EQT Corp Sells Kentucky Gas Pipeline to Invest in More Marcellus Shale Drilling – On Track to Drill 100 Marcellus Wells This Year
EQT Corporation has just sold a gas pipeline in Kentucky for $390 million to Spectra Energy Partners so it can invest the money in Marcellus (and Huron) shale gas drilling. From EQT’s press announcement about the sale we also learn EQT is on track to drill 100 Marcellus gas wells this year. EQT has revised their projected shale gas output upward from 180 billion cubic feet equivalent (Bcfe) to 185-190 Bcfe for 2011, and expects output to grow to 250 Bcfe in 2012.
EQT Corporation today announced the sale of the Big Sandy Pipeline (Big Sandy) to Spectra Energy Partners, LP for $390 million. The transaction is expected to close during the third quarter of 2011.
Big Sandy is an approximately 70-mile, 20-inch diameter, natural gas pipeline regulated by the Federal Energy Regulatory Commission (FERC). Placed in service in April 2008 with a current capacity of 171,000 Dth per day, Big Sandy transports natural gas from the Langley, Kentucky natural gas processing complex, to ultimately the Mid-Atlantic and Northeast markets.
“The sale of our Big Sandy Pipeline is another step in our commitment to prioritize our capital and accelerate our most profitable investment opportunities, which means primarily Marcellus and also Huron development activities. We will continue to fund this acceleration through our operating cash flow, additional asset sales and available debt capacity,” said David Porges, chairman, president and chief executive officer. “We have contracted for capacity to ensure delivery of our growing Huron production and look forward to working with Spectra Energy Partners.”
EQT will invest the majority of the proceeds in developing the Company’s approximately 520,000 Marcellus acres, including associated midstream gathering; and to develop its extensive Huron reserves. EQT now expects to drill 100 Marcellus wells and 120 Huron wells in 2011. The Company’s 2011 CAPEX forecast is increased to between $1,200 and $1,250 million; of which approximately 75% will be used for well development. As a result of this additional investment, EQT is increasing its 2011 production sales volume guidance to between 185 and 190 Bcfe; and establishes a preliminary 2012 volume target of between 245 and 250 Bcfe. A final 2012 target will be set when the Company establishes its 2012 capital budget later this year.*
*EQT Corporation Press Release (May 11, 2011) – EQT Corporation Announces the Sale of Big Sandy Pipeline