EQT Corp. said Thursday that its operations in the Marcellus Shale once again drove significant growth in its production sales volume but it still is evaluating its Utica liquids venture.

The Marcellus accounted for 73% of the company’s sales volume, which hit a record 378.2 Bcfe last year, up 43% from 2012.

“Our largest investment is in continued development of our Marcellus acreage, this investment is our highest return opportunity and it is driving our growth,” said CEO David Porges.

The company drilled 225 gross wells last year, 146 of which targeted the Marcellus at an average lateral length of 4,935 feet. The rest were drilled in Kentucky’s Huron Shale formation and the shallower Upper Devonian above the Marcellus.

In the Utica, though, where the company holds just eight permits in Guernsey County, OH, EQT is uncertain of its future.

“The intent of this [Utica] program is to see if we can crack the code of the condensate light oil window. While our first three wells were, frankly, mediocre, we are encouraged enough by very initial results to try specific changes to our drilling and completion design to improve economics materially,” Porges said. “If they are successful, there is existing acreage nearby at relatively low prices — largely because of the skepticism about this part of the play.”

EQT plans to drill 21 wells in the Utica this year. Steven Schlotterbeck, exploration and production president, said the average lateral length of the company’s Utica wells is about 6,500 feet. He said the company does not plan on releasing any results from the Utica until the middle of the year or later.

“By year-end, we hope to either demonstrate improvement, in which case it would make sense to add acreage, or conclude that we cannot achieve the needed improvements at this time and discontinue drilling,” Porges said of the company’s Utica program.

Despite record earnings of $390.6 million last year, CFO Philip Conti said the figure was “impacted by some unusual numbers” when comparing it to the $183.4 million the company earned in 2012.

A sale of Equitable Gas Co. in December (see Shale Daily, Dec. 18, 2013) cost EQT $68 million in taxes. Expenses related to the upgrades of certain midstream assets and increased drilling activity, as well as lower commodity prices and increased volumes offset some of the profit the company could have realized last year and during the fourth quarter.

After adjusting for such expenses, the company reported net income of $72.5 million, or 47-cents/share, for 4Q2013. Adjusted annual earnings were $352.4 million, or $2.32/share.

EQT invested $1.8 billion on capital projects in 2013, with $1.4 billion going toward production. Net operating revenue rose 23% to $453 million in 4Q2013, while net operating expenses were 20% higher at $291.5 million as the company focused on production and midstream growth.

Production sales volume this year is expected to be between 460-480 Bcfe and liquids volume is expected to reach up to 6.9 million bbl. In December, EQT said it would drill 186 wells in the Marcellus this year and another 30 in the Upper Devonian. On Thursday, Porges said 90% of its Marcellus wells will be fully developed, while another 10% will be drilled in central Pennsylvania to delineate its acreage for future development there.

EQT had largely suspended its drilling program in the Huron in 2012 (see Shale Daily, Jan. 24, 2012), but Porges said a rise in natural gas prices and an existing gathering system there will allow it to invest $180 million to drill more wells.

EQT also plans to continue dropping down midstream assets, such as those in the Huron, to its affiliate EQT Midstream Partners LP. Financial analysts asked company officials Thursday if they believed EQT was realizing the full value of the midstream spin-off (see Shale Daily, Dec. 12, 2011; Feb. 14, 2012).

“We’ve heard that the full value of EQT Midstream is not transparent enough in EQT’s stock price,” Conti told analysts. “If we conclude that a clear value disconnect exists there are a variety of alternatives available to us to address that. You know what they are as some of our energy industry peers have already taken similar steps. I’m not going to address them or list them today, but there are a variety of factors that could cause us to go down one path or another.”

Conti said more details will be available later this year about the company’s partnership with EQT Midstream, which reported a 30% increase in net operating income on Thursday.