venture's limited liability company agreement, MVP Holdco is obligated to provide performance assurances in respect of MVP Southgate, which performance assurances may take the form of a guarantee from EQM (provided that EQM's debt is rated as investment grade in accordance with the requirements of the MVP Joint Venture's limited liability company agreement), a letter of credit or cash collateral.

As a result of EQM’s credit rating downgrades in the first quarter of 2020, EQM delivered credit support to the MVP Joint Venture in the form of letters of credit in the amounts of approximately $220.2 million and $14.2 million with respect to the MVP and MVP Southgate projects, respectively. In connection with delivering such letters of credit as replacement performance assurances, EQM's prior performance guarantees associated with the MVP and MVP Southgate projects were terminated. As of November 2, 2021, the letter of credit with respect to the MVP project was in the amount of approximately $219.7 million as a result of the capital contribution made in October 2021. Upon the FERC’s initial release to begin construction of the MVP Southgate project, the Company’s current letter of credit to support MVP Southgate will be terminated, and the Company will be obligated to deliver a new letter of credit (or provide another allowable form of performance assurance) in an amount equal to 33% of MVP Holdco’s proportionate share of the remaining capital obligations for the MVP Southgate project under the applicable construction budget.

As of September 30, 2021, the Company's maximum financial statement exposure related to the MVP Joint Venture was approximately $3,246 million, which consisted primarily of the investment in unconsolidated entity balance on the consolidated balance sheet as of September 30, 2021 and the letters of credit outstanding under the Amended EQM Credit Facility.

The following tables summarize the unaudited condensed consolidated financial statements of the MVP Joint Venture in relation to the MVP project.

Condensed Consolidated Balance Sheets

	September 30, 2021		December 31, 2020
	(Thousands)
Current assets	$	153,301	$	146,054
Non-current assets	6,282,972		5,848,298
Total assets	$	6,436,273	$	5,994,352
Current liabilities	$	200,454	$	217,086
Equity	6,235,819		5,777,266
Total liabilities and equity	$	6,436,273	$	5,994,352

Condensed Statements of Consolidated Operations

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(Thousands)
Operating expenses	$	(201)	$	20	$	(351)	$	(295)
Other income	5		13		15		275
Net interest income	5,512		39,280		9,387		110,868
AFUDC — equity	12,862		91,653		21,904		258,693
Net income	$	18,178	$	130,966	$	30,955	$	369,541

8.    Debt

Equitrans Midstream Term Loan Facility. In December 2018, Equitrans Midstream entered into a term loan credit agreement (as amended in May 2019, the ETRN Term Loan Credit Agreement) that provided for a senior secured term loan facility in an aggregate principal amount of $600 million (the ETRN Term Loans). On March 3, 2020, EQM drew $650.0 million under the EQM Credit Facility and transferred such funds to the Company, pursuant to a senior unsecured term loan agreement with the Company. The Company utilized a portion of such funds to pay off all of the amounts outstanding under the ETRN Term Loans and the ETRN Term Loan Credit Agreement was terminated. As a result, the Company wrote off $24.4 million of unamortized discount and financing costs related to the ETRN Term Loan Credit Agreement. The write off charge is included in the loss on extinguishment of debt line on the statements of consolidated comprehensive income. On September 29, 2020, the Company made a prepayment to EQM of all principal, interest, fees and other obligations outstanding under the senior unsecured term loan agreement and terminated the agreement. During the period from January 1, 2020 to March 3, 2020, the weighted average annual interest rate on the ETRN Term Loans was approximately 6.2%.

EQM Revolving Credit Facility. On October 31, 2018, EQM amended and restated its unsecured revolving credit facility to increase the borrowing capacity from $1 billion to $3 billion and extend the term to October 2023 (the EQM Credit Facility). On March 30, 2020, EQM entered into an amendment (the First Amendment) to the EQM Credit Facility (as amended, the First Amended EQM Credit Facility) which, among other things, amended certain defined terms and negative covenants in the EQM Credit Facility. On April 16, 2021, EQM entered into a second amendment (the Second Amendment) to the EQM Credit Facility (as amended by the First Amendment and the Second Amendment, the Amended EQM Credit Facility), which amended, among other things, certain defined terms, and specified that the maximum Consolidated Leverage Ratio (as defined in the Amended EQM Credit Facility) vary over the course of the remaining term, ranging from not more than 5.95 to 1.00 to not more than 5.00 to 1.00, with the then-applicable ratio being tested as of the end of each fiscal quarter. The Second Amendment also reduced the aggregate commitments available under the Amended EQM Credit Facility to $2.25 billion.

The Amended EQM Credit Facility is available for general partnership purposes, including to purchase assets, to make investments, to fund working capital requirements and capital expenditures and to pay distributions. Subject to satisfaction of certain conditions, the Amended EQM Credit Facility has an accordion feature that allows EQM to increase the available borrowings under the facility by up to an additional $750 million. The Amended EQM Credit Facility has a sublimit of up to $250 million for same-day swing line advances and a sublimit of up to $400 million for letters of credit. In addition, EQM has the ability to request that one or more lenders make available term loans under the Amended EQM Credit Facility subject to the satisfaction of certain conditions (which term loans would be secured by cash, qualifying investment grade securities or a combination thereof). The Company’s obligations in respect of the revolving borrowings made under the Amended EQM Credit Facility are unsecured. As of September 30, 2021, no term loans were outstanding under the Amended EQM Credit Facility.

As of September 30, 2021, EQM had approximately $350 million of borrowings and $266 million of letters of credit outstanding under the Amended EQM Credit Facility. As of December 31, 2020, EQM had $485 million of borrowings and $246 million of letters of credit outstanding under the First Amended EQM Credit Facility. During the three and nine months ended September 30, 2021, the maximum outstanding borrowings at any time were approximately $390 million and $525 million, respectively, and the average daily balances were approximately $358 million and $440 million, respectively. EQM incurred interest at weighted average annual interest rates of approximately 2.7% and 2.6% for the three and nine months ended September 30, 2021, respectively. During the three and nine months ended September 30, 2020, the maximum outstanding borrowings at any time were approximately $485 million and $2,040 million, respectively, the average daily balances were approximately $485 million and $975 million, respectively, and the weighted average annual interest rates were approximately 2.6% and 2.9%, respectively. For the three and nine months ended September 30, 2021, commitment fees of $1.7 million and $5.6 million, respectively, were paid to maintain credit availability under the Amended EQM Credit Facility. For the three and nine months ended September 30, 2020, commitment fees of $2.4 million and $5.0 million, respectively, were paid to maintain credit availability under the First Amended EQM Credit Facility.

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Amended 2019 EQM Term Loan Agreement. In August 2019, EQM entered into a term loan agreement (the 2019 EQM Term Loan Agreement) that provided for unsecured term loans (the EQM Term Loans) in an aggregate principal amount of $1.4 billion. On March 30, 2020, EQM entered into an amendment to the 2019 EQM Term Loan Agreement (as amended, the Amended 2019 EQM Term Loan Agreement) which, among other things, amended certain defined terms and negative covenants in the 2019 EQM Term Loan Agreement.

On January 8, 2021, EQM (i) applied a portion of the proceeds from the issuance of the 2021 Senior Notes (as defined below) to prepay all principal, interest, fees and other obligations outstanding under the Amended 2019 EQM Term Loan Agreement and (ii) terminated the Amended 2019 EQM Term Loan Agreement and the loan documents associated therewith. EQM repaid outstanding loans with a principal amount of $1.4 billion in connection with the termination of the Amended 2019 EQM Term Loan Agreement. Prior to its termination in January 2021, the Amended 2019 EQM Term Loan Agreement would have matured in August 2022. During the period from January 1, 2021 through January 7, 2021, the weighted average annual interest rate was approximately 2.4%. During the three and nine months ended September 30, 2020, the weighted average annual interest rates were approximately 2.4% and 2.8%, respectively.

Eureka Credit Facilities. On May 13, 2021, Eureka Midstream, LLC (Eureka), a wholly owned subsidiary of Eureka Midstream, repaid all outstanding principal borrowings plus accrued and unpaid interest under and terminated its credit facility with ABN AMRO Capital USA LLC, as administrative agent, the lenders party thereto from time to time and any other persons party thereto from time to time (the Former Eureka Credit Facility). No early termination or prepayment penalties were incurred as a result of the termination of the Former Eureka Credit Facility or the repayment of outstanding amounts under the facility. In connection with the termination of the Former Eureka Credit Facility, all guaranties and liens securing the obligations under the Former Eureka Credit Facility were terminated and released. Prior to its termination, the Former Eureka Credit Facility was scheduled to mature on August 25, 2021.

In conjunction with the termination of, and to fund the repayment of all outstanding amounts under the Former Eureka Credit Facility, on May 13, 2021, Eureka entered into a $400 million senior secured revolving credit facility with Sumitomo Mitsui Banking Corporation, as administrative agent, the lenders party thereto from time to time and any other persons party thereto from time to time (the 2021 Eureka Credit Facility). The 2021 Eureka Credit Facility matures on November 13, 2024, and is available for general business purposes, including financing maintenance and expansion capital expenditures related to the Eureka system and providing working capital for Eureka’s operations. During the term of the 2021 Eureka Credit Facility, Eureka is required to maintain (i) a Consolidated Leverage Ratio (as defined in the 2021 Eureka Credit Facility) of not more than 4.75 to 1.00, and (ii) a ratio of Consolidated EBITDA (as defined in the 2021 Eureka Credit Facility) for the four fiscal quarters then ending to Consolidated Interest Charges (as defined in the 2021 Eureka Credit Facility) of not less than 2.50 to 1.00, each tested as of the end of each fiscal quarter. Subject to the satisfaction of certain conditions, the 2021 Eureka Credit Facility has an accordion feature that allows Eureka to increase the available borrowings under the facility to an amount no greater than $500 million of total commitments. The 2021 Eureka Credit Facility also has a sublimit of up to $25 million for same-day swing line advances.

As of September 30, 2021, Eureka had approximately $295 million of borrowings outstanding under the 2021 Eureka Credit Facility. As of December 31, 2020, Eureka had approximately $303 million of borrowings outstanding under the Former Eureka Credit Facility. For the three and nine months ended September 30, 2021, the maximum amount of outstanding borrowings under either of the Eureka credit facilities at any time was approximately $300 million and $315 million, respectively, the average daily balances were approximately $299 million and $305 million, respectively, and Eureka incurred interest at weighted average annual interest rates of approximately 2.8% and 2.5%, respectively. For the three and nine months ended September 30, 2021, commitment fees of $0.1 million and $0.3 million, respectively, were paid to maintain credit availability under the Eureka credit facilities. For the three and nine months ended September 30, 2020, the maximum amount of outstanding borrowings under the Former Eureka Credit Facility at any time was approximately $323 million for both periods, the average daily balances were approximately $310 million and $300 million, respectively, and Eureka incurred interest at weighted average annual interest rates of approximately 2.4% and 2.6% respectively. For the three and nine months ended September 30, 2020, commitment fees of $0.1 million and $0.4 million, respectively, were paid to maintain credit availability under the Former Eureka Credit Facility.

2021 Senior Notes. During the first quarter of 2021, EQM issued, in a private offering, $800 million aggregate principal amount of new 4.50% senior notes due 2029 (the 2029 Notes) and $1,100 million aggregate principal amount of new 4.75% senior notes due 2031 (the 2031 Notes and, together with the 2029 Notes, the 2021 Senior Notes) and received net proceeds from the offering of approximately $1,876.5 million (excluding costs related to the Tender Offers discussed below), inclusive of a discount of $19 million and debt issuance costs of $4.5 million. EQM used the net proceeds from the offering of the 2021 Senior Notes and cash on hand to repay all outstanding borrowings under the Amended 2019 EQM Term Loan Agreement, to purchase an aggregate principal amount of $500 million of its outstanding 4.75% notes due 2023 (2023 Notes) pursuant to tender offers for certain of EQM's outstanding indebtedness (such tender offers, the Tender Offers), and for general partnership purposes.

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2020 Senior Notes. During the second quarter of 2020, EQM issued $700 million aggregate principal amount of new 6.00% senior unsecured notes due July 1, 2025 and $900 million aggregate principal amount of new 6.50% senior unsecured notes due July 1, 2027 (collectively, the 2020 Senior Notes) and received net proceeds from the offering of approximately $1,576.1 million, inclusive of a discount of $20.0 million and debt issuance costs of $3.9 million. A portion of the net proceeds were used to repay a portion of the borrowings outstanding under the First Amended EQM Credit Facility, and the remainder was used for general partnership purposes.

Tender Offers. On January 15, 2021 (the early tender deadline), the maximum principal amount for the Tender Offers was fully subscribed by the 2023 Notes tendered as of the early tender deadline and on January 20, 2021, EQM purchased an aggregate principal amount of $500 million of 2023 Notes at an aggregate cost of approximately $537 million (inclusive of the applicable early tender premium for the 2023 Notes described in that certain Offer to Purchase of EQM dated January 4, 2021, as amended, plus accrued interest).

The Company incurred a loss on the extinguishment of debt of $41.0 million during the nine months ended September 30, 2021 related to the payment of the Tender Offer premium and write off of unamortized discounts and financing costs related to the prepayment of the EQM Term Loans under, and termination of, the Amended 2019 EQM Term Loan Agreement and purchase of 2023 Notes in the Tender Offers. This amount is included in the loss on extinguishment of debt line on the statements of consolidated comprehensive income.

As of September 30, 2021, EQM and Eureka were in compliance with all debt provisions and covenants.

9.    Fair Value Measurements

Assets Measured at Fair Value on a Recurring Basis. The Company records derivative instruments at fair value on a gross basis in its consolidated balance sheets. The Henry Hub cash bonus payment provision, as described in Note 5, is recorded at its estimated fair value using a Monte Carlo simulation model. Significant inputs used in the fair value measurement include NYMEX Henry Hub natural gas futures prices as of the date of valuation, the targeted in-service date of the MVP, risk-free interest rates based on U.S. Treasury rates, expected volatility of NYMEX Henry Hub natural gas futures prices and an estimated credit spread of EQT. The expected volatility of NYMEX Henry Hub natural gas futures prices used in the valuation methodology represents a significant unobservable input causing the Henry Hub cash bonus payment provision to be designated as a Level 3 fair value measurement. An expected average volatility of approximately 38% was utilized in the valuation model, which is based on market-quoted volatilities of relevant NYMEX Henry Hub natural gas forward prices. As of September 30, 2021 and December 31, 2020, the fair values of the Henry Hub cash bonus payment provision were $105.9 million and $68.0 million, respectively, which were recorded in other assets on the Company's consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recognized gains of $21.3 million and $37.9 million, respectively, representing the change in estimated fair value of the derivative instrument during the respective periods. During the three and nine months ended September 30, 2020, the Company recognized gains of $21.0 million and $37.7 million, respectively, representing the change in estimated fair value of the derivative instrument during the respective periods. The gains are reflected in other income in the Company's statements of consolidated comprehensive income.

