First quarter results for Marcellus Shale player EQT Corp. got a strong boost from increased gas volumes and more favorable natural gas liquids (NGL) prices, the Pittsburgh-based company said Wednesday.

EQT reported first quarter earnings of $88.1 million (65 cents/share) and operating cash flow of $204.8 million. This compares to earnings of $72 million (55 cents/share) and operating cash flow of $174.2 million in the first quarter of 2009. Earnings per share increased 18%.

EQT Production achieved sales of produced gas of 30 Bcfe for the first quarter, representing a 31% increase quarter-over-quarter. Average daily gas sales were 11% higher than during the fourth quarter of 2009, driven by horizontal drilling in the Marcellus Shale and Huron/Berea plays. More than 40% of EQT’s sales of produced natural gas came from horizontal shale wells, up from 25%. Quarter-over-quarter, sales of gas from the Huron/Berea horizontal wells increased 60%, while sales of gas from Marcellus wells increased more than 1,000%.

At EQT Midstream gas processing net revenues were $22.7 million, or $16.1 million higher, as a result of a 72% increase in the average NGL sales price and a 21% increase in liquids volume, nearly all of which was produced by EQT Production.

During a conference call Wednesday with financial analysts, newly elected CEO David Porges said EQT will secure a partner for a buildout of NGL handling capability by the end of the year. EQT also is considering taking a partner on the dry gas side, he said.

“We continue to have discussions with potential midstream partners. Initially, we are most focused on identifying a strategic partner for the liquids buildout,” Porges said. “This means that they must have experience in dealing with wet systems processing and downstream aspects of liquids, as well as being willing and able to fund a sufficient amount of the capital required for this buildout.

“We are also open to partnering on the dry gas side of our midstream business. In this instance operating expertise is less important as our midstream unit already has that know-how. Rather, the focus is on a partner that brings funding capacity and willingness.”

Porges, a company veteran, was leading his first conference call as the company’s CEO, having been picked to replace Murry Gerber, who has stepped down to lobby on behalf of the gas industry. Gerber plans to stay at EQT as executive chairman until its annual meeting in April 2011.

Porges was elected president and CEO on April 21. He joined EQT in 1998 as senior vice president and CFO and was promoted to executive vice president in 2000. In 2007 he was promoted to president and COO.

For 2010 EQT sales of produced gas are forecast to be 126 Bcfe, which factors in expected curtailments during the summer, EQT said.

The company drilled 108 gross wells during the first quarter. Of these, 77 were horizontal wells, 56 targeting the Huron/Berea play and 21 targeting the Marcellus play. The company also drilled 15 vertical wells in its coalbed methane play.

EQT drilled 21 horizontal Marcellus wells in the first quarter and is on track to drill 100 horizontal Marcellus wells this year. The company said it expects that Marcellus production will continue to grow faster than its other plays and that sales of gas from the Marcellus play will exceed 100 MMcfe/d by the end of this year.

In the first quarter EQT drilled two extended lateral wells in the Huron/Berea play, bringing the total to nine since 2009. EQT said it still plans to drill 99 extended lateral wells this year.

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