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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, 2022
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 NUMBER001-38629
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 classTrading SymbolName of each exchange on which registered
Common Stock, no par valueETRNNew 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 FilerAccelerated Filer                 Emerging Growth Company
Non-Accelerated FilerSmaller 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, 2022: 432,781



EQUITRANS MIDSTREAM CORPORATION
Index
 Page No.
  
  
 
   
 
   
 
   
   
 
   
 
  
  
  
  
  
 
  
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 by the Company and EQT (as defined below), as subsequently amended, which became effective on March 1, 2022 and 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.
Amended EQM Credit Facility – that certain Third Amended and Restated Credit Agreement, dated as of October 31, 2018, among EQM, as borrower, Wells Fargo Bank, National Association, as the administrative agent, swing line lender, and a letter of credit (L/C) issuer, the lenders party thereto from time to time and any other persons party thereto from time to time (as amended by that certain First Amendment to Third Amended and Restated Credit Agreement, dated as of March 30, 2020, by that certain Second Amendment to Third Amended and Restated Credit Agreement, dated April 16, 2021, by that certain Third Amendment to the Third Amended and Restated Credit Agreement, dated as of April 22, 2022, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time). For the avoidance of doubt, any reference to the Amended EQM Credit Facility as of any particular date shall mean the Amended EQM Credit Facility as in effect on such date.
Amended 2019 EQM Term Loan Agreement - that certain term loan agreement entered into in August 2019 and amended on March 30, 2020 by EQM, which term loan agreement was terminated on January 8, 2021.
Annual Revenue Commitments (ARC or ARCs) - contractual term in a water services agreement that obligates the customer to pay for a fixed amount of water services annually.
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.
associated gas – natural gas that is produced as a byproduct of principally oil production activities.
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. EQM is a wholly owned subsidiary of Equitrans Midstream Corporation.
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) and ARC (as defined above) contracts.
gas – natural gas.
liquefied natural gas (LNG) – natural gas that has been cooled to minus 161 degrees Celsius for transportation, typically by ship. The cooling process reduces the volume of natural gas by 600 times.
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.
3

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 is designed to 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 was approved by the FERC to extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. The project is subject to ongoing discussions between the MVP Joint Venture and the project shipper, Dominion Energy North Carolina, as discussed in Part I, "Outlook" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q.
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, pentane, 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 water services agreements and new water services agreements if negotiated between the parties, which letter agreement was replaced by the 2021 Water Services Agreement on March 1, 2022.
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."
AbbreviationsMeasurements
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
MMcf  = million cubic feet
GAAP – United States Generally Accepted Accounting Principles
MMgal  = million gallons
IRS – United States Internal Revenue Service
NGA – Natural Gas Act of 1938, as amended
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,
 2022202120222021
 (Thousands, except per share amounts)
Operating revenues$331,751 $342,074 $1,002,508 $1,070,365 
Operating expenses:  
Operating and maintenance 35,297 38,743 100,573 111,004 
Selling, general and administrative 33,348 33,560 90,483 104,536 
Depreciation68,572 66,021 203,272 203,954 
Amortization of intangible assets16,204 16,204 48,614 48,614 
Impairment of long-lived assets   56,178 
Total operating expenses153,421 154,528 442,942 524,286 
Operating income 178,330 187,546 559,566 546,079 
Equity income (a)
48 8,461 91 14,385 
Impairment of equity method investment(583,057) (583,057) 
Other income, net893 21,199 21,414 38,251 
Loss on extinguishment of debt  (24,937)(41,025)
Net interest expense(101,085)(94,101)(289,323)(284,887)
(Loss) income before income taxes(504,871)123,105 (316,246)272,803 
Income tax (benefit) expense(1,275)32,200 8,636 65,180 
Net (loss) income (503,596)90,905 (324,882)207,623 
Net income attributable to noncontrolling interests2,932 3,557 10,655 10,479 
Net (loss) income attributable to Equitrans Midstream(506,528)87,348 (335,537)197,144 
Preferred dividends14,628 14,628 43,884 43,884 
Net (loss) income attributable to Equitrans Midstream common shareholders$(521,156)$72,720 $(379,421)$153,260 
(Loss) earnings per share of common stock attributable to Equitrans Midstream common shareholders - basic$(1.20)$0.17 $(0.88)$0.35 
(Loss) earnings per share of common stock attributable to Equitrans Midstream common shareholders - diluted$(1.20)$0.17 $(0.88)$0.35 
Weighted average common shares outstanding - basic433,348 433,017 433,333 433,001 
Weighted average common shares outstanding - diluted433,348 433,675 433,333 433,412 
Statement of comprehensive income:
Net (loss) income$(503,596)$90,905 $(324,882)$207,623 
Other comprehensive income, net of tax:
Pension and other post-retirement benefits liability adjustment, net of tax expense of $10, $12, $34, and $36
36 34 104 103 
Other comprehensive income 36 34 104 103 
Comprehensive (loss) income (503,560)90,939 (324,778)207,726 
Less: Comprehensive income attributable to noncontrolling interests2,932 3,557 10,655 10,479 
Less: Comprehensive income attributable to preferred dividends14,628 14,628 43,884 43,884 
Comprehensive (loss) income attributable to Equitrans Midstream common shareholders$(521,120)$72,754 $(379,317)$153,363 
Dividends declared per common share$0.15 $0.15 $0.45 $0.45 