Other Financial Instruments. The carrying values of cash and cash equivalents, accounts receivable, amounts due to/from related parties and accounts payable approximate fair value due to the short maturity of the instruments; as such, their fair values are Level 1 fair value measurements. The carrying values of borrowings under the Amended EQM Credit Facility, the Former Eureka Credit Facility (prior to its termination), the 2021 Eureka Credit Facility and the Amended 2019 EQM Term Loan Agreement (prior to its termination) approximate fair value as the interest rates are based on prevailing market rates; these are considered Level 1 fair value measurements. As EQM's borrowings under its senior notes are not actively traded, their fair values are estimated using an income approach model that applies a discount rate based on prevailing market rates for debt with similar remaining time-to-maturity and credit risk; as such, their fair values are Level 2 fair value measurements. As of September 30, 2021 and December 31, 2020, the estimated fair values of EQM's senior notes were approximately $7,030 million and $5,495 million, respectively, and the carrying values of EQM's senior notes were approximately $6,432 million and $5,046 million, respectively. The fair value of the Preferred Interest is a Level 3 fair value measurement and is estimated using an income approach model that applies a market-based discount rate. As of September 30, 2021 and December 31, 2020, the estimated fair values of the Preferred Interest were approximately $119 million and $127 million, respectively, and the carrying values of the Preferred Interest were approximately $101 million and $105 million, respectively.

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10.    Earnings Per Share

The following table sets forth the computation of the basic and diluted earnings per share attributable to Equitrans Midstream common shareholders for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended September 30,
	2021				2020
	Basic		Diluted		Basic		Diluted
	(In thousands, except per share data)
Net income	$	90,905	$	90,905	$	168,439	$	168,439
Less: Net income attributable to noncontrolling interests	3,557		3,557		3,973		3,973
Less: Preferred dividends	14,628		14,628		14,628		14,628
Net income attributable to Equitrans Midstream common shareholders	$	72,720	$	72,720	$	149,838	$	149,838
Basic weighted average common shares outstanding	433,017		433,017		432,773		432,773
Dilutive securities (a)	—		658		—		48
Diluted weighted average common shares outstanding	433,017		433,675		432,773		432,821
Earnings per share of common stock attributable to Equitrans Midstream common shareholders	$	0.17	$	0.17	$	0.35	$	0.35
	Nine Months Ended September 30,
	2021				2020
	Basic		Diluted		Basic		Diluted
	(In thousands, except per share data)
Net income	$	207,623	$	207,623	$	501,457	$	501,457
Less: Net income attributable to noncontrolling interests (excluding EQM Series A Preferred Units)	10,479		10,479		163,406		163,406
Less: EQM Series A Preferred Units interest in net income	—		—		47,359		47,359
Less: Preferred dividends	43,884		43,884		44,132		44,132
Net income attributable to Equitrans Midstream common shareholders	$	153,260	$	153,260	$	246,560	$	246,560
Basic weighted average common shares outstanding	433,001		433,001		314,411		314,411
Dilutive securities (a)	—		411		—		—
Diluted weighted average common shares outstanding	433,001		433,412		314,411		314,411
Earnings per share of common stock attributable to Equitrans Midstream common shareholders	$	0.35	$	0.35	$	0.78	$	0.78

(a)For the three and nine months ended September 30, 2021, the Company excluded 30,018 (in thousands), in each case, of weighted average anti-dilutive securities related to the Equitrans Midstream Preferred Shares. For the three and nine months ended September 30, 2020, the Company excluded 30,099 and 11,995 (in thousands), respectively, of weighted average anti-dilutive securities related to the Equitrans Midstream Preferred Shares and stock-based compensation awards. For the nine months ended September 30, 2020, EQM's dilutive securities issued and outstanding prior to the EQM Merger did not have a material impact on the Company's diluted earnings per share.

The Company grants Equitrans Midstream phantom units to certain non-employee directors that will be paid in Equitrans Midstream common stock upon the director's termination of service on the Board. As there are no remaining service, performance or market conditions related to these awards, 498 and 495 (in thousands) Equitrans Midstream phantom units were included in the computation of basic and diluted weighted average common shares outstanding for the three and nine months ended September 30, 2021, respectively, and 303 and 279 (in thousands) Equitrans Midstream phantom units were included in the computation of basic and diluted weighted average common shares outstanding for the three and nine months ended September 30, 2020.

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Preferred dividends include a $27.3 million premium recognized on the redemption of the EQM Series A Preferred Units as part of the Restructuring Closing during the nine months ended September 30, 2020.

11.     Income Taxes

The Company's effective tax rate was 26.2% for the three months ended September 30, 2021, compared to 14.4% for the three months ended September 30, 2020. The Company's effective tax rate was 23.9% for the nine months ended September 30, 2021, compared to 14.0% for the nine months ended September 30, 2020. For the nine months ended September 30, 2021 and 2020, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the periods. The effective tax rate was higher for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 primarily due to the decrease in net income attributable to noncontrolling interests as a result of the EQM Merger and a decrease in AFUDC – equity and related effect on the Company's estimated annual effective tax rate for the nine months ended September 30, 2021. The effective tax rate for the three and nine months ended September 30, 2020 was lower than the statutory rate primarily because the Company did not record income tax expense on the portion of its income attributable to the noncontrolling limited partners of EQM for the periods prior to the closing of the EQM Merger, did not record income tax expense on the portion of its income attributable to the noncontrolling member of Eureka Midstream and due to the impact of AFUDC - equity related to the MVP project.

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EQUITRANS MIDSTREAM CORPORATION

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements, and the notes thereto, included elsewhere in this report.

Cautionary Statements

Disclosures in this Quarterly Report on Form 10-Q contain 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 (the Securities Act). Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe," "target" and other words of similar meaning 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 matters discussed in the section captioned "Outlook" in Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," and the expectations of plans, strategies, objectives, and growth and anticipated financial and operational performance of Equitrans Midstream and its affiliates, including:

•guidance and any changes in such guidance regarding the Company’s gathering, transmission and storage and water services revenue and volume growth, including the anticipated effects associated with the EQT Global GGA and related documents entered into with EQT;

•projected revenue (including from firm reservation fees) and volumes, deferred revenues, expenses and contract liabilities, and the effects on liquidity, projected revenue, deferred revenue and contract liabilities associated with the EQT Global GGA and the MVP project (including changes in the targeted full in-service date for such project);

•the ultimate gathering fee relief provided to EQT under the EQT Global GGA and related agreements, including the exercise by EQT of any cash-out option as an alternative to receiving a portion of such relief;

•the Company's ability to de-lever;

•the weighted average contract life of gathering, transmission and storage contracts;

•infrastructure programs (including the timing, cost, capacity and sources of funding with respect to gathering, transmission and storage and water projects);

•the cost, capacity, shippers for, timing of regulatory approvals (including permitting timelines with respect to the MVP project water crossings), final design and project scope (including expansions or scope extensions or refinements and capital related thereto), ability to contract additional capacity on, mitigate emissions from and targeted in-service dates of current or in-service projects or assets, in each case as applicable;

•the ultimate terms, partner relationships and structure of the MVP Joint Venture and ownership interests therein;

•the impact of changes in the targeted full in-service date of the MVP project on, among other things, the fair value of the Henry Hub cash bonus provision of the EQT Global GGA and the estimated transaction price allocated to the Company's remaining performance obligations under certain contracts with firm reservation fees and MVCs;

•expansion projects in the Company's operating areas and in areas that would provide access to new markets;

•the Company's ability to provide produced and mixed water handling services and realize expansion opportunities;

•the Company's ability to identify and complete acquisitions and other strategic transactions, including joint ventures, effectively integrate transactions into the Company’s operations, and achieve synergies, system optionality, accretion and other benefits associated with transactions, including through increased scale;

•the Company's ability to access commercial opportunities and new customers for its water services business, and the timing and cost of the Company's development of a mixed-use water system;

•any credit rating impacts associated with the MVP project, customer credit ratings changes, defaults, acquisitions, dispositions and financings and any changes in EQM's credit ratings;

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•the impact of the arbitration decision in favor of the Company regarding the Hammerhead gathering agreement and ownership of the Hammerhead pipeline on investors' perceptions of the Company's commercial relationship with EQT and the ability to achieve, and time for achieving, Hammerhead pipeline in-service;

•the effect and outcome of future litigation and other proceedings, including regulatory proceedings;

•the effects of any consolidation of or effected by upstream gas producers, whether in or outside of the Appalachian Basin;

•the timing and amount of future issuances or repurchases of the Company's securities;

•the effects of conversion, if at all, of the Equitrans Midstream Preferred Shares;

•the effects of seasonality;

•expected cash flows and MVCs, including those associated with the EQT Global GGA, and the potential impacts thereon of the commission timing and cost of the MVP project;

•projected capital contributions and capital and operating expenditures, including the amount and timing of reimbursable capital expenditures, capital budget and sources of funds for capital expenditures;

•dividend amounts, timing and rates;

•changes in commodity prices and the effect of commodity prices on the Company's business;

•future decisions of customers in respect of curtailing natural gas production, timing of turning wells in line, rig and completion activity and related impacts on the Company's business;

•liquidity and financing requirements, including sources and availability;

•interest rates;

•the ability of the Company's subsidiaries (some of which are not wholly owned) to service debt under, and comply with the covenants contained in, their respective credit agreements;

•expectations regarding natural gas and water volumes in the Company's areas of operations;

•the Company's ability to achieve anticipated benefits associated with the execution of the EQT Global GGA, the 2021 Water Services Agreement and related agreements;

•the impact on the Company and its subsidiaries of the coronavirus disease 2019 (COVID-19) pandemic, including, among other things, effects on demand for natural gas and the Company's services, commodity prices, access to capital and costs which may be incurred as a result of, and compliance with, any vaccine or testing mandate issued by the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) or any other government agency;

•the Company's ability to achieve its environmental, social and governance (ESG) and sustainability goals (including goals set forth in its climate policy);

•the effectiveness of the Company's information technology systems and practices to defend against evolving cyber attacks on United States critical infrastructure;

•the effects of government regulation; and

•tax status and position.

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. The Company has based these forward-looking statements on management's current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, judicial and other risks and uncertainties, many of which are difficult to predict and are beyond the Company's control. The risks and uncertainties that may affect the operations, performance and results of the Company's business and forward-looking statements include, but are not limited to, those set forth under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, as updated by this Quarterly Report on Form 10-Q.

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Any forward-looking statement speaks only as of the date on which such statement is made and the Company does not intend to correct or update any forward-looking statement, unless required by securities law, whether as a result of new information, future events or otherwise.

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Executive Overview

Net income attributable to Equitrans Midstream common shareholders was $72.7 million for the three months ended September 30, 2021 compared to $149.8 million for the three months ended September 30, 2020. The decrease resulted primarily from lower equity income from the Company's investment in the MVP Joint Venture, lower operating revenues on Water and higher net interest expense, partially offset by higher operating revenues on Gathering.

Net income attributable to Equitrans Midstream common shareholders was $153.3 million for the nine months ended September 30, 2021 compared to $246.6 million for the nine months ended September 30, 2020. The decrease resulted primarily from lower equity income from the Company's investment in the MVP Joint Venture, lower operating revenues on Gathering (primarily due to impacts of the EQT Global GGA) and Water, higher net interest expense, and additional loss on extinguishment of debt charges, partially offset by lower net income attributable to noncontrolling interest, transaction costs recorded during the first nine months of 2020 and lower income tax expense. See Note 5 to the consolidated financial statements for a discussion of deferred revenues under the EQT Global GGA.

COVID-19 Update

While the COVID-19 pandemic is continuing, the outbreak has had, and continues to have, a minimal direct impact on the Company’s overall operations. The Company continues to actively manage its response to the COVID-19 pandemic in collaboration with relevant parties and, given that the situation surrounding COVID-19 remains fluid, a number of Company-wide measures undertaken in response to COVID-19 remain in effect to continue to promote the safety and health of field and office-based employees and contractors. On September 9, 2021, President Biden announced that OSHA is developing a rule that will require all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work. As an employer with more than 100 employees, the Company will be required to comply with the rule. The Company is currently monitoring the rulemaking and evaluating the potential impact of this mandate on the Company, including potential costs which could be incurred by the Company as a result of such mandate.

Notwithstanding the outbreak’s minimal direct impact to date on the Company’s overall operations, the Company acknowledges that the COVID-19 pandemic is still ongoing and therefore the Company cannot predict that the pandemic, or further developments regarding variants of COVID-19 or the above-referenced rulemaking, will not have any impact in the future on the Company's business, results of operations or financial position. For further information regarding the potential impact of COVID-19 on the Company, see "The outbreak of COVID-19 (or any future pandemic), and related declines in economic output and demand for natural gas, could harm our business, results of operations and financial condition." under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Business Segment Results

Operating segments are revenue-producing components of an enterprise for which separate financial information is produced internally and is subject to evaluation by the chief operating decision maker in deciding how to allocate resources. Headquarters costs consist primarily of transaction costs and other unallocated corporate expenses. Net interest expense, components of other income and income tax expense are managed on a consolidated basis. The Company has presented each segment's operating income, other income, equity income and various operational measures in the following sections. Management believes that the presentation of this information is useful to management and investors regarding the financial condition, results of operations and trends of its segments. The Company has reconciled each segment's operating income to the Company's consolidated operating income and net income in Note 4 to the consolidated financial statements.

