EQT Corp. said in a regulatory filing late Tuesday it expects to report steep losses on derivatives for the third quarter as U.S. natural gas prices have hit their highest levels in more than a decade. 

In a Form 8-K filed with the U.S. Securities and Exchange Commission, EQT forecast a $1.6 billion loss on derivatives for 3Q2022 and a $5.5 billion loss through the first nine months of the year. EQT, the country’s largest natural gas producer, also said it expects to report more than $2 billion in cash payments to settle derivatives during the third quarter, bringing the total to about $4.7 billion through the first nine months of 2022. 

The company has not scheduled its third quarter earnings report, and the final numbers could change. EQT reported a net loss of $1.2 billion (minus $3.58/share) for 2021, partly because of losses on derivatives not designated as hedges. 

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Natural gas prices started climbing sharply last year as global demand rebounded after the worst of the Covid-19 pandemic. The market tightened further as 2022 drew near and tensions between Russia and Ukraine ratcheted up. 

Strong power burns and high levels of LNG exports in the United States have cut into storage inventories this year, putting upward pressure on Henry Hub prices. Slower production growth most of the year, along with gas shortages in Europe amid Russia’s war in Ukraine have also pushed prices higher. 

The market has driven Henry Hub volatility, a measure of how much daily prices change, to an all-time high this year, according to the Energy Information Administration. 

EQT and other U.S. gas producers have repeatedly been hit with steep losses on wrong-way bets as they’ve tried to strike a balance between protecting against downside and capturing upside as prices have swung.