(a)Represents equity income from Mountain Valley Pipeline, LLC (the MVP Joint Venture). See Note 6.

The accompanying notes are an integral part of these consolidated financial statements.
5

EQUITRANS MIDSTREAM CORPORATION
Statements of Consolidated Cash Flows (Unaudited)
 Nine Months Ended September 30,
 20222021
 (Thousands)
Cash flows from operating activities:  
Net (loss) income$(324,882)$207,623 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 203,272 203,954 
Amortization of intangible assets48,614 48,614 
Deferred income taxes8,101 61,267 
Impairment of long-lived assets and equity method investment583,057 56,178 
Equity income (a)
(91)(14,385)
Other income, net(21,681)(38,160)
Loss on extinguishment of debt24,937 41,025 
Non-cash long-term compensation expense10,304 10,590 
Changes in other assets and liabilities:
Accounts receivable34,921 73,348 
Accounts payable2,255 (1,765)
Accrued interest(57,375)(48,893)
Deferred revenue261,013 225,315 
Other assets and other liabilities(25,906)(2,687)
Net cash provided by operating activities746,539 822,024 
Cash flows from investing activities:  
Capital expenditures(276,828)(211,072)
Capital contributions to the MVP Joint Venture(158,178)(178,953)
Proceeds from sale of gathering assets3,719  
Principal payments received on the Preferred Interest 4,110 3,885 
Net cash used in investing activities(427,177)(386,140)
Cash flows from financing activities:  
Proceeds from revolving credit facility borrowings284,500 457,500 
Payments on revolving credit facility borrowings(394,500)(600,000)
Proceeds from the issuance of long-term debt1,000,000 1,900,000 
Debt discounts, debt issuance costs and credit facility arrangement fees(19,880)(29,904)
Payment for retirement of long-term debt(1,021,459)(1,936,250)
Dividends paid to holders of Equitrans Midstream Preferred Shares(43,884)(43,884)
Dividends paid to common shareholders(194,733)(194,624)
Distributions to noncontrolling interests(16,000)(2,500)
Net cash used in financing activities(405,956)(449,662)
Net change in cash and cash equivalents(86,594)(13,778)
Cash and cash equivalents at beginning of period134,661 208,023 
Cash and cash equivalents at end of period$48,067 $194,245 
Cash paid during the period for:  
Interest, net of amount capitalized$339,285 $326,456 
Income taxes$1,243 $ 
(a)Represents equity income from the MVP Joint Venture. See Note 6.
The accompanying notes are an integral part of these consolidated financial statements.
6

