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EQT Ramps Up First Utica Well, Achieves 1 Bcfe/d in Appalachian Output

Hours ahead of EQT Corp.'s second quarter conference call on Thursday, the company tied into sales its first Utica Shale well, the CEO said.

EQT Corp.'s Appalachian-based production in the second quarter rose 54% year/year and helped to push the company to a record 1 Bcfe/d, driven by 111% growth in the Marcellus Shale, executives said Thursday.

There are even better results to come, CEO David Porges said during a conference call to discuss quarterly results. Some of the wells that were to turn to sales in 3Q2013 were done more efficiently than expected, which moved their completion dates into 2Q2013, he said.

EQT Production's sales volume averaged 92.4 Bcfe, helping the company to surpass the magical 1 Bcf/d target from its Appalachian operations. In the Marcellus alone, production averaged 748 MMcfe/d," said exploration chief Steve Schlotterbeck. Natural gas liquids (NGL) volumes totaled 1.234 million bbl, a 45% increase year/year.

EQT spud 41 gross wells in the Marcellus between April and June, with an average length-of-pay of 4,295 feet. Year-to-date EQT had spud 445 wells in the Marcellus and had 321 online, with 11 completed but not turned to sales.

The Pittsburgh operator also spud eight Upper Devonian wells. Three Utica Shale wells have been completed, including the one that recently ramped up. The second and third wells are expected to be turned inline in early August.

The Appalachian producer owns about 3.5 million gross acres in the basin, including 540,000 gross acres in the Marcellus. The Marcellus also had lifted sales to a record in the first quarter (see Shale Daily, April 26).

Of particular interest going forward are the twin targets, Marcellus and Upper Devonian, which are being drilled at the same time. Last year, EQT began using the same multi-well drilling pads to drill into the formations (see Shale Daily, Dec. 6, 2012). With solid results to date, the question becomes whether to drill and complete the two sections at the same time, or complete the Marcellus wells independently, then come back to finish the Upper Devonian wells, said Schlotterbeck.

Profits also soared year/year, jumping to $86.9 million (57 cents/share) from $31.4 million (21 cents). Operating cash flow nearly doubled to $316.7 million from $166 million; adjusted cash flow was $2.10/share versus $1.12. Net operating revenues increased 58% to $469.7 million; while net operating expenses rose by $81.7 million, to $298.4 million.

EQT has increased its full-year sales volume guidance to 360-365 Bcfe, which would be 40% higher than in 2012. NGL volumes this year are expected to quadruple to 4.8-5.0 million bbl.

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