EQT to drill 33 more Marcellus gas wells

OREANDA-NEWS. July 29, 2016. EQT said it will drill 33 new natural gas wells on its Marcellus shale acreage in the second half of 2016 without boosting spending.

Over the past week a handful of independent producers have pledged to increase drilling activity on the back of stronger commodity prices, but a majority have raised their capital spending budgets in order to accomplish their goals. EQT joins Range Resources in being able to ramp up output without spending more capital, largely because of the two companies' extensive existing operations in Appalachia.

Higher gas prices will justify higher production, chief executive David Porges said on an earnings call. An expected increase in takeaway capacity at the end of this year is adding confidence to that decision, he added.

Nymex prompt-month natural gas prices rose to a 13-month high earlier this month after falling to a 17-year low in March.

The company's Ohio Valley Connector project, expected in service in the fourth quarter, will add 600mn cf/d of takeaway for EQT production, a portion of its total 820mn cf/d of capacity. The Texas Eastern Transmission Gulf Markets pipeline expansion should also come on line in the fourth quarter, adding 100mn cf/d of takeaway for EQT output, Porges said. That project's full capacity is 628mn cf/d (2.8mn m?/d).

EQT is attempting to increase its production ahead of a broader ramp up industry wide, Porges said. He cautioned that there will be an "inevitable overreaction in the industry" to the stronger prices, but said the company does not think it will be as pronounced as "a few years ago."

The majority of the new wells EQT plans to drill will be completed in 2017, so any costs connected to bringing the wells on line will be included in the 2017 capital spending budget. Also, any increase in spending this year is also offset by lower service costs and improved efficiencies, Porges said.

EQT produced about 2 Bcf/d of natural gas equivalent (Bcfe/d) during the second quarter, up by 26pc from a year earlier. The company had a realized sales price of \\$2.11/1,000 cf, down by 23 pc from the same period last year.

The company's deal with Statoil to purchase 62,500 Marcellus shale acres and 53,000 Utica shale acres closed on 8 July.