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Gathering Results of Operations

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		% Change	2021		2020		% Change
	(Thousands, except per day amounts)
FINANCIAL DATA
Firm reservation fee revenues (a)	$	151,004	$	145,533	3.8	$	448,556	$	446,721	0.4
Volumetric-based fee revenues	92,812		87,118		6.5	285,288		317,508		(10.1)
Total operating revenues	243,816		232,651		4.8	733,844		764,229		(4.0)
Operating expenses:
Operating and maintenance	25,758		20,683		24.5	72,698		62,306		16.7
Selling, general and administrative	21,831		21,930		(0.5)	72,324		67,686		6.9
Transaction costs	—		—		—	—		4,104		(100.0)
Depreciation	47,441		44,648		6.3	140,899		126,915		11.0
Amortization of intangible assets	16,204		16,204		—	48,614		46,990		3.5
Impairments of long-lived assets	—		—		—	—		55,581		(100.0)
Total operating expenses	111,234		103,465		7.5	334,535		363,582		(8.0)
Operating income	$	132,582	$	129,186	2.6	$	399,309	$	400,647	(0.3)
Other income (b)	$	21,328	$	21,005	1.5	$	37,897	$	37,729	0.4
OPERATIONAL DATA
Gathered volumes (BBtu per day)
Firm capacity (c)	5,110		5,111		—	5,211		4,493		16.0
Volumetric-based services	2,880		3,080		(6.5)	3,109		3,565		(12.8)
Total gathered volumes	7,990		8,191		(2.5)	8,320		8,058		3.3
Capital expenditures (d)	$	62,916	$	90,452	(30.4)	$	170,709	$	303,063	(43.7)

(a)For the three and nine months ended September 30, 2021, firm reservation fee revenues included approximately $5.5 million and $12.4 million, respectively, of MVC unbilled revenues. For the three and nine months ended September 30, 2020, firm reservation fee revenues included approximately $2.6 million and $13.7 million, respectively, of MVC unbilled revenues.

(b)Other income includes the unrealized gains on derivative instruments associated with the Henry Hub cash bonus payment provision. See Note 9 to the consolidated financial statements for further information.

(c)Includes volumes up to the contractual MVC under agreements structured with MVCs. Volumes in excess of the contractual MVC are reported under Volumetric-based services.

(d)Includes approximately $4.8 million and $10.6 million of capital expenditures related to the noncontrolling interest in Eureka Midstream for the three and nine months ended September 30, 2021, respectively, and includes approximately $13.5 million and $37.1 million of capital expenditures related to the noncontrolling interest in Eureka Midstream for the three and nine months ended September 30, 2020, respectively.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Gathering operating revenues increased by $11.2 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Firm reservation fee revenues increased by $5.5 million primarily due to increased MVC revenues primarily attributable to contractual agreements commencing in late 2020. Volumetric-based fee revenues increased by $5.7 million primarily due to higher compression fees.

Gathering operating expenses increased by $7.8 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due to higher operating and maintenance and depreciation expenses. Operating and maintenance expense increased by $5.1 million primarily as a result of an increase in repairs and maintenance expense. Depreciation expense increased by $2.8 million as a result of additional assets placed in-service.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

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Gathering operating revenues decreased by $30.4 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Volumetric-based fee revenues decreased by $32.2 million primarily due to increased MVC revenues attributable to volumes that previously were subject to volumetric-based fees prior to the EQT Global GGA. The volumetric-based fee revenue decrease was slightly offset by an increase in firm reservation fee revenues of $1.8 million primarily due to increased MVC revenues, partially offset by increased deferred revenue resulting from the EQT Global GGA. See Note 5 to the consolidated financial statements for a discussion of deferred revenues under the EQT Global GGA.

Gathering operating expenses decreased by $29.0 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily as a result of the impairments of long-lived assets (which consisted of gathering assets and customer-related intangible assets totaling $55.6 million, as described in Note 3 to the consolidated financial statements) and transaction costs associated with the EQM Merger and related transactions during the first quarter of 2020, partially offset by increases in operating and maintenance, selling, general and administrative and depreciation expenses in the first nine months of 2021 compared to the first nine months of 2020. Operating and maintenance expense increased by $10.4 million primarily as a result of an increase in repairs and maintenance expense. Selling, general and administrative expense increased by $4.6 million primarily due to legal fees associated with the Hammerhead pipeline arbitration and personnel costs. Depreciation expense increased by $14.0 million as a result of additional assets placed in-service.

See "Outlook" and Note 3 to the consolidated financial statements for further discussion of the impairments of long-lived assets. See also “Outlook” and Part I, "Item 3. Quantitative and Qualitative Disclosures About Market Risk" of this Quarterly Report on Form 10-Q for discussions of certain customer production curtailments during 2020 and Note 5 to the consolidated financial statements for discussions of the EQT Global GGA and the transactions related thereto, including the gathering fee relief to EQT thereunder. As was the case for the Gathering operating revenues during the first nine months of 2021, the Company expects that the revenues resulting from the MVCs under the EQT Global GGA will increase the proportion of the Company's total operating revenues that are firm reservation fee revenues, and correspondingly decrease the portion of the Company's total operating revenues that are volumetric-based fee revenues, in future periods. Firm reservation fee revenues under the Company’s Hammerhead gathering agreement with EQT are also expected to contribute to an increase in the Company’s firm reservation fee revenues following achievement of the Hammerhead pipeline in-service. See also “Outlook” for discussions of the arbitration decision issued in the Hammerhead pipeline dispute with EQT.

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Transmission Results of Operations

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		% Change	2021		2020		% Change
	(Thousands, except per day amounts)
FINANCIAL DATA
Firm reservation fee revenues	$	84,053	$	84,612	(0.7)	$	269,239	$	267,973	0.5
Volumetric-based fee revenues	6,833		8,717		(21.6)	25,964		20,896		24.3
Total operating revenues	90,886		93,329		(2.6)	295,203		288,869		2.2
Operating expenses:
Operating and maintenance	7,922		8,653		(8.4)	23,682		27,724		(14.6)
Selling, general and administrative	9,426		7,557		24.7	26,907		18,644		44.3
Depreciation	13,835		13,659		1.3	41,461		40,787		1.7
Total operating expenses	31,183		29,869		4.4	92,050		87,155		5.6
Operating income	$	59,703	$	63,460	(5.9)	$	203,153	$	201,714	0.7
Equity income	$	8,461	$	60,917	(86.1)	$	14,385	$	171,233	(91.6)
OPERATIONAL DATA
Transmission pipeline throughput (BBtu per day)
Firm capacity reservation	2,939		2,950		(0.4)	2,927		2,897		1.0
Volumetric-based services	7		29		(75.9)	9		17		(47.1)
Total transmission pipeline throughput	2,946		2,979		(1.1)	2,936		2,914		0.8
Average contracted firm transmission reservation commitments (BBtu per day)	3,819		3,859		(1.0)	4,008		4,027		(0.5)
Capital expenditures (a)	$	5,755	$	6,721	(14.4)	$	17,050	$	32,983	(48.3)

(a)Transmission capital expenditures do not include aggregate capital contributions made to the MVP Joint Venture for the MVP and MVP Southgate projects of $94.3 million and $179.0 million for the three and nine months ended September 30, 2021, respectively, and $65.6 million and $144.3 million for the three and nine months ended September 30, 2020, respectively.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Transmission operating revenues decreased by $2.4 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily as a result of decreased volumetric-based usage fee revenues.

Operating expenses increased by $1.3 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily as a result of higher selling, general and administrative expense resulting primarily from increased professional service fees, partly offset by lower operating and maintenance expense primarily due to lower personnel costs.

Equity income decreased by $52.5 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due to the decrease in the MVP Joint Venture's AFUDC on the MVP project for the three months ended September 30, 2021.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Transmission operating revenues increased by $6.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Firm reservation fee revenues increased by $1.3 million primarily due to customers contracting for additional firm transmission capacity. Volumetric-based fee revenues increased by $5.1 million primarily due to higher storage activities and increased usage fees.

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Operating expenses increased by $4.9 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily as a result of higher selling, general and administrative expense resulting from increased professional service fees and personnel costs, partly offset by lower operating and maintenance expense primarily due to operational efficiencies.

Equity income decreased by $156.8 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 due to the decrease in the MVP Joint Venture's AFUDC on the MVP project for the nine months ended September 30, 2021.

In January 2021, the MVP Joint Venture temporarily suspended AFUDC on the MVP project due to a temporary reduction in growth construction activities. During the second quarter of 2021, the MVP Joint Venture resumed some AFUDC on the MVP project as certain growth construction activities resumed. Depending on the timing of the resumption of the remaining growth construction activities and associated AFUDC, the Company’s equity income could be negatively impacted in future periods, and such impact could be substantial.

Water Results of Operations

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020		% Change	2021		2020		% Change
	(Thousands, except MMgal amounts)
FINANCIAL DATA
Firm reservation fee revenues (a)	$	1,061	$	9,005	(88.2)	$	3,834	$	32,788	(88.3)
Volumetric-based fee revenues	6,311		15,015		(58.0)	37,484		57,817		(35.2)
Total operating revenues	7,372		24,020		(69.3)	41,318		90,605		(54.4)
Operating expenses:
Operating and maintenance	5,053		4,569		10.6	14,581		23,960		(39.1)
Selling, general and administrative	2,369		1,228		92.9	5,396		3,752		43.8
Depreciation	4,364		8,105		(46.2)	20,740		22,720		(8.7)
Impairments of long-lived assets	—		—		100.0	56,178		—		100.0
Total operating expenses	11,786		13,902		(15.2)	96,895		50,432		92.1
Operating (loss) income	$	(4,414)	$	10,118	(143.6)	$	(55,577)	$	40,173	(238.3)
OPERATIONAL DATA
Water services volumes (MMgal)
Firm capacity reservation (b)	16		126		(87.3)	70		487		(85.6)
Volumetric-based services	161		307		(47.6)	837		1,124		(25.5)
Total water volumes	177		433		(59.1)	907		1,611		(43.7)
Capital expenditures	$	10,803	$	2,530	327.0	$	20,430	$	8,377	143.9

(a)    For the three and nine months ended September 30, 2021, firm reservation fee revenues included approximately $0.5 million and $1.5 million, respectively, of MVC unbilled revenues. For the three and nine months ended September 30, 2020, firm reservation fee revenues included approximately $1.9 million and $11.4 million, respectively, of MVC unbilled revenues.

(b)    Includes volumes up to the contractual MVC under agreements structured with MVCs. Volumes in excess of the contractual MVC are reported under Volumetric-based services.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Water operating revenues decreased by $16.6 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Firm reservation fee revenues decreased by $7.9 million primarily as a result of decreased revenues associated with contractually lower MVCs. Volumetric-based fee revenues decreased $8.7 million primarily due to lower volumes as a result of decreased producer activity.

Water operating expenses decreased by $2.1 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily as a result of decreased depreciation expense due to the impairments of long-lived

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assets (as described in Note 3 to the consolidated financial statements) during the second quarter of 2021, partially offset by higher selling, general and administrative expense resulting primarily from increased professional service fees.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Water operating revenues decreased by $49.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Firm reservation fee revenues decreased by $29.0 million primarily as a result of decreased revenues associated with contractually lower MVCs. Volumetric-based fee revenues decreased $20.3 million primarily due to lower volumes as a result of decreased producer activity and decreased realized rates on a per gallon basis.

Water operating expenses increased by $46.5 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily as a result of the impairments of long-lived assets totaling $56.2 million (as described in Note 3 to the consolidated financial statements), partly offset by lower operating and maintenance expense primarily due to overall lower customer activity resulting in lower fresh water and produced water costs.

The Company’s water services are directly associated with producers’ well completion activities and fresh and produced water needs (which are partially driven by horizontal lateral lengths and the number of completion stages per well). Therefore, the Water operating results traditionally fluctuate from year-to-year in response to producers’ well completion activities and water operating results for interim periods are not necessarily indicative of the results for any year, including the year ending December 31, 2021.

Other Income Statement Items

Other Income

Other income was relatively flat for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020.

See also "Outlook" for a discussion of factors affecting the estimated fair value of the derivative asset attributable to the Henry Hub cash bonus payment provision that is recognized in other income on the Company's statements of consolidated comprehensive income.

Loss on Extinguishment of Debt

Loss on extinguishment of debt increased $16.2 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The Company incurred a loss on the extinguishment of debt of $41.0 million during the nine months ended September 30, 2021 related to the payment of the Tender Offer premium and write off of unamortized discounts and financing costs related to the prepayment of the EQM Term Loans under, and termination of, the Amended 2019 EQM Term Loan Agreement and purchase of 2023 Notes in the Tender Offers. During the nine months ended September 30, 2020, the Company incurred a loss on the extinguishment of debt of $24.9 million related to the write off of unamortized discounts and financing costs primarily related to the prepayment and termination of the ETRN Term Loan Credit Agreement. See Note 8 to the consolidated financial statements for additional discussion.

Net Interest Expense

Net interest expense increased $7.7 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily due to higher interest expense of $22.1 million associated with the 2021 Senior Notes, partially offset by lower interest expense of $14.9 million primarily associated with the termination of the Amended 2019 EQM Term Loan Agreement, decreased borrowings under the Amended EQM Credit Facility and lower interest on the 2023 Notes as a result of the Tender Offers.

Net interest expense increased $64.9 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily due to higher interest expense of $65.8 million and $48.2 million associated with the 2021 Senior Notes and the 2020 Senior Notes, respectively, and decreased capitalized interest and AFUDC - debt of $13.9 million, partially offset by lower interest expense of $64.2 million primarily associated with the termination of the Amended 2019 EQM Term Loan Agreement and the ETRN Term Loan Credit Agreement, decreased borrowings under the Amended EQM Credit Facility and lower interest on the 2023 Notes as a result of the Tender Offers.

As a result of the issuance of the 2021 Senior Notes, and after taking into account the use of those proceeds to pay off other outstanding debt, the Company expects interest expense for the periods after the issuance of the 2021 Senior Notes to continue to be higher than comparable prior year periods.

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See also Note 8 to the consolidated financial statements for a discussion of certain of the Company's outstanding debt.

Income Taxes

See Note 11 to the consolidated financial statements for an explanation of the changes in income taxes for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020.

The Company files a consolidated income tax return for federal income taxes and uses the asset and liability method to account for income taxes. EQM is a limited partnership for U.S. federal and state income tax purposes. Eureka Midstream is a limited liability company for such purposes. EQM and Eureka Midstream are not subject to U.S. federal or state income taxes.