EQUITRANS MIDSTREAM CORPORATION
Consolidated Balance Sheets (Unaudited)
September 30, 2022December 31, 2021
(Thousands)
ASSETS
Current assets:  
Cash and cash equivalents$48,067 $134,661 
Accounts receivable (net of allowance for credit losses of $2,508 and $2,696 as of September 30, 2022 and December 31, 2021, respectively)
230,932 252,301 
Other current assets53,109 59,867 
Total current assets
332,108 446,829 
Property, plant and equipment9,271,014 9,004,602 
Less: accumulated depreciation(1,412,301)(1,217,099)
Net property, plant and equipment7,858,713 7,787,503 
Investment in unconsolidated entity (a)
784,384 1,239,039 
Goodwill486,698 486,698 
Net intangible assets603,157 651,771 
Other assets321,444 308,924 
Total assets$10,386,504 $10,920,764 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY  
Current liabilities:  
Current portion of long-term debt$98,941 $ 
EQT Cash Option (as defined in Note 4)195,820  
Accounts payable51,177 59,627 
Capital contributions payable to the MVP Joint Venture40,989 72,188 
Accrued interest94,534 151,909 
Accrued liabilities59,782 83,852 
Total current liabilities541,243 367,576 
Long-term liabilities:
   Revolving credit facility borrowings395,000 505,000 
   Long-term debt6,332,378 6,434,945 
   Contract liability886,126 821,342 
   Regulatory and other long-term liabilities108,272 99,333 
Total liabilities8,263,019 8,228,196 
Mezzanine equity:
Equitrans Midstream Preferred Shares, 30,018 shares issued and outstanding as of September 30, 2022 and December 31, 2021
681,842 681,842 
Shareholders' equity:  
Common stock, no par value, 432,781 and 432,522 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
3,969,591 3,957,756 
Retained deficit(3,003,848)(2,428,171)
Accumulated other comprehensive loss(1,950)(2,054)
Total common shareholders' equity963,793 1,527,531 
Noncontrolling interests477,850 483,195 
Total shareholders' equity1,441,643 2,010,726 
Total liabilities, mezzanine equity and shareholders' equity$10,386,504 $10,920,764 

(a)Represents investment in the MVP Joint Venture. See Note 6.

The accompanying notes are an integral part of these consolidated financial statements.
7

EQUITRANS MIDSTREAM CORPORATION
Statements of Consolidated Shareholders' Equity and Mezzanine Equity (Unaudited)
Mezzanine
Equity
AccumulatedEquitrans
Common StockOtherMidstream
 SharesNoRetainedComprehensiveNoncontrollingTotalPreferred
 OutstandingPar ValueDeficitLossInterests EquityShares
 (Thousands, except per share amounts)
Balance at January 1, 2021432,470 $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, net28 4,662 — — — 4,662 — 
Distributions paid to noncontrolling interests— — — — (2,500)(2,500)— 
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)
— — — — — — (14,628)
Balance at March 31, 2021432,498 $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, net7 3,635 — — — 3,635 — 
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)
— — — —   (14,628)
Balance at June 30, 2021432,505 $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, net17 3,304 — — — 3,304 — 
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)
— — — — — — (14,628)
Balance at September 30, 2021432,522 $3,952,896 $(770,769)$(2,126)$479,144 $3,659,145 $681,842 

