Revenue from Contracts with Customers

As discussed in Note S, the Company adopted Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), on January 1, 2018 using the modified retrospective method of adoption. Adoption of the ASU did not require an adjustment to the opening balance of equity and did not materially change the Company's amount and timing of revenues. The Company applied the ASU only to contracts that were not completed as of January 1, 2018. The Company has elected to exclude all taxes from the measurement of transaction price.

For the sale of natural gas, oil and natural gas liquids (NGLs), the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. These contracts typically require payment within 25 days of the end of the calendar month in which the gas is delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company’s efforts to satisfy the performance obligations. Other contracts contain fixed consideration (i.e. fixed price contracts or contracts with a fixed differential to NYMEX or index prices). The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price.

Based on management’s judgment, the performance obligations for the sale of natural gas, oil and NGLs are satisfied at a point in time because the customer obtains control and legal title of the asset when the natural gas, oil or NGL is delivered to the designated sales point.

The sales of natural gas, oil and NGLs as presented on the Statements of Consolidated Operations represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling natural gas, oil and NGLs on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis.

The Company provides gathering, transmission and storage services in two manners: firm service and interruptible service. Firm service contracts are typically long term and include firm reservation fees, which are fixed, monthly charges for the guaranteed reservation of pipeline or storage capacity. Volumetric based fees under firm contracts include usage fees and charges for actual volumes transported, gathered or stored in excess of firm contracted volume. Interruptible service contracts include volumetric based fees, which are charges for the volume of gas actually gathered, transported or stored and do not guarantee access to the pipeline or storage facility. These contracts can be short or long term. Firm and interruptible contracts are billed at the end of each calendar month, with payment typically due within 21 days.

Based on total projected contractual revenues and including contracts associated with expected future capacity from expansion projects that are not yet fully constructed but for which EQM has entered into firm contracts, EQM's firm gathering contracts and firm transmission and storage contracts had weighted average remaining terms of approximately 8 and 15 years, respectively, as of December 31, 2017.

Under a firm contract, the Company has a stand-ready obligation to provide the service over the life of the contract. The performance obligation for firm reservation fee revenue is satisfied over time as the pipeline capacity is made available to the customer. As such, the Company recognizes firm reservation fee revenue evenly over the contract period, using a time-elapsed output method to measure progress. The performance obligation for volumetric based fee revenues for usage fees under firm and interruptible contracts is generally satisfied upon the Company's monthly billing to the customer for actual volumes gathered, transported or stored during the month. The amount billed corresponds directly to the value of the Company’s performance to date as the customer obtains value as each volume is gathered, transported or stored.

Certain of EQM's gas gathering agreements are structured with minimum volume commitments (MVC), which specify quantities for which a customer will be charged regardless of actual quantities gathered under the contract. Revenue is recognized for MVCs when the performance obligation has been met, which is the earlier of when the gas is gathered or when it is remote that the producer will be able to meet its MVC.

Water services revenues primarily represent fees charged by RMP for the delivery of fresh water to a customer at a specified delivery point. All of RMP’s water services revenues are generated pursuant to variable price per volume contracts with customers in the Appalachian Basin. For water services contracts, the only performance obligation in each contract is for RMP to provide water (usually a minimum daily volume) to the customer at any designated delivery point. This performance obligation is generally satisfied upon RMP’s monthly billing to the customer for the volume of water provided during the month. For water services arrangements, the customer is typically invoiced on a monthly basis with payment due 21 days after the receipt of the invoice.

Because the Company's performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company has recognized amounts due from contracts with customers of $441.1 million as accounts receivable within the Condensed Consolidated Balance Sheet.

The table below provides disaggregated information regarding the Company’s revenues, presented consistently with the Company’s segment reporting. Certain contracts that provide for the release of capacity that is not used to transport the Company’s produced volumes were deemed to be outside the scope of Revenue from Contracts with Customers. The cost of, and recoveries on, that capacity are reported within pipeline and net marketing services at EQT Production. Derivative contracts are also outside the scope of Revenue from Contracts with Customers.



Three Months Ended June 30, 2018	Revenues from contracts with customers			Other sources of revenue			Total
	(Thousands)
Natural gas sales	$	855,924		$	—		$	855,924
NGLs sales	125,657			—			125,657
Oil sales	9,784			—			9,784
Sales of natural gas, oil and NGLs	$	991,365		$	—		$	991,365

Pipeline and net marketing services at EQT Production	$	9,391		$	3,789		$	13,180
EQM Gathering:
Firm reservation fee revenues	111,702			—			111,702
Volumetric based fee revenues:
Usage fees under firm contracts	9,956			—			9,956
Usage fees under interruptible contracts	58,958			—			58,958
EQM Transmission:
Firm reservation fee revenues	82,222			—			82,222
Volumetric based fee revenues:
Usage fees under firm contracts	4,828			—			4,828
Usage fees under interruptible contracts	2,095			—			2,095
RMP Gathering:
Gathering revenues	52,966			—			52,966
Compression revenues	9,315			—			9,315
Water services at RMP Water	42,655			—			42,655
Intersegment eliminations	(270,674		)	—			(270,674		)
Pipeline, water and net marketing services	$	113,414		$	3,789		$	117,203

Loss on derivatives not designated as hedges	$	—		$	(53,897	)	$	(53,897	)

Total operating revenues	$	1,104,779		$	(50,108	)	$	1,054,671



Six Months Ended June 30, 2018	Revenues from contracts with customers			Other sources of revenue		Total
	(Thousands)
Natural gas sales	$	1,945,684		$	—	$	1,945,684
NGLs sales	251,125			—		251,125
Oil sales	20,930			—		20,930
Sales of natural gas, oil and NGLs	$	2,217,739		$	—	$	2,217,739

Pipeline and net marketing services at EQT Production	$	11,668		$	24,582	$	36,250
EQM Gathering:
Firm reservation fee revenues	221,635			—		221,635
Volumetric based fee revenues:
Usage fees under firm contracts	22,064			—		22,064
Usage fees under interruptible contracts	116,545			—		116,545
EQM Transmission:
Firm reservation fee revenues	179,997			—		179,997
Volumetric based fee revenues:
Usage fees under firm contracts	8,650			—		8,650
Usage fees under interruptible contracts	7,432			—		7,432
RMP Gathering:
Gathering revenues	105,696			—		105,696
Compression revenues	18,086			—		18,086
Water services at RMP Water	65,618			—		65,618
Intersegment eliminations	(520,153		)	—		(520,153		)
Pipeline, water and net marketing services	$	237,238		$	24,582	$	261,820

Gain on derivatives not designated as hedges	$	—		$	8,695	$	8,695

Total operating revenues	$	2,454,977		$	33,277	$	2,488,254

The following table includes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration. The table excludes all contracts that qualified for the exception to the relative standalone selling price method. Gathering firm reservation fees and transmission and storage firm reservation fees include amounts related to affiliate contracts.



	2018 (a)		2019		2020		2021		2022		Thereafter		Total
	(Thousands)
Natural gas sales	$	36,865	$	24,841	$	1,275	$	—	$	—	$	—	$	62,981
Gathering firm reservation fees	$	227,675	$	476,730	$	552,308	$	562,307	$	561,019	$	2,841,280	$	5,221,319
Gathering revenues supported by MVCs	$	—	$	65,700	$	71,370	$	71,175	$	71,175	$	136,875	$	416,295
Transmission and storage firm reservation fees	$	179,786	$	347,061	$	347,261	$	341,769	$	338,010	$	2,602,572	$	4,156,459

(a) July 1 through December 31.