Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

Debt

Credit facility. The Company has a $2.5 billion credit facility that expires in July 2022.

The Company had $0.7 billion of letters of credit outstanding under its credit facility as of March 31, 2020 and no letters of credit outstanding under its credit facility as of December 31, 2019. As of May 1, 2020, the Company had sufficient unused borrowing capacity, net of letters of credit, under its credit facility to satisfy any requests for margin deposit or other collateral that its counterparties are permitted to request of the Company pursuant to the Company's derivative instruments, midstream services contracts and other contracts. As of May 1, 2020, such assurances could be up to approximately $1.1 billion, inclusive of letters of credit, margin deposits and other collateral posted of approximately $0.9 billion in the aggregate.

Under the Company's credit facility, for the three months ended March 31, 2020 and 2019, the maximum amounts of outstanding borrowings were $0.4 billion and $1.1 billion, respectively, the average daily balances were approximately $0.1 billion and $0.6 billion, respectively, and interest was incurred at weighted average annual interest rates of 3.2% and 4.0%, respectively. As a result of the downgrades of the Company's senior notes credit rating discussed below, the margin on base rate loans increased

from 0.75% as of March 31, 2020 to 1.00%, and the margin on Eurodollar rate loans increased from 1.75% as of March 31, 2020 to 2.00%.

Term loan facility. Effective May 2019, the Company has a $1.0 billion term loan facility that matures in May 2021. For the three months ended March 31, 2020, interest was incurred on the Company's term loan facility borrowings at a weighted average annual interest rate of 2.8%. As of March 31, 2020 and December 31, 2019 the margins on the Company's term loan facility borrowings were 1.25% and 1.00%, respectively. As a result of the downgrades of the Company's senior notes credit rating discussed below, the margin on the Company's term loan facility borrowings increased to 1.50%.

Senior notes. On January 21, 2020, the Company issued $1.0 billion aggregate principal amount of 6.125% senior notes due February 1, 2025 and $750 million aggregate principal amount of 7.000% senior notes due February 1, 2030 (together, the Adjustable Rate Notes). The Company used the net proceeds from the Adjustable Rate Notes to repay $500 million aggregate principal amount of the Company's floating rate notes, $500 million aggregate principal amount of the Company's 2.50% senior notes, $500 million aggregate principal amount of the Company's 4.875% senior notes and $200 million of the Company's term loan facility borrowings. The Company's floating rate notes and 2.50% senior notes were fully redeemed at a price of 100% and 100.446% (inclusive of a make whole call premium), respectively, plus accrued but unpaid interest of $1.2 million and $4.2 million, respectively. This resulted in the payment of make whole call premiums of $2.2 million related to the Company's 2.50% senior notes. The $500 million aggregate principal amount of the Company's 4.875% senior notes was redeemed at a total cost of $517.4 million, inclusive of a tender premium of $10.0 million and accrued but unpaid interest of $7.4 million.

As a result of downgrades of the Company's senior notes credit rating that occurred subsequent to the issuance of the Adjustable Rate Notes, including those discussed below, the interest rate on the 6.125% senior notes will increase to 7.875% and the interest rate on the 7.000% senior notes will increase to 8.750% beginning with the interest payment period that starts on August 1, 2020. Interest rate adjustments under the Adjustable Rate Notes cannot exceed 2% of the interest rate first set forth on the face of the senior notes.

Subsequent events. In April 2020, Moody's and S&P downgraded the Company's senior notes credit rating to "Ba3" and "BB–," respectively.

In addition, in April 2020, the Company repurchased approximately $4.6 million aggregate principal amount of its 4.875% senior notes pursuant to privately negotiated open market purchases.

On April 28, 2020, the Company issued $500 million aggregate principal amount of 1.75% convertible senior notes (the Convertible Notes) due May 1, 2026, unless earlier redeemed, repurchased or converted. The Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Upon conversion of the Convertible Notes, which may not occur prior to May 5, 2023, the Company may satisfy its conversion obligation by paying or delivering to the holder of the Convertible Notes, cash, EQT common stock or a combination thereof, at the Company's election. The Company used $32.5 million of the net proceeds from the offering to pay the cost of the Capped Call Transactions described below and $450 million of the net proceeds to repay a portion of the Company's term loan facility borrowings. As of May 1, 2020, the Company had approximately $350 million in term loan facility borrowings outstanding. The Company intends to use the remainder of the net proceeds to repay or redeem other outstanding indebtedness and for general corporate purposes.

In connection with the Convertible Notes offering, the Company entered into privately negotiated capped call transactions (the Capped Call Transactions), the purpose of which is to reduce the potential dilution to EQT common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted notes, with such reduction and offset subject to a cap. The Capped Call Transactions have a strike price of $15.00 per share of EQT common stock and a capped price of $18.75 per share of EQT common stock.