Why EQT Is Lengthening Laterals in the Marcellus

After the close of the Rice acquisition, EQT Corporation’s (EQT) Marcellus acreage would increase from 813,000 acres to 1,000,000 acres, of which 680,000 acres would be its core acreage, with 2,500 undeveloped locations.

In its 4Q17 earnings conference, EQT’s management noted that its Marcellus spuds are expected to average over 13,600 feet and that this is the “direct result of collaboration between land professionals from both companies.”

As a result of lengthening laterals, EQT expects its development costs to decline. EQT’s 2017 Marcellus program had a development cost of $0.60 per net Mcfe (thousands of cubic feet equivalent)—17% lower than its the 2016 figure of $0.72 per net Mcfe. Development costs in 2018 are expected to range between $0.41 per Mcfe to $0.43 per Mcfe.

As we discussed in preceding parts of this series, EQT’s management expects to see higher capital efficiency as a result of longer laterals and lower costs, which it believes will result in savings worth $1.9 billion.