All of Eureka Midstream's income is, and for the period prior to the closing of the EQM Merger all of EQM's income was, included in the Company's pre-tax income; however, the Company does not record income tax expense on the portions of its income attributable to the noncontrolling member of Eureka Midstream and did not record income tax expense on the portions of its income attributable to the noncontrolling limited partners of EQM for the periods prior to the closing of the EQM Merger. This reduces the Company's effective tax rate in periods when the Company has consolidated pre-tax income. The Company's effective tax rate for periods following the EQM Merger has been, and the Company expects its effective tax rate for future periods will be, generally higher than the pre-EQM Merger periods due to the decrease in net income attributable to noncontrolling interests as a result of the EQM Merger and related Restructuring.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was relatively flat for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Net income attributable to noncontrolling interests decreased for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily as a result of the reduction in noncontrolling interest in connection with the EQM Merger and the Restructuring.

The Company recorded net income attributable to noncontrolling interest for the third-party ownership interests in EQM (including the EQM Series A Preferred Units) through the closing of the EQM Merger. Upon the closing of the EQM Merger on June 17, 2020, the Company's remaining noncontrolling interest consists solely of the third-party ownership interest in Eureka Midstream.

Capital Expenditures

See "Investing Activities" and "Capital Requirements" under "Capital Resources and Liquidity" for discussion of capital expenditures and capital contributions.

Outlook

The Company's strategically-located assets overlay core acreage in the Appalachian Basin. The location of the Company's assets allows its producer customers to access major demand markets in the U.S. The Company is one of the largest natural gas gatherers in the U.S., and its largest customer, EQT, was the largest natural gas producer in the U.S. based on average daily sales volumes as of September 30, 2021. The Company maintains a stable cash flow profile, with approximately 67% of its revenue for the nine months ended September 30, 2021 generated by firm reservation fees. Further, the percentage of the Company's revenues that are generated by firm reservation fees is expected to increase in future years as a result of the 15-year term EQT Global GGA, which includes an MVC of 3.0 Bcf per day that became effective on April 1, 2020 and gradually steps up to 4.0 Bcf per day for several years following the full in-service date of the MVP project. This contract structure enhances the stability of the Company's cash flows and limits its direct exposure to commodity price risk.

The Company's principal strategy is to achieve greater scale and scope and enhance the durability of its financial strength, which the Company expects will drive future growth and investment. The Company is implementing its strategy by leveraging its existing assets, executing on its growth projects (including through potential expansion and extension opportunities), focusing on ESG and sustainability initiatives, and, where appropriate, seeking and executing on strategically-aligned acquisition and joint venture opportunities and other strategic transactions, while strengthening its balance sheet through:

•highly predictable cash flows backed by firm reservation fees;

•actions to de-lever its balance sheet;

•disciplined capital spending;

•operating cost control; and

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•an appropriate dividend policy.

As part of its approach to organic growth, the Company is focused on its projects and assets outlined below, many of which are supported by contracts with firm capacity or MVC commitments. The Company believes that this approach will enable the Company to achieve its strategic goals.

The Company expects that the MVP project, together with the Hammerhead pipeline and Equitrans, L.P. Expansion Project (EEP), will primarily drive the Company's organic growth and that its future growth also will be supported by the MVP Southgate project, as discussed in further detail below.

•Mountain Valley Pipeline. The MVP is being constructed by a joint venture among the Company and affiliates of each of NextEra Energy, Inc., Con Edison, AltaGas Ltd. and RGC Resources, Inc. As of September 30, 2021, the Company owned an approximate 46.6% interest in the MVP project and will operate the MVP. The MVP is an estimated 300-mile, 42-inch diameter natural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day that will span from the Company's existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia, providing access to the growing Southeast demand markets. The MVP Joint Venture has secured a total of 2.0 Bcf per day of firm capacity commitments at 20-year terms. Additional shippers have expressed interest in the MVP project and the MVP Joint Venture is evaluating an expansion opportunity that could add approximately 0.5 Bcf per day of capacity through the installation of incremental compression. The MVP Joint Venture is also evaluating other future pipeline extension projects.

In October 2017, the FERC issued the Certificate of Public Convenience and Necessity (the Certificate) for the MVP. In the first quarter of 2018, the MVP Joint Venture received limited notice to proceed with certain construction activities from the FERC and commenced construction. Following a comprehensive review of all outstanding stream and wetland crossings across the approximately 300-mile MVP project route, on February 19, 2021, the MVP Joint Venture submitted (i) a joint application package to each of the Huntington, Pittsburgh and Norfolk Districts of the U.S. Army Corps of Engineers (Army Corps) that requests an Individual Permit from the Army Corps to effect approximately 300 water crossings utilizing open cut techniques (the Army Corps Individual Permit) and (ii) an application to amend the Certificate that seeks FERC authority to utilize alternative trenchless construction methods to effect approximately 120 water crossings. Related to seeking the Army Corps Individual Permit, on March 4, 2021, the MVP Joint Venture submitted applications to each of the West Virginia Department of Environmental Protection (WVDEP) and the Virginia Department of Environmental Quality (VADEQ) seeking Section 401 water quality certification approvals or waivers (such approvals or waivers, the State 401 Approvals). Both the WVDEP and VADEQ submitted requests to the Army Corps for additional time to address the applications, and, in late June 2021, the Army Corps granted the WVDEP and the VADEQ additional review time through November 29, 2021 and December 31, 2021, respectively. In early June 2021, the FERC issued a notice of schedule for the MVP Joint Venture's Certificate amendment application and the FERC issued an Environmental Assessment in mid-August 2021. Given that the expected permitting timelines for both the FERC and the Army Corps remain in-line with the Company's expectations, the Company continues to target a full in-service date for the MVP project in summer 2022 at a total project cost of approximately $6.2 billion (excluding AFUDC).

In order to complete the project in accordance with the targeted full in-service date and cost, the MVP Joint Venture must, among other things, timely receive the Army Corps Individual Permit (as well as timely receive the State 401 Approvals and, as necessary, certain other state-level approvals), and timely receive authorization from the FERC to amend the Certificate to utilize alternative trenchless construction methods for certain stream and wetland crossings. The MVP Joint Venture also must (i) maintain and, as applicable, timely receive required authorizations, including authorization to proceed with construction, related to the Jefferson National Forest (JNF) from the Bureau of Land Management (BLM), the U.S. Forest Service (USFS) and the FERC; (ii) continue to have available the orders previously issued by the FERC modifying its prior stop work orders and extending the MVP Joint Venture’s prescribed time to complete the MVP project; (iii) timely receive authorization from the FERC to complete construction work in the portion of the project route currently remaining subject to the FERC’s previous stop work order; and (iv) continue to be authorized to work under the Biological Opinion and Incidental Take Statement issued by the United States Department of the Interior’s Fish and Wildlife Service (FWS) for the MVP project. In each case, any such foregoing or other authorizations must remain in effect notwithstanding any pending or future challenge thereto. For further information regarding litigation and regulatory related delays affecting the completion of the MVP project, see Part II, "Item 1. Legal Proceedings" of this Quarterly Report on Form 10-Q. See also "The regulatory approval process for the construction of new midstream assets is very challenging, and decisions by regulatory and judicial authorities in pending or potential proceedings could impact our or the MVP Joint Venture's ability to obtain or maintain in effect all approvals and authorizations necessary to complete certain projects on the targeted time frame or at all or our ability to achieve the expected

35

investment returns on the projects." included in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 for additional discussion of risks in respect of the targeted in-service date and cost discussed above.

On November 4, 2019, Con Edison exercised an option to cap its investment in the construction of the MVP project at approximately $530 million (excluding AFUDC). The Company and NextEra Energy, Inc. are obligated, and RGC Resources, Inc., another member of the MVP Joint Venture owning an interest in the MVP project, has opted, to fund the shortfall in Con Edison's capital contributions on a pro rata basis. Such funding by the Company and funding by other members has and will correspondingly increase the Company's and such other members' respective interests in the MVP project and decrease Con Edison's interest in the MVP project. As a result, based on the MVP project's approximate $6.2 billion (excluding AFUDC) targeted cost, the Company's ownership interest in the MVP project is expected to progressively increase from approximately 46.6% to approximately 47.8%.

Through September 30, 2021, based on the MVP project's targeted cost, the Company had funded approximately $2.4 billion of its estimated total capital contributions of approximately $3.1 billion (inclusive of additional contributions required due to the Con Edison cap described above), including approximately $160 million in excess of the Company's ownership interest. For 2021, the Company expects to make total capital contributions of $275 million to $295 million to the MVP Joint Venture for purposes of the MVP project, depending on the timing of construction of the project, of which approximately $175.8 million had been contributed to the MVP Joint Venture as of September 30, 2021.

•Wellhead Gathering Expansion Projects and Hammerhead Pipeline. During the nine months ended September 30, 2021, the Company invested approximately $170.7 million in gathering projects (inclusive of capital expenditures related to the noncontrolling interest in Eureka Midstream). For 2021, the Company expects to invest approximately $235 million to $260 million in gathering projects (inclusive of expected capital expenditures related to the noncontrolling interest in Eureka Midstream). The primary projects include infrastructure expansion of core development areas in the Marcellus and Utica Shales in southwestern Pennsylvania, southeastern Ohio and northern West Virginia for EQT, Range Resources Corporation (Range Resources) and other producers.

The Hammerhead pipeline is a 1.6 Bcf per day gathering header pipeline that is primarily designed to connect natural gas produced in Pennsylvania and West Virginia to the MVP, Texas Eastern Transmission and Dominion Transmission, is supported by a 20-year term, 1.2 Bcf per day, firm capacity commitment from EQT and cost approximately $540 million. For more information, including regarding in-service for the Hammerhead pipeline, see "Hammerhead Pipeline" below.

•Transmission Projects. During the nine months ended September 30, 2021, the Company invested approximately $17.1 million in transmission projects. For 2021, the Company expects to invest approximately $30 million to $35 million in transmission projects.

The EEP is designed to provide north-to-south capacity on the mainline Equitrans, L.P. system, including primarily for deliveries to the MVP. A portion of the EEP commenced operations with interruptible service in the third quarter of 2019. The EEP provides capacity of approximately 600 MMcf per day and offers access to several markets through interconnects with Texas Eastern Transmission, Dominion Transmission and Columbia Gas Transmission. Once the MVP is fully placed in service, firm transportation agreements for 550 MMcf per day of capacity will commence under 20-year terms.

•MVP Southgate Project. In April 2018, the MVP Joint Venture announced the MVP Southgate project, a proposed 75-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. The MVP Southgate project is backed by a 300 MMcf per day firm capacity commitment from Dominion Energy North Carolina. As designed, the MVP Southgate project has expansion capabilities that could provide up to 900 MMcf per day of total capacity. The MVP Southgate project is estimated to cost a total of approximately $450 million to $500 million, which is expected to be spent primarily in 2022. The Company expects to fund approximately $225 million of the overall project cost. During the nine months ended September 30, 2021, the Company made approximately $3.2 million of capital contributions to the MVP Joint Venture for the MVP Southgate project. For 2021, the Company expects to make capital contributions of approximately $5 million to $10 million to the MVP Joint Venture for the MVP Southgate project. The Company will operate the MVP Southgate and, as of September 30, 2021, owned a 47.2% interest in

36

the MVP Southgate project. The MVP Joint Venture submitted the MVP Southgate certificate application to the FERC in November 2018. The Final Environmental Impact Statement for the MVP Southgate project was issued on February 14, 2020. In June 2020, the FERC issued the Certificate of Public Convenience and Necessity for the MVP Southgate; however, the FERC, while authorizing the project, directed the Office of Energy Projects not to issue a notice to proceed with construction until necessary federal permits are received for the MVP project and the Director of the Office of Energy Projects lifts the stop work order and authorizes the MVP Joint Venture to continue constructing the MVP project. On August 11, 2020, the North Carolina Department of Environmental Quality (NCDEQ) denied the MVP Southgate project's application for a Clean Water Act Section 401 Individual Water Quality Certification and Jordan Lake Riparian Buffer Authorization due to uncertainty surrounding the completion of the MVP project. On March 11, 2021, the Fourth Circuit Court of Appeals, pursuant to an appeal filed by the MVP Joint Venture, vacated the NCDEQ's denial and remanded the matter to the NCDEQ for additional review. On April 29, 2021, the NCDEQ reissued its denial of the MVP Southgate project's application for a Clean Water Act Section 401 Individual Water Quality Certification and Jordan Lake Riparian Buffer Authorization. Based on the targeted full in-service date for the MVP and expectations regarding MVP Southgate permit approval timing, the Company is targeting commencing construction on the MVP Southgate in 2022 and placing the MVP Southgate in-service during the spring of 2023. See the discussion of litigation and regulatory related delays affecting the completion of the MVP Southgate project set forth in Part II, "Item 1. Legal Proceedings" of this Quarterly Report on Form 10-Q.

•Water Operations. During the nine months ended September 30, 2021, the Company invested approximately $20.4 million in its water delivery infrastructure. For 2021, the Company expects to invest approximately $35 million in the operations of its water delivery infrastructure in Pennsylvania.

See further discussion of capital expenditures in the "Capital Requirements" section below.

EQT Global GGA. On February 27, 2020, the Company announced the EQT Global GGA, which is a 15-year contract that includes, among other things, a 3.0 Bcf per day MVC (which gradually steps up to 4.0 Bcf per day for several years following the full in-service date of the MVP project) and the dedication of a substantial majority of EQT’s core acreage in southwestern Pennsylvania and West Virginia to the Company. Under the EQT Global GGA, EQT will receive certain gathering fee relief over a period of three years following the in-service date of the MVP, subject to any exercise of the EQT Cash Option (as further described in Note 5 to the consolidated financial statements). The EQT Global GGA replaced 14 previous gathering agreements between EQT and the Company.

Under the EQT Global GGA, the performance obligation is to provide daily MVC capacity and as such the total consideration is allocated proportionally to the daily MVC over the life of the contract. In periods that the gathering MVC revenue billed will exceed the allocated consideration, the excess will be deferred to the contract liability and recognized in revenue when the performance obligation has been satisfied. Assuming a full in-service date in summer 2022 for the MVP, the deferral to the contract liability is expected to increase by approximately $75 million during the fourth quarter of 2021 and by approximately $137 million during 2022. During the third quarter of 2021, the estimated deferral to the contract liability for 2022 increased by approximately $70 million due to a refinement of the full in-service date assumed within the summer 2022 in-service target for MVP. While the 3.0 Bcf per day MVC capacity became effective on April 1, 2020, additional daily MVC capacity and the associated gathering MVC fees payable by EQT to the Company as set forth in the EQT Global GGA are conditioned upon the full in-service date of the MVP. There are ongoing legal and regulatory matters that must be resolved before the MVP project can be completed which could have a material effect on the performance obligation, the allocation of the total consideration over the life of the contract and the gathering MVC fees payable by EQT under the contract.

