Consolidated Variable Interest Entities

The Company adopted ASU No. 2015-02, Consolidation in the first quarter of 2016 and, as a result, EQT determined EQGP and EQM to be variable interest entities. Following the Rice Merger, the Company concluded that RMP and Strike Force Midstream each meet the criteria for variable interest entity classification. Through EQT's ownership and control of EQGP's general partner, EQM's general partner, RMP's general partner and Strike Force Midstream Holdings, EQT has the power to direct the activities that most significantly impact the economic performance of EQGP, EQM, RMP and Strike Force Midstream. In addition, through EQT's limited partner interest in EQGP and EQGP's general partner interest, limited partner interest and IDRs in EQM, EQT has the obligation to absorb the losses of EQGP and EQM and the right to receive benefits from EQGP and EQM, in accordance with such interests. Furthermore, through EQT's general partner interest, limited partner interest and IDRs in RMP and majority ownership interest in Strike Force Midstream, EQT has the obligation to absorb the losses of RMP and Strike Force Midstream and the right to receive benefits from RMP and Strike Force Midstream, in accordance with such interests. As EQT has a controlling financial interest in EQGP, EQM, RMP and Strike Force Midstream and is the primary beneficiary, EQT consolidates EQGP, EQM, RMP and Strike Force Midstream.

The key risks associated with the operations of EQGP, EQM, RMP and Strike Force Midstream, as applicable, are:


•	EQGP's only cash-generating assets consist of its partnership interests in EQM; therefore, its cash flow is dependent upon the ability of EQM to make cash distributions to its partners;


•	EQM and RMP depend on EQT for a substantial majority of their revenues and future growth; therefore, EQM and RMP are indirectly subject to the business risks of EQT;

•

EQM's natural gas gathering, transmission and storage services, RMP's natural gas gathering, compression and water services, and Strike Force Midstream's gathering and compression services are subject to extensive regulation by federal, state and local regulatory authorities and subject to stringent environmental laws and regulations, which may expose EQM, RMP and Strike Force Midstream to significant costs and liabilities;


•	Expanding EQM, RMP and Strike Force Midstream's businesses by constructing new midstream assets subjects EQM, RMP, and Strike Force Midstream to risks. If EQM, RMP and Strike Force Midstream do not complete these expansion projects, their future growth may be limited;


•	EQM, RMP and Strike Force Midstream are subject to numerous hazards and operational risks which include, but are not limited to, ruptures, fires, explosions, leaks and damage to pipelines, facilities, equipment and surrounding properties caused by natural disasters, acts of sabotage and terrorism, and inadvertent damage; and


•	Certain of the services EQM provides on its transmission and storage system are subject to long-term, fixed-price "negotiated rate" contracts that are not subject to adjustment, even if EQM's cost to perform such services exceeds the revenues received from such contracts, and, as a result, EQM's costs could exceed its revenues received under such contracts.

See further discussion of the impact that EQT's ownership and control of EQM, EQGP , RMP and Strike Force Midstream have on EQT's financial position, results of operations and cash flows in Notes 3, 4 and 5 for EQM, EQGP, and RMP, respectively, and in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K for the year ended December 31, 2017.

The following table presents amounts included in the Consolidated Balance Sheets that were for the use or obligation of EQGP or EQM as of December 31, 2017 and 2016.



Classification	December 31, 2017		December 31, 2016
	(Thousands)
Assets:
Cash and cash equivalents	$	2,857	$	60,453
Accounts receivable	28,804		20,662
Prepaid expenses and other	8,470		5,745
Property, plant and equipment, net	2,804,059		2,578,834
Other assets	483,004		206,104
Liabilities:
Accounts payable	$	47,042	$	35,831
Other current liabilities	133,531		32,242
Credit facility borrowings	180,000		—
Senior Notes	987,352		985,732
Other liabilities and credits	20,273		9,562

The following table summarizes EQGP and EQM's Statements of Consolidated Operations and Cash Flows for the years ended December 31, 2017, 2016 and 2015, inclusive of affiliate amounts.



	Years Ended December 31,
	2017			2016			2015
	(Thousands)
Operating revenues	$	834,096		$	735,614		$	632,936
Operating expenses	256,403			211,630			183,956
Other (expenses) income	(8,773		)	11,010			(14,980		)
Net income	$	568,920		$	534,994		$	434,000

Net cash provided by operating activities	$	647,828		$	535,357		$	488,329
Net cash used in investing activities	$	(456,968	)	$	(732,033	)	$	(1,043,822	)
Net cash (used in) provided by financing activities	$	(248,456	)	$	(103,828	)	$	735,712

The following table presents summary information of assets and liabilities of RMP included in the Company’s Consolidated Balance Sheets that are for the use or obligation of RMP.



Classification	December 31, 2017
	(Thousands)
Assets:
Cash	$	10,538
Accounts receivable	12,246
Other current assets	1,327
Property and equipment, net	1,431,802
Goodwill	1,346,918
Liabilities:
Accounts payable	$	4
Other current liabilities	28,830
Credit facility borrowings	286,000
Other long-term liabilities	9,360

The following table presents summary information for RMP’s financial performance included in the Consolidated Statements of Operations and Cash Flows for the period from November 13, 2017 through December 31, 2017, inclusive of affiliate amounts.



	For the period November 13, 2017 through December 31, 2017
	(Thousands)
Operating revenues	$	44,219
Operating expenses	18,274
Other expenses	(811		)
Net income	$	25,134

Net cash provided by operating activities	$	22,430
Net cash used in investing activities	$	(34,553	)
Net cash provided by financing activities	$	9,959

The following table presents summary information of assets and liabilities of Strike Force Midstream included in the Company’s Consolidated Balance Sheets that are for the use or obligation of Strike Force Midstream.



	December 31, 2017
	(Thousands)
Assets:
Cash	$	43,938
Accounts receivable	12,477
Property and equipment, net	356,346
Intangible Assets	457,992
Liabilities:
Other current liabilities	$	24,341

The following table presents summary information for Strike Force Midstream’s financial performance included in the Consolidated Statements of Operations and Cash Flows for the period from November 13, 2017 through December 31, 2017, inclusive of affiliate amounts.



	For the period November 13, 2017 through December 31, 2017
	(in thousands)
Operating revenues	$	9,214
Operating expenses	6,330
Other (expenses) income	52
Net income	$	2,936

Net cash provided by operating activities	$	8,588
Net cash used in investing activities	$	(36,190	)
Net cash provided by financing activities	$	26,951