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Why EQT Increased Its 2016 Production Guidance Range

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EQT’s key operational highlights

EQT’s (EQT) 2Q16 production volumes totaled 184.5 billion cubic feet equivalent (Bcfe). In comparison, 2Q15 production volumes were 147 Bcfe. EQT’s 1Q16 production volumes amounted to 180 Bcfe.

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EQT’s 2Q16 realized prices

EQT’s average realized price of crude oil (OIL) and condensates fell from $45.91 per barrel in 2Q15 to $35.78 per barrel in 2Q16. Its average realized price for natural gas (UNG) fell from $2.87 per thousand cubic feet in 2Q15 to $2.11 per thousand cubic feet in 2Q16. Its average realized price for natural gas liquids fell from $18.67 per barrel in 2Q15 to $15.53 per barrel in 2Q16.

EQT’s 2016 production guidance

EQT (EQT) increased its 2016 production guidance range to 730–740 Bcfe from the previous 710–730 Bcfe it provided in its 1Q16 earnings. Production volumes for 3Q16 are expected to be 187–180 Bcfe.

As you can see in the graph above, EQT’s production volumes have mostly increased steadily over the quarters since 1Q15. EQT attributes this quarterly production increase to improved well productivity, especially in the Marcellus Shale. The Marcellus Shale contributed to ~84% of EQT’s total production in fiscal 2015.

Marcellus: EQT’s mainstay

EQT’s Marcellus assets comprise 660,000 acres, with 31 trillion cubic feet equivalent of total resource potential. The company’s 2Q16 earnings presentation noted that since 2006, EQT’s Marcellus volumes have grown at a 31% CAGR (compound annual growth rate).

Other upstream companies that are active in the Marcellus Shale are Cabot Oil & Gas (COG), Rice Energy (RICE), and Noble Energy (NBL).

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