Based on the Henry Hub natural gas forward strip prices as of October 29, 2021 and the terms of the Henry Hub cash bonus payment provision, any further delays in the in-service date for the MVP project, including beyond the most recent targeted full in-service date of summer 2022, would decrease the estimated fair value of the derivative asset attributable to the Henry Hub cash bonus payment provision, and such decrease may be substantial. For a discussion of the potential effect of hypothetical changes to the NYMEX Henry Hub natural gas future prices on the estimated fair value of the derivative asset attributable to the Henry Hub cash bonus payment provision, see "Commodity Prices" in Part I, "Item 3. Quantitative and Qualitative Disclosures About Market Risk" of this Quarterly Report on Form 10-Q. Changes in estimated fair value, if any, would be recognized in other income on the Company’s statements of consolidated comprehensive income.

For a discussion of the Company's commercial relationship with EQT and related considerations, including risk factors, see the Company's Annual Report on Form 10-K for the year ended December 31, 2020, as updated by this Quarterly Report on Form 10-Q. See also Note 5 to the consolidated financial statements for additional information regarding the EQT Global GGA and

37

the transactions related thereto. For further discussion on litigation and regulatory challenges affecting the completion of the MVP project, see "Outlook" above and Part II, "Item 1. Legal Proceedings" of this Quarterly Report on Form 10-Q.

Hammerhead Pipeline. On September 23, 2020, EQT and certain affiliates of EQT instituted arbitration proceedings against the Company by filing a Demand for Arbitration with the American Arbitration Association. The arbitration arose out of the Hammerhead gathering agreement, pursuant to which the Company agreed to construct the Hammerhead pipeline and gather gas for EQT. EQT sought a declaratory judgment that it could exercise an early termination right and purchase the Hammerhead pipeline and related facilities under the terms of the Hammerhead gathering agreement. With its Demand for Arbitration, EQT also sought emergency relief, asking that an emergency arbitrator: (i) resolve the parties’ dispute on the merits by October 1, 2020; or (ii) alternatively, toll the contractual deadline for EQT’s exercise of its termination right, which was set to expire on October 11, 2020, until after the parties’ dispute was resolved. On October 6, 2020, the emergency arbitrator issued an order denying EQT’s request for emergency resolution on the merits but tolling the early termination deadline until the arbitration has been resolved. The Company’s answer to the Notice of Arbitration was filed on October 8, 2020, and the parties participated in an arbitration hearing from June 28, 2021 to July 2, 2021.

On October 25, 2021, the three-member panel appointed to arbitrate the dispute issued a binding arbitration decision in favor of the Company. The arbitration panel unanimously determined that, under the Hammerhead gathering agreement, although the in-service date for the Hammerhead pipeline was delayed beyond October 1, 2020, such delay was caused by or attributable to force majeure and, accordingly, that EQT has no early termination right under the Hammerhead gathering agreement relating to the timing of Hammerhead pipeline in-service or related right to purchase the Hammerhead gathering pipeline and associated facilities. Given the arbitration panel’s determinations, the Company will not be entitled to charge EQT monthly firm capacity reservation fees under the Hammerhead gathering agreement unless and until Hammerhead pipeline in-service is achieved (which the Company expects in conjunction with MVP in-service).

Local Market Natural Gas Prices. The Company’s business is dependent on continued natural gas production and the availability and development of reserves in its areas of operation. Prices for natural gas and NGLs, including regional basis differentials, may adversely affect timing of development of additional reserves and production that is accessible by the Company’s pipeline and storage assets, which also negatively affects the Company’s water services business that is directly associated with producers’ well completion activities.

While natural gas prices have surged from 2020 lows as of the filing of this Quarterly Report on Form 10-Q, low or discounted natural gas prices in the Appalachian region have affected, and could in the future affect, Company producer customers’ determinations in respect of the amount and location of future rig and completion activity, timing of turning wells in line and whether to temporarily shut in portions of their production or otherwise take actions to slow production growth and/or reduce production during periods of low and discounted local natural gas prices. For additional information regarding impacts of commodity prices on the Company and related risks, including regarding past production curtailments by Company customers, see Part I, “Item 3. Quantitative and Qualitative Disclosures About Market Risk” of this Quarterly Report on Form 10-Q, as well as "Decreases in production of natural gas in our areas of operation have adversely affected, and future decreases could further adversely affect, our business and operating results and reduce our cash available to pay cash dividends to our shareholders." included in Item "1A. Risk Factors" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Potential Future Impairments. During the second quarter of 2021, the Company recognized impairments of approximately $56.2 million related to the Ohio Water long-lived assets. During the first quarter of 2020, the Company recognized impairments of long-lived assets of approximately $55.6 million, including $37.9 million related to certain Hornet Midstream-related gathering assets and $17.7 million related to certain Hornet Midstream-related intangible assets. See Note 3 to the consolidated financial statements for additional information.

The accounting estimates related to impairments are susceptible to change, including estimating fair value which requires considerable judgment. For goodwill, management’s estimate of a reporting unit’s future financial results is sensitive to changes in assumptions, such as changes in stock prices, weighted-average cost of capital, terminal growth rates and industry multiples. Similarly, cash flow estimates utilized for purposes of evaluating long-lived assets and equity method investments (such as in the MVP Joint Venture) require the Company to make projections and assumptions for many years into the future for pricing, demand, competition, operating costs, commencement of operations, resolution of relevant legal and regulatory matters, and other factors. The Company evaluates long-lived assets and equity method investments for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such assets may not be recoverable (meaning, in the case of equity method investments, that such investments have suffered other-than-temporary declines in value under ASC 323). The Company believes the estimates and assumptions used in estimating its reporting units’, its long-lived assets' and its equity investment's fair values are reasonable and appropriate as of September 30, 2021; however, assumptions and estimates are inherently subject to significant business, economic, competitive, regulatory, judicial and other risks that could

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materially affect the calculated fair values and the resulting conclusions regarding impairments, which could materially affect the Company’s results of operations and financial position. Additionally, actual results could differ from these estimates and assumptions may not be realized. The Company also continues to evaluate and monitor the ongoing legal and regulatory matters related to the MVP and MVP Southgate projects that affect project completion, as further described in Part II, “Item 1. Legal Proceedings” of this Quarterly Report on Form 10-Q. Adverse or delayed developments with respect to such matters or other adverse developments could require that the Company modify assumptions reflected in the probability-weighted scenarios of discounted future net cash flows (including with respect to the probability of success) utilized to estimate the fair value of its equity investment in the MVP Joint Venture, which could result in an other-than-temporary decline in value, resulting in an impairment of that investment. See also Note 3 to the consolidated financial statements, as well as “Reviews of our goodwill, intangible and other long-lived assets have resulted in significant impairment charges and reviews of our goodwill, intangible and other long-lived assets could result in future significant impairment charges, including with respect to our investment in the MVP Joint Venture.” included in “Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and the Company's discussion of "Critical Accounting Policies and Estimates" included in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

As of the filing of this Quarterly Report on Form 10-Q, the Company cannot predict the likelihood or magnitude of any future impairment.

For a discussion of capital expenditures, see "Capital Requirements" below.

Capital Resources and Liquidity

The Company's liquidity requirements are to finance its operations, its capital expenditures, potential acquisitions and other strategic transactions and capital contributions to joint ventures, including the MVP Joint Venture, to pay cash dividends and to satisfy any indebtedness obligations. The Company's ability to meet these liquidity requirements depends on the Company's cash flow from operations, the continued ability of the Company to borrow under its credit facilities and the Company's ability to raise capital in banking, capital and other markets. Cash flow and capital raising activities may be affected by prevailing economic conditions in the natural gas industry and other financial and business factors (including market forces causing shifts in investor and lender sentiment away from fossil fuels and credit allocations to industries and companies perceived as being more sustainable, having better growth opportunities and/or having stronger ESG metrics and practices), some of which are beyond the Company's control. The Company's available sources of liquidity include cash from operations, cash on hand, borrowings under its subsidiaries' revolving credit facilities, issuances of additional debt and issuances of additional equity securities. As of September 30, 2021, pursuant to the terms of the Amended EQM Credit Facility, EQM would have been able to borrow approximately $1.0 billion under the Amended EQM Credit Facility. The amount the Company is able to borrow under the Amended EQM Credit Facility is bounded by a maximum consolidated leverage ratio. See Note 8 to the consolidated financial statements included in this Quarterly Report on Form 10-Q for further information regarding the Amended EQM Credit Facility.

See “Security Ratings” below for a discussion of EQM’s credit ratings as of September 30, 2021. As a result of downgrades of EQM's credit ratings to non-investment grade in February 2020, EQM was obligated to deliver additional credit support to the MVP Joint Venture in the form of letters of credit, which, in the case of the MVP project (based on the targeted cost for the project), is in the amount of approximately $219.7 million and is, in the case of the MVP Southgate, $14.2 million, in each case as of the filing date of this Quarterly Report on Form 10-Q. Additionally, pursuant to the EQT Global GGA, if EQM does not maintain minimum credit ratings from two of three credit rating agencies of at least Ba3 with respect to Moody's and BB- with respect to S&P and Fitch, EQM will be obligated to provide additional credit support in an amount equal to approximately $196 million to EQT in support of the potential payment obligation related to the EQT Cash Option (the Cash Option Letter of Credit). See Note 5 to the consolidated financial statements for a discussion of the EQT Cash Option, which will become exercisable by EQT commencing on January 1, 2022. See "A further downgrade of EQM's credit ratings, including in connection with the MVP project or customer credit ratings changes, including EQT's, which are determined by independent third parties, could impact our liquidity, access to capital, and costs of doing business." included in "Item 1A. Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Operating Activities

Net cash flows provided by operating activities were $822.0 million for the nine months ended September 30, 2021 compared to $824.2 million for the nine months ended September 30, 2020. The decrease was primarily driven by the timing of working capital receipts and payments.

Investing Activities

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Net cash flows used in investing activities were $386.1 million for the nine months ended September 30, 2021 compared to $518.1 million for the nine months ended September 30, 2020. Investing activities decreased by approximately $166.5 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, primarily due to decreased capital expenditure spending on Eureka projects, the Hammerhead pipeline and various wellhead gathering and transmission projects, which was partially offset by an increase in capital contributions to the MVP Joint Venture consistent with timing of the resumption of certain growth construction activities on the MVP project. See “Capital Requirements” below for a discussion of forecasted 2021 capital expenditures and capital contributions to the MVP Joint Venture.

Financing Activities

Net cash flows used in financing activities were $449.7 million for the nine months ended September 30, 2021 compared to $211.9 million for the nine months ended September 30, 2020. For the nine months ended September 30, 2021, the primary uses of financing cash flows were the payment for retirement of the EQM Term Loans and termination of the Amended 2019 EQM Term Loan Agreement, net repayments on borrowings under the revolving credit facilities, the Company's purchase of an aggregate principal amount of $500 million of EQM's 2023 Notes pursuant to the Tender Offers and the payment of dividends to shareholders, while the primary source of financing cash flows was the issuance of the 2021 Senior Notes. For the nine months ended September 30, 2020, the primary source of financing cash flows was net proceeds from the 2020 Senior Notes issuance, while the primary uses of financing cash flows were the redemption of the EQM Series A Preferred Units, payment for retirement of the ETRN Term Loans, the payments of dividends and distributions to shareholders and unitholders (including distributions paid to EQM Series A Preferred unitholders) and net payments of borrowings on the First Amended EQM Credit Facility.

Capital Requirements

The gathering, transmission and storage and water services businesses are capital intensive, requiring significant investment to develop new facilities and to maintain and upgrade existing operations.

For 2021, capital contributions to the MVP Joint Venture are expected to be approximately $275 million to $295 million and approximately $5 million to $10 million related to the MVP Southgate project, and capital expenditures are expected to be $300 million to $330 million (including approximately $15 million to $20 million attributable to the noncontrolling interest in Eureka Midstream). The Company's future capital investments may vary significantly from period to period based on the available investment opportunities, the timing of the construction of the MVP, MVP Southgate and other projects, and maintenance needs. The Company expects to fund future capital expenditures and capital contributions primarily through cash on hand, cash generated from operations and borrowings under its subsidiaries' credit facilities.

Credit Facility Borrowings

See Note 8 to the consolidated financial statements for discussion of the Amended EQM Credit Facility, the Amended 2019 EQM Term Loan Agreement (prior to its termination), the Former Eureka Credit Facility (prior to its termination) and the 2021 Eureka Credit Facility.

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Security Ratings

The table below sets forth the credit ratings for EQM's debt instruments at September 30, 2021.

	EQM
	Senior Notes
Rating Service	Rating	Outlook
Moody's	Ba3	Negative
S&P	BB-	Stable
Fitch	BB	Negative

In January 2021, each of Moody's, S&P, and Fitch affirmed EQM's credit ratings in connection with the issuance of the 2021 Senior Notes. There were no changes to EQM's credit ratings during the nine months ended September 30, 2021. EQM's credit ratings are subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. The Company 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 entirely by a credit rating agency if, in its judgment, circumstances so warrant, including in connection with the MVP project or the creditworthiness of EQM's customers. As of September 30, 2021, EQT's public debt had credit ratings of BB+ from S&P (with a positive outlook), Ba1 from Moody's (with a stable outlook) and BB+ from Fitch (with a stable outlook). If any credit rating agency downgrades or withdraws EQM's ratings, including for reasons relating to the MVP project (such as delays in the targeted full in-service date of the MVP project or increases in such project’s costs), EQM’s leverage or credit ratings of the Company's customers, the Company's access to the capital markets could become more challenging, borrowing costs will likely increase, the Company may be required to provide additional credit assurances (the amount of which may be substantial), including the Cash Option Letter of Credit, in support of commercial agreements such as joint venture agreements, and the potential pool of investors and funding sources may decrease. In order to be considered investment grade, a company must be rated Baa3 or higher by Moody's, BBB- or higher by S&P, or BBB- or higher by Fitch. All of EQM's credit ratings are considered non-investment grade.

