EQT Corp. said Monday that it would spend $1.5 billion on exploration and production next year to finance a program that sets it up for 15-20% year/year production growth in 2018 and after.
That's up from this year's budget of $1 billion. The company said it would fund next year's operations with both cash on hand and cash flow. EQT is targeting full-year guidance of 810-830 Bcfe, compared to 750-755 Bcfe this year, saying “the majority of the volume expected from the 2017 drilling program will be realized in 2018.”
The company plans to drill 119 Marcellus Shale wells with an average lateral length of 7,000 feet. All would be on multi-well pads, with 76 expected to be drilled in Pennsylvania and 43 in West Virginia. EQT also plans to drill 81 Upper Devonian Shale wells with an average lateral length of 7,300 feet. Those would be drilled on Marcellus pads in Pennsylvania.
In July, the company slowed down its nascent deep Utica Shale program so that it could better analyze data and work more closely on its costs and completion designs in the play. That work continues as the year draws to a close. Management said at the end of the third quarter that the aim is to establish a Utica development program in 2018. The company said it would drill another seven deep Utica exploratory wells in 2017 with an average lateral length of 6,800 feet.
The E&P budget does not include spending for business development, land acquisitions or midstream capital related to EQT Midstream Partners LP (EQM). EQM said in a separate release Monday that it would spend $500-850 million for growth and contributions to Mountain Valley Pipeline LLC and another $35 million for ongoing maintenance. Distributable cash flow is expected to be $590-630 million, with annual per unit distributions forecast to grow 20% year/year in 2017.
EQT also announced a change in its midstream agreement with Williams Ohio Valley Midstream LLC for the dedicated portion of the 62,500 net acres the company acquired in West Virginia from Statoil ASA earlier this year. Under the new agreement, EQT has committed 50 MMcfe/d, which would grow to 200 MMcfe/d by the fourth year of the deal. EQM can now provide high pressure pipeline services on that acreage in addition to wellhead gathering services. EQT and EQM are coordinating to design a midstream system to support more production from the properties.
EQM said MVP has secured 2 Bcf/d of firm capacity commitments at 20-year terms and is targeting a late 2018 in-service date. The company also plans to install 30 miles of gathering pipeline next year and 10,000 hp of compression across Northern West Virginia and Southwestern Pennsylvania to support EQT production.
EQM also said it would invest in expanding the Equitrans pipeline system and modernizing the Allegheny Valley Connector. The projects include additional compression, pipeline looping and new header pipelines that will add up to 1.5 Bcf/d of capacity by the end of 2018.
Phase one of a natural gas header pipeline for Range Resources Corp. is complete. EQM said it plans to finish the second phase by 2Q2017. The header in Southwest Pennsylvania would provide Range with another 600 MMcf/d of capacity.