EQT presses Marcellus, Huron/Berea activity

By OGJ editors
HOUSTON, July 30
-- EQT Corp., Pittsburgh, said its production subsidiary sold 31.9 bcf of natural gas equivalent in the quarter ended June 30, up 31% for the second consecutive quarter.

EQT said 45% of its gas sales came from horizontal shale wells, up from 28% in the 2009 second quarter. Marcellus shale output, expected to exceed 140 MMcfd by yearend, averaged 55 MMcfd in the second quarter.

Management said EQT doesn’t have nearly enough capital to develop its “immense resource base.”

The company plans to have drilled 96 Marcellus wells in Pennsylvania and West Virginia and 271 Huron/Berea wells in Kentucky in 2010. It has spudded 62 horizontal Marcellus wells with a 3,550-ft average completed lateral length and 143 Huron/Berea wells with an average 3,920 ft in 2010.

The company is drilling longer laterals, and the length will vary greatly depending on the geometry of its acreage blocks, management said.

Of 115 horizontal wells EQT has spudded in the Marcellus play, only 34 are on line, 27 are drilling with large rigs or being or “topholed,” 38 are awaiting fracs, and 16 are completed and awaiting hookup. The company does not start gas flowing until it has finished all completion work on a pad.

One Marcellus well that has been on line 90 days has an estimated ultimate recovery of 8.8 bcf. The $5.3 million well has a 5,300-ft lateral with 4,800 ft of pay and 16 frac stages. EQT began frac work July 28 at another Marcellus well with a 8,400 ft of pay in a 9,000-ft lateral and has pumped the first two of a planned 28 frac stages.

EQT revised its estimate of midstream cost in support of its Marcellus development to $1.29/Mcf from $1.98/Mcf. That figure plus efficiencies from pad drilling and increased production per well have doubled the all-in aftertax return rate to an average 63% at a flat $6/MMbtu and hiked the rate to 23% at $4/MMbtu.

The company took a $4.5 million charge in the quarter for terminating a contract for the processing and disposal of recovered frac water. It no longer requires that capacity because it is using 90-100% of recovered frac water to frac new wells.

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