Commitments and Contingencies

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against the Company and its subsidiaries. While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings. The Company accrues legal and other direct costs related to loss contingencies when incurred. The Company establishes reserves whenever it believes it to be appropriate for pending matters. Furthermore, after consultation with counsel and considering available insurance, the Company believes that the ultimate outcome of any matter currently pending against it or any of its consolidated subsidiaries will not materially affect its business, financial condition, results of operations, liquidity or ability to pay dividends to its shareholders.

See "The regulatory approval process for the construction of new midstream assets is very challenging, and decisions by regulatory and judicial authorities in pending or potential proceedings could impact our or the MVP Joint Venture's ability to obtain or maintain in effect all approvals and authorizations necessary to complete certain projects on the targeted time frame or at all or our ability to achieve the expected investment returns on the projects." under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, "Item 1. Legal Proceedings" of this Quarterly Report on Form 10-Q for discussion of certain litigation and regulatory proceedings, including related to the MVP and MVP Southgate projects.

See Note 16 to the annual consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of the Company's commitments and contingencies.

Dividends

On October 18, 2021, the Board declared cash dividends for the third quarter of 2021 of $0.15 per common share and $0.4873 per Equitrans Midstream Preferred Share, in each case, payable on November 12, 2021 to shareholders of record at the close of business on November 2, 2021.

Critical Accounting Policies and Estimates

The Company's critical accounting policies are described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Any new accounting policies or updates to existing accounting policies as a result of new accounting

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pronouncements have been included in the notes to the Company's consolidated financial statements in Part I, "Item 1. Financial Statements" of this Quarterly Report on Form 10-Q. The application of the Company's critical accounting policies may require management to make judgments and estimates about the amounts reflected in the consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk. Changes in interest rates affect the amount of interest the Company earns on cash, cash equivalents and short-term investments and the interest rates EQM and Eureka pay on borrowings under their respective revolving credit facilities. The Amended EQM Credit Facility and the 2021 Eureka Credit Facility provide for variable interest rates and thus expose the Company, through EQM and Eureka, to fluctuations in market interest rates. In addition, EQM's interest rates under the Amended EQM Credit Facility are impacted by changes in EQM's credit ratings (which may be caused by factors outside of EQM's control). Eureka's interest rates under the 2021 Eureka Credit Facility are impacted by changes in Eureka's Consolidated Leverage Ratio (as defined in the 2021 Eureka Credit Facility) which may fluctuate based on Eureka Midstream's liquidity needs. Such changes in interest rates may accordingly impact the Company's results of operations and liquidity. Further, changes in interest rates may affect the dividend payable on Equitrans Midstream Preferred Shares after March 31, 2024, which could affect the amount of cash the Company has available to make quarterly cash dividends to its shareholders. EQM's senior notes are fixed rate and thus do not expose the Company to fluctuations in market interest rates. Changes in interest rates do affect the fair value of EQM's fixed rate debt. See Notes 8 and 9 to the consolidated financial statements for discussions of borrowings and fair value measurements, respectively. EQM and Eureka may from time to time hedge the interest on portions of borrowings under the revolving credit facilities, as applicable, in order to manage risks associated with floating interest rates (however, there may be no assurance that such hedges will fully mitigate interest rate risk).

See also "Changes in the method of determining the London Interbank Offered Rate (LIBOR), or the replacement of the LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt." included in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Credit Risk. The Company is exposed to credit risk, which is the risk that it may incur a loss if a counterparty fails to perform under a contract. The Company actively manages its exposure to credit risk associated with customers through credit analysis, credit approval and monitoring procedures. For certain transactions, the Company requests letters of credit, cash collateral, prepayments or guarantees as forms of credit support. Equitrans, L.P.'s FERC tariffs require tariff customers that do not meet specified credit standards to provide three months of credit support; however, the Company is exposed to credit risk beyond this three-month period when its tariffs do not require its customers to provide additional credit support. For some of the Company's long-term contracts associated with system expansions, it has entered into negotiated credit agreements that provide for other credit support if certain credit standards are not met. The Company has historically experienced only minimal credit losses in connection with its receivables.

The Company is exposed to the credit risk of its customers, such as EQT, including as a result of changes in customer credit ratings, liquidity and access to capital markets. For example, as of September 30, 2021, EQT had $0.6 billion of letters of credit outstanding to third parties under its revolving credit facility. In August 2021, EQT's $83.6 million letter of credit issued to the MVP Joint Venture was cancelled as a result of EQT's improved credit ratings. At September 30, 2021, EQT's public senior debt had non-investment grade credit ratings. See "Security Ratings" under Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information regarding EQT's credit ratings.

See Note 6 for information regarding the Credit Letter Agreement and associated EQT credit rating requirements. In addition, EQT has guaranteed the payment obligations of certain of its subsidiaries, up to a maximum amount of $115 million, $131 million and $30 million related to gathering, transmission and water services, respectively, across all applicable contracts, for the benefit of the subsidiaries of the Company providing such services. See Note 15 to the annual consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of the Company's exposure to credit risk.

Commodity Prices. The Company's business is dependent on continued natural gas production and the availability and development of reserves in its areas of operation. Prices for natural gas and NGLs, including regional basis differentials, may adversely affect timing of development of additional reserves and production that is accessible by the Company’s pipeline and storage assets, which also negatively affects the Company’s water services business, and may affect the creditworthiness of the Company’s customers.

Natural gas and NGL prices, particularly lower prices, affect capital spending levels of the Company's customers, which in turn affect production levels and, accordingly, demand for the Company's services and therefore its results of operations.

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Additionally, although natural gas prices have surged from 2020 lows as of the filing date of this Quarterly Report on Form 10-Q, higher natural gas prices have not caused the Company's largest customers to significantly increase their capital spending forecasts given factors such as, in the Company's view, corporate capital allocation strategies. Even if natural gas prices remain elevated, the Company's customers may announce lower, flat or modest increases to capital spending in the future based on various factors, including regional takeaway capacity limitations, access to capital, investor expectations regarding free cash flow, a desire to reduce or refinance leverage or other factors.

Lower regional natural gas prices, corporate capital allocation strategies or regional takeaway constraints during periods of high natural gas prices, could cause producers to determine in the future that drilling activities in areas outside of the Company's current areas of operation are strategically more attractive to them. Additionally, lower natural gas prices, particularly in the Appalachian region, have caused, and may in the future cause, certain producers, including customers of the Company, to determine to reduce or hold generally steady their rig count (and thereby delay or not increase production), delay turning wells in line, temporarily shut in portions of their production or otherwise take actions to slow production growth and/or reduce production, which when effected by the Company's producer customers reduces the demand for, and usage of, the Company’s services. For instance, temporary production curtailments effected in 2020 by EQT and certain other Company customers resulted in a decrease in the Company's volumetric-based fee revenues for portions of 2020. An extended period of low natural gas prices and/or instability in natural gas prices in future periods, especially in the Appalachian region, could cause EQT or other producers to take similar actions in the future, which could have a significant negative effect on the demand for the Company's services and therefore its results of operations. Many of the Company’s customers, including EQT, have entered into long-term firm reservation transmission and gathering contracts or contracts with MVCs on the Company's systems and approximately 67% of the Company’s operating revenue for the nine months ended September 30, 2021 was generated by firm reservation fees. As a result, the Company believes that the effect of temporary declines in volumes of gas gathered, transported or stored on its systems may be mitigated because firm reservation fee revenues are paid regardless of volumes supplied to the system by customers (although significant declines in gas production in the Company's areas of operations would adversely affect the Company's results of operations, financial condition and liquidity as approximately 33% of the Company’s operating revenues for the nine months ended September 30, 2021 was generated by volumetric-based fee revenues).

Price declines and sustained periods of low natural gas and NGL prices could have an adverse effect on the creditworthiness of the Company's customers and related ability to pay firm reservation fees under long-term contracts and/or affect, as discussed above, activity levels and, accordingly, volumetric-based fees, which could affect the Company’s results of operations, liquidity or financial position. For example, each of S&P, Moody's and Fitch took negative ratings actions on EQT during 2020, citing, among other things, lower natural gas price assumptions and financing needs (although all three ratings agencies later took positive action on EQT citing, among other things, subsequent debt reduction and improvements in natural gas fundamentals). Credit risk and related management is further discussed above under “Credit Risk” in Part I, “Item 3. Quantitative and Qualitative Disclosures About Market Risk” of this Quarterly Report on Form 10-Q.

Unless the Company is successful in attracting and retaining new customers, the Company's ability to maintain or increase the capacity subscribed and volumes transported, gathered or provided on its systems will be dependent on receiving consistent or increasing commitments and production from its existing customers, which may be impacted by commodity prices, including regional commodity prices and/or other factors, including corporate capital allocation strategies. While EQT has dedicated a substantial portion of its core acreage to the Company and has entered into long-term firm gathering and transmission contracts and contracts with MVCs on certain of the Company's systems, EQT may determine in the future that drilling or continuing to produce gas from existing wells in the Company's areas of operations is not economical above the amount to fulfill its required MVCs or otherwise strategically determine to curtail volumes on the Company's systems. For example, in 2020, EQT publicly disclosed that it had made the strategic decision to temporarily curtail significant portions of its production, and certain other Company customers also curtailed portions of their production during 2020. Other than with respect to its MVCs and other firm commitments under existing contracts, EQT is under no contractual obligation to continue to develop its acreage dedicated to the Company. See also Note 5 to the consolidated financial statements for a discussion of the EQT Global GGA and the 2021 Water Services Agreement.

The fair value of the Company’s derivative instruments is largely determined by estimates of the NYMEX Henry Hub natural gas forward price curve. A hypothetical 10% increase in NYMEX Henry Hub natural gas futures prices would increase the valuation of the Company’s derivative instruments by $10.7 million, while a hypothetical 10% decrease in NYMEX Henry Hub natural gas futures prices would decrease the valuation of the Company’s derivative instruments by $12.9 million. This fair value change assumes volatility based on prevailing market parameters at September 30, 2021. See Notes 5 and 9 to the consolidated financial statements for a discussion of the Henry Hub cash bonus payment provision.

For further discussion of commodity prices and related risks, see "Local Market Natural Gas Prices" under "Outlook” in this Quarterly Report on Form 10-Q and "Our exposure to direct commodity price risk may increase in the future." and "Decreases in production of natural gas in our areas of operation have adversely affected, and future decreases could further adversely affect, our business and operating results and reduce our cash available to pay cash dividends to our

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shareholders", each under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Other Market Risks. The Amended EQM Credit Facility and the 2021 Eureka Credit Facility are underwritten by syndicates of 21 and 16 financial institutions, respectively, each of which is obligated to fund its pro rata portion of any borrowings by EQM or Eureka, as applicable. In each case, no one lender of the financial institutions in the syndicate holds more than 10% of such facility. EQM's and Eureka's respective large syndicate groups and relatively low percentage of participation by each lender is expected to limit the Company's and Eureka's respective exposure to disruption or consolidation in the banking industry.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of management, including the Company’s Principal Executive Officer and Principal Financial Officer, an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) was conducted as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the third quarter of 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against the Company and its subsidiaries. While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings. The Company accrues legal and other direct costs related to loss contingencies when incurred. The Company establishes reserves whenever it believes it to be appropriate for pending matters. Furthermore, after consultation with counsel and considering available insurance, the Company believes that the ultimate outcome of any matter currently pending against it or any of its consolidated subsidiaries will not materially affect its business, financial condition, results of operations, liquidity or ability to pay dividends to its shareholders.

Hammerhead Pipeline Dispute

See “Hammerhead Pipeline” under Part I, “Outlook” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

MVP Matters

The MVP Joint Venture is currently defending certain agency actions and judicial challenges to the MVP that must be resolved before the project can be completed, including the following:

•Sierra Club, et al. v. U.S. Army Corps of Eng'rs (Huntington District) Fourth Circuit Court of Appeals (Fourth Circuit), Case No. 20-2039 and Sierra Club, et al. v. U.S. Army Corps of Eng'rs (Norfolk District), Fourth Circuit Court of Appeals, Case No. 20-2042. In February 2018, the Sierra Club filed a lawsuit in the Fourth Circuit against the Army Corps in Sierra Club, et al. v. U.S. Army Corps of Engineers, et al., consolidated under Case No. 18-1173. The lawsuit challenged the verification by the Huntington District of the Army Corps that Nationwide Permit 12, which generally authorizes discharges of dredge or fill material into waters of the United States and the construction of pipelines across such waters under Section 404 of the Clean Water Act, could be utilized in the Huntington District (which covers all but the northernmost area of West Virginia) for the MVP project. The crux of Sierra Club's position was that the MVP Joint Venture, pursuant to its FERC license, planned to use a certain methodology (dry open cut creek crossing methodology) to construct the pipeline across streams in West Virginia that would take considerably longer than the 72 hours allowed for such activities pursuant to the terms of West Virginia's Clean Water Act Section 401 certification for Nationwide Permit 12. A three-judge panel of the Fourth Circuit agreed with the Sierra Club and on October 2, 2018, issued a preliminary order stopping the construction in West Virginia of that portion of the pipeline that was subject to Nationwide Permit 12. In August 2018, the WVDEP initiated an administrative process to revise its 401 Water Quality Certification for the Army Corps Nationwide Permits and requested public comment to, among other things, specifically revise the 72-hour limit for stream crossings noted as problematic by the Fourth Circuit as well as other conditions (the WVDEP 401 Rulemaking Proceedings). Pending the resolution of the WVDEP 401 Rulemaking Proceedings, the Army Corps' Pittsburgh District and Norfolk District (each of which had also verified use of Nationwide Permit 12 by the MVP Joint Venture) suspended their verifications that allowed the MVP Joint Venture to use Nationwide Permit 12 for stream and wetlands crossings in northern West Virginia and Virginia, respectively. On April 24, 2019, the WVDEP submitted a modification to its 401 Water Quality Certification developed in the WVDEP 401 Rulemaking Proceedings to the EPA for approval, which approval was received in August 2019. The Army Corps approved the WVDEP's modification on January 24, 2020, and the MVP Joint Venture submitted a new permit application to the Army Corps on January 28, 2020. On September 25, 2020, the Huntington and Pittsburgh districts approved the MVP Joint Venture’s Nationwide Permit 12 and the Norfolk district lifted its suspension of the MVP Joint Venture's Nationwide Permit 12. On September 28, 2020, Appalachian Mountain Advocates, on behalf of Sierra Club and certain other petitioners, filed a petition for review of the Huntington and Norfolk permits. On October 5, 2020, Appalachian Mountain Advocates requested from the Fourth Circuit an administrative stay of the Army Corps' verifications to the MVP Joint Venture's Nationwide Permit 12. On November 9, 2020, the Court entered an order granting the motion to stay the verifications and issued a written opinion on December 1, 2020 on the issuance of the stay. While the case was scheduled to be fully briefed and argued by March 31, 2021, on February 19, 2021, the MVP Joint Venture, as part of its initiated broader strategy to obtain authorization for stream and wetland crossings discussed above under Part I, "Outlook" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," requested that the Army Corps' Huntington, Pittsburgh, and Norfolk Districts administratively revoke the previously-issued Nationwide Permit 12 verifications for the project. On March 2, 2021, the Army Corps revoked the Nationwide Permit 12 verifications for the project in accordance with the MVP Joint Venture's request. Following resolution of administrative issues unrelated to the MVP project on September 13, 2021, the parties moved to dismiss the case, which the Fourth Circuit granted on September 23, 2021.

