Shale plays figured prominently in the third quarter performance of Denver-based QEP Resources as the company grew production by about 20% from the year-ago period.

QEP -- in its first quarter as a stand-alone company following its spinoff from Questar Corp. (see Daily GPI, May 19) -- reported third quarter production of 61.7 Bcfe compared to 43.8 Bcfe for the 2009 period, a 41% increase. Accounting for curtailments during the 2009 period, QEP production was up approximately 20%. Crude oil and natural gas liquids (NGL) comprised 11% of reported production volumes.

"Taking into account price-related curtailments in the third quarter of 2009, [exploration and production unit] QEP Energy delivered approximately 20% year-over-year production growth, driven by strong results from ongoing Haynesville Shale and Pinedale Anticline development activities, combined with significant contributions from new wells in our Woodford Shale, Granite Wash and Bakken plays," said CEO Chuck Stanley.

"We are well positioned to deliver at least 15% year-over-year production growth in 2010. QEP Field Services also had a good quarter. Field Services gathering and processing businesses benefited from growing production at QEP Energy and our third-party customers."

The company now estimates that 2010 net production could range from 225-227 Bcfe, up 19-20% from 2009 production of 189.5 Bcfe. Prior guidance was 218-222 Bcfe.

Net realized natural gas prices at QEP Energy averaged $4.64/Mcf, down 28% compared to third quarter 2009. Net realized crude oil and NGL prices averaged $53.74/bbl, up 3% from the year-ago quarter.

In the Haynesville Shale improved drilling performance has translated into lower well costs with year-to-date drill times for operated wells averaging 39 days from spud to total depth, resulting in average gross completed well costs of less than $8.8 million for 2010, QEP said.

The company currently has 13 operated wells waiting on completion and seven operated wells being drilled in the Haynesville play. It also participated in eight outside-operated Haynesville wells that were completed and turned to sales during the third quarter.

QEP Energy has approximately 35,000 net acres in the "Wash" plays in the western Anadarko Basin, 27,000 of which are in the Texas Panhandle. At Sept. 30 net production from this play (combined vertical and horizontal wells) was approximately 35 MMcfe/d. The company is currently drilling two wells and has one well completing. QEP Energy is also participating in five outside-operated wells currently being drilled and five outside-operated wells that are awaiting completion.

The company has completed and turned to sales 34 new wells (20-acre, 10-acre, and five-acre) at Pinedale, for a total of 91 wells to date in 2010. Year-to-date 2010 drill times have averaged 16.8 days from spud to total depth, resulting in average gross completed well costs of $3.7 million for 2010.

QEP Energy has completed and turned to sales one new operated Woodford Cana Shale well in western Oklahoma. The company has two operated wells currently being drilled and two operated wells awaiting completion in the play. It currently operates 10 producing wells and has nonoperated working interests in more than 70 producing wells. The company also has interests in 13 wells currently being drilled and 13 wells awaiting completion that are operated by others.

QEP Field Services gathering volumes totaled 126.6 million MMBtu in the third quarter, compared to 95.6 million MMBtu in the 2009 quarter, a 33% increase.

Construction continues on two new QEP Field Services cryogenic gas processing plants in the Rocky Mountain region. In eastern Utah, the 150 MMcf/d Iron Horse plant should commence operations in early 2011, providing fee-based processing services for third-party customers. When completed in the fourth quarter of 2011, the 420 MMcf/d Blacks Forks II cryogenic plant in southwest Wyoming will extract an incremental 15,000 b/d of NGLs net to QEP, the company said.

Net income in the third quarter was $71.1 million (40 cents/share), essentially equal to the $71.4 million (40 cents) for the third quarter of 2009. Excluding changes in unrealized gains and losses on natural gas basis-only swaps, gains and losses on noncore asset sales, separation costs and losses on early extinguishment of debt, net income was $57.2 million (32 cents/share) compared to $78.3 million (43 cents) in the prior-year period.