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EQT’s Marcellus Economics: What Will Longer Laterals Really Do?


Mar. 20 2018, Updated 7:32 a.m. ET

EQT’s Marcellus economics

EQT Corporation’s (EQT) plans to drill longer laterals in the Marcellus are also expected to result in improved returns in that region.

Its after-tax IRR (internal rate of return) is expected to increase from 49% in an eight-well pad that is 8,000 feet lateral to 71% in a 12-well pad that is 14,000 feet lateral, at $2.50 NYMEX (New York Mercantile Exchange) natural gas prices. At natural gas prices of $2.00 and $3.00, these returns are expected to increase to 29% and 140%, respectively, from the previous 19% and 96%.

EQT’s press release stated the following: “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.”

Continue to the next part of this series for a closer look at what the new midstream company will mean for the industry.

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