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Why the Marcellus Play Is Crucial for EQT

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Updated

2016 production guidance

EQT (EQT) increased its 2016 production guidance range to 730–740 Bcfe (Billion cubic feet equivalent) from the previous 710–730 Bcfe it predicted during its 1Q16 earnings results. Production volumes for 3Q16 are expected to be 187–180 Bcfe.

EQT’s (EQT) 2Q16 production volumes totaled 184.5 Bcfe. In comparison, 2Q15 production volumes were 147 Bcfe, and 1Q16 production volumes were 180 Bcfe.

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EQT’s Marcellus margins

EQT’s Marcellus assets comprise 600,000 acres with 31 trillion cubic feet equivalent of total resource potential. The company’s October 2016 presentation noted that since 2006, EQT’s Marcellus volumes have grown at a 31% CAGR (compounded annual growth rate).

The Marcellus Shale makes up most of EQT’s production volumes. It contributed ~84% to EQT’s total production in 2015.

Other upstream companies that are active in the Marcellus Shale are Cabot Oil & Gas (COG), Rice Energy (RICE), and Noble Energy (NBL). In the following part of this series, we’ll look at EQT’s stock performance and key highlights this year.

EQT also sees the Utica Shale as a growth engine for 2016. Steven Schlotterbeck, president of exploration and production, had said in the 1Q16 earnings conference call that the company is targeting 75% higher EUR (estimated ultimate recovery) compared to Marcellus. He said that “higher EUR per well, combined with the higher percentage of the EUR being produced in the first few years and lower expected gathering compression costs should provide returns competitive with the Marcellus.”

In the following part of this series, we’ll look at EQT’s stock performance and key highlights this year.

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