EQT Corp. outlined a $2.4 billion capital expenditure (capex) budget on Tuesday, lifted by plans to resume drilling operations in Kentucky's Huron Shale formation and intent on putting the $740 million it earned from selling its gas utility toward boosting liquids volume and further developing its expansive Marcellus Shale position.

The Pittsburgh-based company said Tuesday it had completed the sale of Equitable Gas Co. to Pennsylvania-based Peoples Natural Gas. The deal also landed EQT 200 miles of additional transmission pipelines and four storage pools.

The company forecast production to increase by 25% in both 2014 and 2015. Liquids volume is expected to come up and comprise nearly 9% of overall production next year, driven mainly by the Huron, where EQT said it would spend $180 million to drill 120 wells with three to four rigs.

As a result of depressed prices at the time, the company suspended its Kentucky drilling program in January 2012 (see Shale Daily, Jan. 24, 2012). EQT, though, added that it currently has 800 producing horizontal wells in the play.

Coming off a strong third quarter, in which profits were 177% higher year-over-year and output climbed (see Shale Daily, Oct. 24), EQT said it would invest $1.9 billion for production next year and another $475 million in EQT Midstream Partners LP.

"The 2014 capex program is designed to profitably accelerate the development of our expansive Marcellus position and will result in significant volume growth in 2015. It includes capital to continue the growth of our midstream footprint," CEO Dave Porges said. "The Huron has returned to being a profitable play and an added benefit is increased throughput in the Huron gathering system, which will facilitate a future sale of EQT Midstream Partners."

In all, liquid volumes are expected to reach up to 6.9 MMbbls, with total production projected to be 460-480 Bcfe.

"[The] greater liquids mix, lower costs and higher midstream EBITDA [are] a positive," said financial analyst Gordon Douthat, of Wells Fargo Securities, in an EQT research note. "[The] company has a track record of beating guidance and as such, we view production expectations as conservative."

EQT plans to spend $1.1 billion developing and drilling 186 wells in its southwest Pennsylvania and northern West Virginia acreage. It also plans to spend $155 million to drill 30 Upper Devonian wells off stacked pads targeting the Marcellus as well. The company will work to de-risk an area of central Pennsylvania it plans to develop in the future, too.

In the Utica, where EQT holds 14,000 net acres, it will spend $145 million to drill 21 wells in the southeast part of Ohio in Guernsey County. Between the Marcellus and the Utica, EQT will run seven to nine rigs in 2014.

At EQT Midstream, $345 million will be spent to construct additional Marcellus gathering infrastructure and another $90 million will be invested on upgrades to the Allegheny Valley Connector, a federally regulated transmission pipeline EQT acquired in the sale of its gas utility.

Additional Marcellus gathering capacity will increase by 120 MMcf/d in Pennsylvania and 320 MMcf/d in West Virginia after next year's construction is complete.