EQT to cut capex, may focus on Utica gas

OREANDA-NEWS. October 23, 2015. US producer EQT will cut its capital spending program next year but may still expand its natural gas operations in the Utica shale if it continues to get good results from existing wells.

In July the company finished fracturing a dry gas well in the Utica that reached a production rate as high as 72.9mn cf/d (2bn m?/d), far exceeding expectations. A handful of other producers have also reported prolific wells in the dry portion of the Utica, which is becoming the fastest growing basin in the US.

That well is currently flowing at 30mn cf/d with steady daily sales, said EQT president of exploration and production Steve Schlotterbeck during the company's third quarter earnings call today. The company has drilled two additional Utica wells since July, with one expected to be on line before the end of this year.

EQT's natural gas production sales volumes for the quarter were up by 27pc over the same quarter last year at 1.7 Bcf/d , but revenues have been more than offset by lower commodity prices, resulting in a \\$50.2mn loss for the quarter.

Amid that loss, the company will lower its capital expenditures budget in 2016 to below the 2015 level of \\$1.8bn, but the company won't yet say the specific dollar amount.

EQT may focus its spending in the Utica next year.

"It's still too early to be confident that the play will be economic but early results are encouraging," said chief executive officer David Porges. "If returns are better than in the core of the Marcellus, we'll add significant positions to the Utica."

Porges said current plans are to add 10 to 15 wells in the Utica but to remain flexible if the Marcellus turns out to have more of an economic advantage.

The company expects to have 15-20pc growth in production volumes next year compared to 2015 amid "the dawn of the Utica era," Porges said.