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•Jefferson National Forest Crossing and Associated Authorizations. In a different Fourth Circuit appeal, Sierra Club, et al. v. U.S. Forest Service, et al., consolidated under Case No. 17-2399, Fourth Circuit Court of Appeals, filed in December 2017, the Sierra Club challenged a Bureau of Land Management (BLM) decision to grant a right-of-way to the MVP Joint Venture and a U.S. Forest Service (USFS) decision to amend its management plan to accommodate the MVP, both of which affect the MVP's approximate 3.5-mile segment in the Jefferson National Forest (JNF) in Virginia. On July 27, 2018, agreeing in part with the Sierra Club, the Fourth Circuit vacated the BLM and USFS decisions, finding fault with the BLM's analysis of the practicality of alternate routes and the USFS' analysis of erosion and sedimentation effects. The USFS published a draft Supplemental Environmental Impact Statement (SEIS) to the 2017 FERC Final Environmental Impact Statement for MVP in the Federal Register on September 25, 2020 with a public comment period that closed on November 9, 2020. On December 11, 2020, the USFS published a Final SEIS that addressed the issues raised in the prior proceedings and evaluated the most recent sedimentation analysis submitted to the agency consistent with the findings presented in MVP’s Biological Opinion and Incidental Take Statement issued by the Department of the Interior's Fish and Wildlife Service (FWS) on September 4, 2020. See Appalachian Voices, et al. v. U.S. Dep’t of Interior below for additional information. On January 11, 2021, the MVP Joint Venture received final approval of the Record of Decision from the USFS and, on January 15, 2021, the BLM issued the required right-of-way permit for the MVP’s 3.5-mile segment in the JNF in Virginia (the JNF Right-of-Way). On January 11, 2021, Sierra Club, et al. filed a petition with the Fourth Circuit to reverse the USFS approval of the Record of Decision and, on January 15, 2021, filed a petition with the Fourth Circuit challenging BLM’s grant of the JNF Right-of-Way. See Wild Virginia, et al. v. United States Forest Service, et al., No. 21-1039(L). The Fourth Circuit consolidated the challenges to the Record of Decision and the JNF Right-of-Way and briefing was completed. Oral argument occurred on October 29, 2021 and the parties are awaiting a decision.

On August 3, 2018, citing the court's vacatur and remand in Sierra Club, et al. v. U.S. Forest Service, et al., consolidated under Case No. 17-2399, the FERC issued a stop work order for the entire pipeline pending the agency actions on remand. The FERC modified its stop work order on August 29, 2018 to allow work to continue on all but approximately 25 miles of the project (the Exclusion Zone). On October 10, 2018, the Fourth Circuit granted a petition for rehearing filed by the MVP Joint Venture for the limited purpose of clarifying that the July 27, 2018 order did not vacate the portion of the BLM's Record of Decision authorizing a right-of-way and temporary use permit for the MVP to cross the Weston and Gauley Bridge Turnpike Trail in Braxton County, West Virginia. On October 15, 2018, the MVP Joint Venture filed with the FERC a request to further modify the August 3, 2018 stop work order to allow the MVP Joint Venture to complete the bore and install the pipeline under the Weston and Gauley Bridge Turnpike Trail. On October 24, 2018, the FERC granted the MVP Joint Venture's request to further modify the stop work order and authorize construction. Additionally, on October 9, 2020, the FERC authorized construction to resume project-wide (as it had been stopped by the FERC on October 15, 2019 in relation to a separate matter discussed below), other than with respect to the Exclusion Zone, which requires additional authorization. On December 17, 2020, the FERC again modified the stop work order and authorized construction to resume in 17 miles of the Exclusion Zone. The Company cannot guarantee whether or when the FERC will act in respect of any or all of the remaining portions of the Exclusion Zone (although the MVP Joint Venture anticipates seeking FERC authorization to lift the Exclusion Zone stop work order should water body crossing authorizations be received as discussed above under "Outlook" in Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations"). The FERC's October 9, 2020 and December 17, 2020 actions are the subject of challenges filed by the Sierra Club in Sierra Club, et al. v. FERC, Case No. 20-1512 (consolidated with No. 21-1040), D.C. Circuit Court of Appeals on December 22, 2020 and January 25, 2021, respectively (a stay request filed by the Sierra Club on January 29, 2021 was denied by the Court of Appeals for the D.C. Circuit (DC Circuit) on February 19, 2021). Briefing in Sierra Club, et al. v. FERC, Case No. 20-1512 (consolidated with No. 21-1040), D.C. Circuit Court of Appeals is to be completed in January 2022. If any of the challenges to the Record of Decision, the JNF Right-of-Way or the FERC's October 9, 2020 and December 17, 2020 orders are successful, it could result in the Record of Decision, the JNF Right-of-Way or the FERC's orders, as applicable, being vacated and/or additional agency proceedings (the outcome of which the Company cannot predict) and cause a delay in the targeted in-service date for the MVP project (and consequent impacts relating to such delay).

•Challenges to FERC Certificate, Court of Appeals for DC Circuit. Multiple parties have sought judicial review of the FERC's order issuing a certificate of public convenience and necessity to the MVP Joint Venture and/or the exercise by the MVP Joint Venture of eminent domain authority. On February 19, 2019, the DC Circuit issued an order rejecting multiple consolidated petitions seeking direct review of the FERC order under the Natural Gas Act and certain challenges to the exercise by the MVP Joint Venture of eminent domain authority in Appalachian Voices, et al. v. FERC, et al., consolidated under Case No. 17-1271. No petitions for rehearing or petitions for rehearing en banc were filed by the April 5, 2019 deadline. The mandate was issued on April 17, 2019. Another group of parties filed a complaint in the U.S. District Court for the District of Columbia asserting that the FERC's order issuing certificates is unlawful on constitutional and other grounds in Bold Alliance, et al. v. FERC, et al., Case No. 17-1822. The district

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court plaintiffs sought declaratory relief as well as an injunction preventing the MVP Joint Venture from developing its project or exercising eminent domain authority. In December 2017 and January 2018, the FERC and the MVP Joint Venture, respectively, moved to dismiss the petitions for lack of subject matter jurisdiction. The court granted the motion and dismissed plaintiffs' complaint on September 28, 2018. On October 26, 2018, plaintiffs appealed the decision in Case No. 17-1822 to the DC Circuit in Bold Alliance, et al. v. FERC, et al., Case No. 18-5322. On December 3, 2018, the FERC, as appellee, filed a joint motion with the appellants to hold Case No. 18-5322 in abeyance pending completion of the appeals of the final agency orders related to the MVP certificate in consolidated Case No. 17-1271 and Atlantic Coast Pipeline’s (ACP) certificate. The MVP Joint Venture filed a motion to dismiss the case as to some of the plaintiffs. On February 15, 2019, the DC Circuit entered an order holding this appeal in abeyance pending rulings on the appeals from the ACP and MVP FERC proceedings. Although the members of the ACP project announced the cancellation of that project on July 5, 2020, ACP's proceeding remains pending. Case No. 18-5322 remains in abeyance. Similarly, another group of parties filed a complaint in the U.S. District Court for the District of Columbia in Bohon et al. v. FERC et al., Case No. 20-00006, asserting that the delegation of authority to FERC under the NGA violates the nondelegation doctrine and separation-of-powers principle of the U.S. Constitution. The MVP Joint Venture and the FERC filed motions to dismiss which were granted by the court. On July 6, 2020, the landowners filed a notice of appeal to the DC Circuit in Case No. 20-5203. On November 30, 2020, appellants asked the DC Circuit to overturn the decision of the lower court. Oral argument before the DC Circuit was scheduled for March 29, 2021, but the court cancelled and held oral argument in abeyance and directed the parties to file motions to govern future proceedings following a decision by the U.S. Supreme Court in PennEast Pipeline Co. v. New Jersey, Case No. 19-1039, which decision was published on June 29, 2021. Briefing in Bohon et al. v. FERC et al., Case No. 20-00006 on the significance of the PennEast Pipeline Co. opinion was completed on July 29, 2021. The DC Circuit issued an order on September 15, 2021 denying appellants' motion for summary reversal of the decision of the lower court and supplemental briefing was completed as of October 6, 2021. Oral argument is scheduled for December 15, 2021. Due to the uncertainty regarding the timing of permitting and the outcome of legal challenges facing the MVP project, on August 25, 2020, the MVP Joint Venture filed a request with the FERC for and, on October 9, 2020, the FERC granted, an extension of time to complete the MVP project for an additional two years through October 13, 2022. On December 22, 2020, a challenge to the FERC’s action to grant an extension of time to complete the MVP project was filed in the DC Circuit in Sierra Club, et al. v. FERC, Case No. 20-1512 (consolidated with No. 21-1040, DC Circuit). On January 29, 2021, Sierra Club requested a stay of the FERC’s action to grant the MVP Joint Venture an extension of time to complete the MVP project from the DC Circuit, which stay request was denied by the DC Circuit on February 19, 2021. Briefing in Sierra Club, et al. v. FERC, Case No. 20-1512 (consolidated with No. 21-1040, D.C. Circuit), is to be completed in January 2022. If any of these challenges were successful, it could result in the MVP Joint Venture's certificate of public convenience and necessity being vacated and/or additional proceedings before the FERC, the outcome of which the Company cannot predict, and cause a delay in the targeted in-service date for the MVP project (and consequent impacts related to such delay).

•Appalachian Voices, et al. v. U.S. Dep’t of Interior, et al., Fourth Circuit Court of Appeals, Case No. 20-2159. In August 2019, Wild Virginia and certain other petitioners filed a petition in the Fourth Circuit in Wild Virginia et al. v. United States Department of the Interior; Case No. 19-1866, to challenge the MVP Joint Venture’s Biological Opinion and Incidental Take Statement issued by FWS which was approved in November 2017 (the Original BiOp). On October 11, 2019, the Fourth Circuit issued an order approving the petitioners’ requested stay of the Original BiOp and holding the litigation in abeyance until January 11, 2020. On October 15, 2019, the FERC issued an order requiring the MVP Joint Venture to cease all forward-construction progress (the FERC modified this order on October 9, 2020 and December 17, 2020, which the Sierra Club has appealed to the DC Circuit as discussed above under "Jefferson National Forest Crossing and Associated Authorizations"). On September 4, 2020, FWS issued the MVP Joint Venture a new Biological Opinion and Incidental Take Statement (the New BiOp) for the MVP project and the Fourth Circuit subsequently dismissed the litigation regarding the Original BiOp. On October 27, 2020, Appalachian Voices et al. filed a petition with the Fourth Circuit challenging the New BiOp and filed a request for an administrative stay of the New BiOp with FWS, which FWS subsequently denied. On November 2, 2020, the petitioners filed a motion to stay the New BiOp with the Fourth Circuit. On November 18, 2020, the Fourth Circuit issued an order denying the requested stay. The matter was fully briefed as of March 19, 2021. Oral argument occurred on October 29, 2021 and the parties are awaiting a decision. If this challenge were successful, it could result in the New BiOp being vacated and/or additional proceedings (the outcome of which the Company cannot predict) and cause a delay in the targeted in-service date for the MVP project (and consequent impacts relating to such delay).

Other Proceedings Relevant to the MVP Project

FERC Rulemaking on Construction Commencement. The MVP Joint Venture is a party to a FERC rulemaking proceeding that may potentially affect when the MVP Joint Venture is permitted to commence the crossings of streams and wetlands utilizing trenchless construction methods following the FERC’s issuance of its amended Certificate for the MVP project, as described in “Outlook” under Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.” On May 4, 2021, the FERC issued Order No. 871-B. Order No. 871-B and its predecessors relate to an industry-wide rulemaking

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regarding construction commencement while a rehearing request is pending before the FERC. The MVP Joint Venture filed a request for clarification or rehearing of the certificate amendment aspects of Order No. 871-B with the FERC on June 3, 2021. The FERC issued Order No. 871-C on August 2, 2021. The Company cannot predict the impact of Order No. 871 and its progeny on the MVP project, if any.

MVP Southgate Matters

The MVP Joint Venture is currently challenging or defending certain agency actions and judicial challenges to the MVP Southgate project that must be resolved before the project can be completed, including the following:

•Sierra Club et al. v. FERC; Case No. 20-1427, DC Circuit. On June 18, 2020, the FERC issued an order granting a certificate of public convenience and necessity for the MVP Southgate project. However, the FERC, while authorizing the project, directed the Office of Energy Projects not to issue a notice to proceed with construction until necessary federal permits are received for the MVP project and the Director of the Office of Energy Projects lifts the stop-work order and authorizes the MVP Joint Venture to continue constructing the MVP project. Certain opposition parties subsequently requested rehearing of the certificate order. On August 20, 2020, the FERC issued an order denying requests for rehearing of that certificate order, and on September 17, 2020, the FERC issued an order addressing the arguments raised on rehearing. On October 9, 2020, Sierra Club, among other petitioners, filed an appeal of these orders with the DC Circuit. The matter has been fully briefed and is awaiting oral arguments. If this challenge were successful, it could result in the MVP Southgate project’s certificate of public convenience and necessity being vacated and/or additional proceedings before the FERC, the outcome of which the Company cannot predict, and cause a delay in the targeted in-service date for the MVP Southgate project (and consequent impacts relating to such delay).

