EQT Corp. is selling its Big Sandy Pipeline in eastern Kentucky to Spectra Energy Partners LP for $390 million in cash. Most of the sale proceeds are targeted for Marcellus and Huron shale development.
Big Sandy, a 70-mile-long, 20-inch diameter gas pipeline, entered service in 2008 (see Daily GPI, April 11, 2008) and has capacity of 171,000 Dth/d. The transaction is expected to close during the third quarter of 2011.
"The sale of our Big Sandy Pipeline is another step in our commitment to prioritize our capital and accelerate our most profitable investment opportunities, which means primarily Marcellus and also Huron development activities," said EQT CEO David Porges. "We will continue to fund this acceleration through our operating cash flow, additional asset sales and available debt capacity.
"We have contracted for capacity to ensure delivery of our growing Huron production and look forward to working with Spectra Energy Partners."
Spectra Energy Partners said EQT will be the main shipper on the pipeline, with more than 8% of the capacity under firm 16-year agreements. Big Sandy interconnects with the Tennessee Gas Pipeline system, linking the Huron Shale and Appalachian Basin natural gas supplies to the Mid-Atlantic and Northeast markets.
EQT said it will use most of the pipeline sale proceeds to develop its 520,000 Marcellus acres, including associated midstream gathering; and to develop its Huron reserves. EQT said now expects to drill 100 Marcellus wells and 120 Huron wells in this year (see Shale Daily, May 2).
The company's 2011 capital spending forecast was increased to $1.2-1.25 billion, of which about 75% will be used for well development. As a result of this additional investment, EQT is increasing its 2011 production sales volume guidance to 185-190 Bcfe and established a preliminary 2012 volume target of 245-250 Bcfe. A final 2012 target is to be set later this year.
©Copyright 2011 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.