EQT Bets the Farm on the Marcellus Shale

EQT is betting big on the Marcellus for 2012 and will spend 80 percent of its upstream budget on Marcellus Shale development in 2012.

EQT Corporation is looking for 32% production growth in 2012, as the company makes a bet on the successful development of the Marcellus Shale next year. The company also plans to help fund this development through an initial public offering of the company’s intrastate pipeline business.

EQT Corporation will put approximately 80% of the company’s upstream budget into the development of the Marcellus Shale in 2012. The company has 530,000 net acres in Pennsylvania and West Virginia that is prospective for this formation and plans to drill 132 wells here during the year.

EQT Corporation reported 2.9 Tcfe of proved reserves in the Marcellus Shale at the end of 2010, and estimates the company’s probable and possible reserves at 9.3 Tcfe. The company also estimates that Marcellus Shale wells will provide the company a 41% after tax return. The company uses an average well cost of $6.7 million, an estimated ultimate recovery of 7.3 Bcfe and a $4.50 NYMEX price for natural gas.

EQT Corporation is planning on using a different hydraulic fracturing technique on many of its Marcellus Shale wells in 2012. Although this new design will increase drilling and completion costs, the company feels that this additional cost will lead to more productive wells with better returns.*

*Investopedia (Dec 19, 2011) – EQT Corporation Bets Big On The Marcellus Shale