•Mountain Valley Pipeline, LLC v. North Carolina Department of Environmental Quality, No. 20-1971, Fourth Circuit Court of Appeals. On August 11, 2020, the North Carolina Department of Environmental Quality (NCDEQ) denied the MVP Southgate project’s application for a Clean Water Act Section 401 Individual Water Quality Certification and Jordan Lake Riparian Buffer Authorization and such denial was reissued by the NCDEQ on April 29, 2021. See "MVP Southgate Project" under "Outlook" in Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information. The Company is evaluating next steps, including the submission of a new application for a Clean Water Act Section 401 Individual Water Quality Certification and Jordan Lake Riparian Buffer Authorization for the MVP Southgate project, but cannot guarantee whether a new application, if submitted, will ultimately be approved or, if approved, whether conditions may be included as part of such approval or whether the application would then be further challenged.

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Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, other than the risks described below.

Risks Related to Our Operations

Increasing scrutiny and changing stakeholder expectations in respect of ESG and sustainability practices may adversely impact our business and our stock price and expose us to new or additional risks.

Companies across all industries are facing increasing scrutiny from stakeholders related to their ESG and sustainability practices. Investor advocacy groups, proxy advisory firms, certain institutional investors and lenders, investment funds and other influential investors are also increasingly focused on ESG and sustainability practices and matters and on the implications and social cost of their investments and loans. Stakeholders’ increased focus and activism related to ESG and sustainability matters may potentially adversely affect our business, financial condition, results of operations, and liquidity, as well as our stock price, and expose us to new or additional risks, including as described below.

Increased focus on ESG and sustainability matters, particularly in respect of climate change and related demand for renewable and alternative energy, may, among other things, hinder our access to capital given our fossil fuel-based operations and/or adversely affect demand for our services. See “If we or our subsidiaries are unable to obtain needed capital or financing on satisfactory terms, our ability to execute our business strategy and pay dividends to our shareholders may be diminished. Additionally, financing transactions may increase our financial leverage or could cause dilution to our shareholders.” and “Increased competition from other companies that provide gathering, transmission and storage, and water services, or from alternative fuel sources, could have a negative impact on the demand for our services, which could adversely affect our financial results.” under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Additionally, pipeline infrastructure companies and projects, such as our MVP project, face increased legal scrutiny and risk, including litigation risk and enhanced and lengthier regulatory reviews by federal, state and/or environmental regulators, due to an increased focus on climate change policies and the fossil fuel industry.

We recognize that our shareholders, employees, customers, regulators, and other stakeholders expect us to continue to focus on long-term sustainable performance, including by addressing significant, relevant ESG factors, further working to prioritize sustainable energy practices, reducing our carbon footprint and promoting sustainability. We have incurred and expect to continue to incur costs in doing so. Further, if we do not adapt to or comply with investor or other stakeholder expectations and standards (or meet sustainability goals that we set), which are evolving, or if we are perceived not to have responded appropriately or quickly enough to growing concern for ESG and sustainability issues, even if our actions are compliant with applicable laws and regulations, our business could suffer reputational or other damage and, additionally, potential negative public perception regarding us or our industry may lead to increased regulatory scrutiny or other adverse developments. Activist shareholders may submit proposals to promote an ESG-related position. Proxy contests and other actions by activist shareholders can, among other things, cause reputational harm, and responding to such actions could be costly and time-consuming, disrupting our operations and diverting the attention of our Board and senior management from the pursuit of business strategies.

In addition, as we continue to focus on long-term sustainable performance and address ESG factors, and as disclosure standards continue to evolve, including as a result of potential regulatory initiatives, we have expanded and expect to further expand our public disclosures in these areas. Such disclosures may reflect goals, cost estimates and other expectations and assumptions, including over long timelines, which goals, cost estimates, and other expectations and assumptions are necessarily uncertain and may not be realized. Failure to realize (or timely achieve progress on) such goals, cost estimates, and other expectations or assumptions may adversely impact us. Further, a multitude of organizations that provide information to investors have developed ratings processes for evaluating companies on their approach to ESG and sustainability matters. Such ratings and reports are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings or perceptions of us or our industry as a result of such ratings or our ESG and sustainability practices may lead to increased negative investor and other stakeholder sentiment toward us or our customers, and to the allocation of investment capital to other industries and companies, which could negatively affect our stock price and access to and costs of capital.

The occurrence of any of the foregoing may adversely affect our business, financial condition, results of operations, liquidity and/or our stock price.

Terrorist or cyberattacks aimed at us or third parties, as well as any noncompliance by us with applicable laws and regulations governing data privacy, could materially adversely affect us.

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We have become increasingly dependent upon digital technologies, including information systems, infrastructure, and cloud applications, to conduct our business, and the maintenance of our financial and other records has long been dependent upon such technologies. We depend on both our own systems, networks, and technology as well as the systems, networks and technology of our vendors, customers and other business partners. Our increasing reliance on digital technologies puts us at greater risk for system failures, disruptions, incidents, and cyberattacks, which could significantly impair our ability to conduct our business. For instance, energy industry participants, including midstream companies, have been the victims of high-profile ransomware attacks, and we expect to continue to be targeted by cyberattacks, as a critical infrastructure company.

The U.S. government has continued to issue public warnings that indicate that energy assets might be specific targets of cyberattacks, and in May and July 2021, the U.S. Department of Homeland Security's Transportation Safety Administration (the “TSA”) issued security directives applicable to midstream companies requiring such companies to comply with mandatory reporting measures, undertake a number of specific cybersecurity enhancements for both information technology (“IT”) and operational technology (“OT”) systems, and provide extensive information to the TSA. We have been required and may further be required to expend additional resources as a result of current or new laws, regulations, directives or other requirements related to critical infrastructure cybersecurity. Any failure to remain in compliance with laws or regulations governing critical infrastructure cybersecurity, including the TSA security directives, may result in penalties, fines, enforcement actions, or mandated changes in our practices, which may have a material adverse effect on our business and operations.

While we and our third-party service providers commit resources to the design, implementation and monitoring of our IT and OT systems, there is no guarantee that our cybersecurity measures will provide absolute security. Despite these measures, we may not be able to anticipate, detect or prevent all cyberattacks or incidents, particularly because the methodologies used by attackers change frequently or may not be recognized until launched, and because attackers are increasingly using tactics, techniques, and procedures designed to circumvent controls and avoid detection. As a result, our IT and OT systems (or those of third parties with whom we are connected) that are designed to protect against cyber risks may not be sufficient, and deliberate attacks on, or unintentional events or incidents affecting, our systems or infrastructure or the systems or infrastructure of third parties could, depending on the extent or duration of the event, materially adversely affect us, including by leading to corruption, misappropriation or loss of our proprietary and sensitive data, delays (which could be significant) in the performance of services for our customers, difficulty in completing and settling transactions, challenges in maintaining our books and records, communication interruptions, environmental damage, regulatory scrutiny, personal injury, property damage and other operational disruptions, as well as damage to our reputation, financial condition and cash flows and potential legal claims and liabilities. Like other companies in the natural gas industry, we have identified and expect to continue to identify cyberattacks and incidents on our systems, but none of the cyberattacks and incidents we have identified to date has had a material impact on our business or operations.

Further, as cyberattacks continue to evolve and increase in sophistication and volume, we have expended, and expect to continue to expend, additional resources relating to cybersecurity, including as applicable, to continue to modify or enhance our preventive and protective measures and/or to investigate and remediate potential vulnerabilities to or consequences of cyberattacks and incidents. There can be no assurance that any preventive, protective, or remedial measures are or will be adequate to address threats that arise.

The regulatory landscape with regard to data privacy continues to develop. New laws and regulations governing data privacy, as well as any unauthorized disclosure of personal information, may potentially increase our compliance costs. Any failure by us, a company that we acquire, or one of our technology service providers, to comply with these laws and regulations, where applicable, could adversely affect us, including by resulting in reputational harm, penalties, regulatory scrutiny, liabilities, and/or mandated changes in our business practices.

Our subsidiaries’ significant indebtedness, and any future indebtedness, as well as the restrictions under our subsidiaries’ debt agreements, could adversely affect our operating flexibility, business, financial condition, results of operations, liquidity and ability to pay dividends to our shareholders.

The respective debt agreements of EQM and Eureka contain various covenants and restrictive provisions that limit EQM’s and Eureka's, as applicable, ability to, among other things:

•incur or guarantee additional debt;

•make distributions on or redeem or repurchase units;

•incur or permit liens on assets;

•enter into certain types of transactions with affiliates;

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•enter into burdensome agreements, subject to certain specified exceptions;

•enter into certain mergers or acquisitions; and

•dispose of all or substantially all of their respective assets.

See Note 8 to the consolidated financial statements for a discussion of the Amended EQM Credit Facility and the 2021 Eureka Credit Facility. The Amended EQM Credit Facility contains certain negative covenants, that, among other things, establish for EQM a maximum consolidated leverage ratio that varies over the course of the term ranging from not more than 5.95 to 1.00 to not more than 5.00 to 1.00, with the then-applicable ratio being tested as of the end of each fiscal quarter (which in limited circumstances may be increased for certain measurement periods following the consummation of certain acquisitions). Under the 2021 Eureka Credit Facility, Eureka is required to maintain a consolidated leverage ratio of not more than 4.75 to 1.00 (or not more than 5.25 to 1.00 for certain measurement periods following the consummation of certain acquisitions). If Eureka has issued senior notes of $200 million or more in the aggregate as of the end of any fiscal quarter, then for such fiscal quarter and for each fiscal quarter thereafter, Eureka is required to maintain a consolidated leverage ratio of not more than 5.25 to 1.00 and will not permit the ratio of senior indebtedness to four-quarter Consolidated EBITDA (as defined in the 2021 Eureka Credit Facility) as of the end of any such quarter to exceed 3.50 to 1.00. Additionally, as of the end of any fiscal quarter, Eureka may not permit the ratio of Consolidated EBITDA (as defined in the 2021 Eureka Credit Facility) for the four fiscal quarters then ending to consolidated interest charges to be less than 2.50 to 1.00. EQM’s and Eureka’s ability to meet these covenants can be affected by events beyond their respective control and we cannot assure our shareholders that EQM or Eureka will continue to meet these covenants. In addition, the Amended EQM Credit Facility and the 2021 Eureka Credit Facility each contain certain events of default, including the occurrence of a change of control.

In addition to the above-described facilities, EQM has issued senior unsecured notes which remain outstanding.

The provisions of the debt agreements may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions. In addition, a failure to comply with the provisions of the debt agreements could result in an event of default, which could enable creditors to, subject to the terms and conditions of the applicable agreement, declare any outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If the payment of the debt is accelerated, our assets may be insufficient to repay such debt in full, and in turn our shareholders could experience a partial or total loss of their investments. The Amended EQM Credit Facility and the 2021 Eureka Credit Facility each contain a cross default provision that applies to any other indebtedness the applicable borrower may have with an aggregate principal amount in excess of $25 million as to EQM, and $10 million as to Eureka.

We and our subsidiaries may in the future incur additional debt. Our and our subsidiaries’ levels of debt could have important consequences to us, including the following:

•our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms;

•our funds available for operations, future business opportunities and dividends to our shareholders may be reduced by that portion of our cash flow required to make interest payments on our or our subsidiaries’ debt;

•we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and

•our flexibility in responding to changing business and economic conditions may be limited.

Our ability to service our subsidiaries’ current, or our or our subsidiaries’ future, respective debts, will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our subsidiaries’ current, or our or our subsidiaries’ future, indebtedness, as applicable, or our operating results affect our ability to comply with covenants in our debt agreements, we will be forced to take actions such as reducing dividends, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital. We may not be able to effect any of these actions on satisfactory terms or at all.

Our subsidiaries’ current substantial indebtedness and the additional debt we and/or our subsidiaries will incur in the future for, among other things, working capital, capital expenditures, capital contributions to the MVP Joint Venture, acquisitions or operating activities may adversely affect our liquidity and therefore our ability to pay dividends to our shareholders.

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In addition, our subsidiaries’ significant indebtedness may be viewed negatively by credit rating agencies, which could result in increased costs for us to access the capital markets. Any future additional downgrade of the debt issued by EQM could significantly increase our capital costs or adversely affect our ability to raise capital in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities

The following table sets forth the Company's repurchases of equity securities registered under Section 12 of the Exchange Act that occurred during the three months ended September 30, 2021:

Period	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
July 2021 (July 1 - July 31)	65	$	7.99	—	$	—
August 2021 (August 1 - August 31)	26,771	8.35		—	—
September 2021 (September 1 - September 30)	—	—		—	—
Total	26,836	$	8.35	—	$	—

(a)Reflects shares withheld by the Company to pay taxes upon vesting of restricted stock.

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Item 6. Exhibits

Exhibit No.	Document Description	Method of Filing
10.1	Letter Agreement, dated as of July 10, 2021, by and among EQM Gathering Opco, LLC, EQT Corporation, EQT Production Company, Rice Drilling B LLC, and EQT Energy, LLC.	Filed herewith as Exhibit 10.1.
10.2	Letter Agreement, dated as of August 25, 2021, by and among EQM Gathering Opco, LLC, EQT Corporation, EQT Production Company, Rice Drilling B LLC, and EQT Energy, LLC.	Filed herewith as Exhibit 10.2.
10.3	Letter Agreement, dated as of September 13, 2021, by and among EQM Gathering Opco, LLC, EQT Corporation, EQT Production Company, Rice Drilling B LLC, and EQT Energy, LLC.	Filed herewith as Exhibit 10.3.
31.1	Rule 13(a)-14(a) Certification of Principal Executive Officer.	Filed herewith as Exhibit 31.1.
31.2	Rule 13(a)-14(a) Certification of Principal Financial Officer.	Filed herewith as Exhibit 31.2.
32	Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.	Furnished herewith as Exhibit 32.
101	Inline Interactive Data File.	Filed herewith as Exhibit 101.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	Filed herewith as Exhibit 104.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Equitrans Midstream Corporation
(Registrant)
By:	/s/ Kirk R. Oliver
	Kirk R. Oliver
	Senior Vice President and Chief Financial Officer

Date:  November 2, 2021

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