8

Mezzanine
Equity
AccumulatedEquitrans
Common StockOtherMidstream
SharesNoRetainedComprehensiveNoncontrollingTotalPreferred
OutstandingPar ValueDeficitLossInterests EquityShares
(Thousands, except per share amounts)
Balance at January 1, 2022432,522 $3,957,756 $(2,428,171)$(2,054)$483,195 $2,010,726 $681,842 
Other comprehensive income (net of tax):
Net income— — 86,505 — 3,775 90,280 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)
— — (65,584)— — (65,584)— 
Share-based compensation plans, net155 2,832 — — — 2,832 — 
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)
— — — — — — (14,628)
Balance at March 31, 2022432,677 $3,960,588 $(2,407,250)$(2,020)$486,970 $2,038,288 $681,842 
Other comprehensive income (net of tax):
Net income— — 55,230 — 3,948 59,178 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)
— — (64,991)— — (64,991)— 
Share-based compensation plans, net104 4,470 — — — 4,470 — 
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)
— — — — — — (14,628)
Balance at June 30, 2022432,781 $3,965,058 $(2,417,011)$(1,986)$490,918 $2,036,979 $681,842 
Other comprehensive (loss) income (net of tax):
Net (loss) income— — (521,156)— 2,932 (518,224)14,628 
Pension and other post-retirement benefits liability adjustment, net of tax expense of $10
— — — 36 — 36 — 
Dividends on common shares ($0.15 per share)
— — (65,681)— — (65,681)— 
Share-based compensation plans, net 4,533 — — — 4,533 — 
Distributions paid to noncontrolling interests— — — — (16,000)(16,000)— 
Dividends paid to holders of Equitrans Midstream Preferred Shares ($0.4873 per share)
— — — — — — (14,628)
Balance at September 30, 2022432,781 $3,969,591 $(3,003,848)$(1,950)$477,850 $1,441,643 $681,842 
The accompanying notes are an integral part of these consolidated financial statements.
9

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 primarily consists of water pipelines and other facilities that support well completion and produced water handling activities.
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, 2022, the results of its operations and equity for the three and nine months ended September 30, 2022 and 2021 and its cash flows for the nine months ended September 30, 2022 and 2021. The consolidated balance sheet at December 31, 2021 has been derived from the audited financial statements at that date, but 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, 2021, 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 primarily 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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, 2021, as well as Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" contained herein.
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 to the calculation of each dividend following March 31, 2024 for the Equitrans Midstream Preferred Shares pursuant to the Company's Second Amended and Restated Articles of Incorporation, as well as any Company contracts that use the London Inter-Bank Offered Rate as a reference rate. The ASU was effective immediately but is only available through December 31, 2022. In April 2022, the FASB proposed deferring the sunset date for applying reference rate reform relief in Topic 848 to December 31, 2024. The Company is currently evaluating the potential impact of adopting this standard on its financial statements and related disclosures.
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 were effective for fiscal years beginning after December 15, 2021. The Company adopted this standard on January 1, 2022 with no significant effect on the Company's financial statements or related disclosures.
2.     Impairment of Long-Lived Assets
Long-Lived Assets. 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 services segment. As a result of the recoverability test, management determined that the carrying value of the Ohio Water long-lived assets (which
10

