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Rice Merger Drives EQT’S 4Q17 and 2017 Production and Reserves

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Feb. 20 2018, Updated 5:45 p.m. ET

EQT’s 4Q17 and 2017 production

EQT’s (EQT) production volume in 4Q17 was 294.4 Bcfe (billion cubic feet equivalent). In comparison, its 4Q16 production volumes were 198 Bcfe. The 48.7% increase in 4Q17 production was likely a result of the inclusion of Rice Energy’s production volumes. EQT completed its acquisition of Rice Energy on November 13, 2017.

EQT’s production volumes for 2017 were 887.5 Bcfe compared to 759 Bcfe in 2016.

EQT management noted that excluding the impact of acquisitions, the company replaced 245% of its 2017 production. Including the impact of acquisitions, EQT’s reserve replacement percentage was 974%.

The company also reported 2017 proved reserves of 21.4 Tcfe (trillion cubic feet equivalent), representing a 59% increase over 2016. That was primarily driven by its Rice Energy acquisition, which added 6.3 Tcfe of proved reserves.

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Commenting on its Rice Energy acquisition, EQT management said, “The foundation of the transaction with Rice was the ability to realize significant synergies on SG&A expenses, as well as capture improved capital returns resulting from the ability to drill longer laterals on its much larger contiguous acreage position.”

Management noted that in 2018, SG&A (selling, general, and administrative) expense savings from the Rice Energy acquisition are expected to be $110 million, while capital efficiency is expected to be $210 million.

Key 4Q17 highlights

As of December 2017, EQT’s Mountain Valley Pipeline received all the required federal permits for the project from the FERC (Federal Energy Regulatory Commission). The 303-mile pipeline is estimated to cost $3.5 billion, with EQT Midstream Partners (EQM) funding approximately $1.6 billion of it. In early January 2018, the JV (joint venture) received permission to begin construction activities in certain areas along the route. The JV targets a late 2018 in-service date. It has already secured 2 Bcf (billion cubic feet) per day of firm capacity commitments at 20-year terms.

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