consisted of water pipelines, impoundment facilities, pumping stations, take point facilities and measurement facilities that support well completion activities and collect flowback and produced water for recycling or disposal in Ohio) 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 impairment of long-lived assets line on the statements of consolidated comprehensive income.
Equity Method Investment. In connection with its assessment as of September 30, 2022, the Company identified an increased risk of one or more permitting delays resulting primarily from recent legal developments and regulatory uncertainties, as well as macroeconomic pressures primarily due to increased interest rates impacting the discount rate used within the estimated fair value of its investment in the MVP Joint Venture. The Company considers these factors to be indicators of a decline in value. As such, the Company evaluated if the carrying value of its equity method investment in the MVP Joint Venture as of September 30, 2022 exceeded the fair value and, if so, whether that decline in value was other-than-temporary.
The Company estimated the fair value of its investment in the MVP Joint Venture using an income approach that primarily considered revised probability-weighted scenarios of discounted future net cash flows based on the estimates of total project costs and revenues. These scenarios reflected assumptions and judgments regarding potential delays and cost increases resulting from various ongoing legal and regulatory matters affecting the MVP and MVP Southgate projects. The Company’s analysis also took into account, among other things, probability-weighted growth expectations from additional compression expansion opportunities. The Company generally used an after-tax discount rate of 7.5% in the analysis derived based on a market participant approach. The Company considered scenarios under which ongoing or new legal and regulatory matters further delay the completion and increase the total costs of the project; all required legal and regulatory approvals and authorizations and certain compression expansion opportunities are realized; and the MVP project is canceled. As a result of the assessment, the Company recognized a pre-tax impairment charge of approximately $583 million that reduced the carrying value of its equity investment in the MVP Joint Venture to approximately $784 million as of September 30, 2022. Given the significant assumptions and judgments used in estimating the fair value of the Company's investment in the MVP Joint Venture, the fair value of the investment in the MVP Joint Venture represents a Level 3 measurement.
There is risk that the Company’s equity investment in the MVP Joint Venture may be further impaired in the future. There are ongoing (and may be future) legal and regulatory matters related to the MVP project, any of which could affect the ability to complete or operate the project, as well as legal and regulatory matters related to the MVP Southgate project that must be resolved in connection with the project. Assumptions and estimates utilized in assessing the fair value of the Company’s investment in the MVP Joint Venture may change depending on the nature or timing of resolutions to the legal and regulatory matters or based on other relevant developments. Adverse changes in circumstances relevant to the likelihood of project or expansion completion could prompt the Company, in future assessments, to apply a lower probability of project or expansion completion and 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 additional impairment, which could have a material adverse effect on the Company's results of operations and financial position.
11

3.    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,
 2022202120222021
 (Thousands)
Revenues from customers:  
Gathering$227,180 $243,816 $672,284 $733,844 
Transmission91,557 90,886 293,430 295,203 
Water13,014 7,372 36,794 41,318 
Total operating revenues$331,751 $342,074 $1,002,508 $1,070,365 
Operating income (loss):  
Gathering$112,279 $132,582 $347,464 $399,309 
Transmission64,077 59,703 209,480 203,153 
Water (a)
2,342 (4,414)3,606 (55,577)
Headquarters (b)
(368)(325)(984)(806)
Total operating income$178,330 $187,546 $559,566 $546,079 
Reconciliation of operating income to net (loss) income: 
Equity income (c)
$48 $8,461 $91 $14,385 
Impairment of equity method investment (c)
(583,057) (583,057) 
Other income, net (d)
893 21,199 21,414 38,251 
Loss on extinguishment of debt  (24,937)(41,025)
Net interest expense(101,085)(94,101)(289,323)(284,887)
Income tax (benefit) expense(1,275)32,200 8,636 65,180 
Net (loss) income $(503,596)$90,905 $(324,882)$207,623 
(a)Impairment of long-lived assets of $56.2 million for the nine months ended September 30, 2021 was included in Water operating income (loss). See Note 2 for further information.
(b)Includes certain unallocated corporate expenses.
(c)Equity income and impairment of equity method investment are included in the Transmission segment.
(d)Includes unrealized (losses) gains on derivative instruments and gain on sale of gathering assets recorded in the Gathering segment.
September 30, 2022December 31, 2021
 (Thousands)
Segment assets:  
Gathering$7,647,237 $7,638,877 
Transmission (a)
2,288,144 2,769,097 
Water196,004 151,151 
Total operating segments10,131,385 10,559,125 
Headquarters, including cash255,119 361,639 
Total assets$10,386,504 $10,920,764 
(a)The equity investment in the MVP Joint Venture is included in the Transmission segment.
12

 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
 (Thousands)
Depreciation:  
Gathering$49,125 $47,441 $145,953 $140,899 
Transmission13,909 13,835 41,707 41,461 
Water5,162 4,364 14,483 20,740 
Headquarters376 381 1,129 854 
Total$68,572 $66,021 $203,272 $