Pittsburgh-based EQT Corporation (EQT), an integrated energy company focused on natural gas supply in Appalachia, yesterday disclosed results of its two Marcellus shale wells.
In Greene County, the Cooper 590384 well produced at a rate of 22 million cubic feet equivalent per day (MMcfe/d) for an average 30-day period. The well, with 8,411 feet of stimulated pay, was completed by means of a 28-stage frac. Cooper 590384 cost approximately $7.1 million and has an estimated reserve of 18 billion cubic feet (Bcf) of gas.
Additionally, the company reported that its Rosborough 590259 well had an initial production (24-hour) rate of 15 MMcfe/d from 4,060 feet of stimulated pay. Rosborough 590259 is located in Armstrong County, where EQT holds nearly 34,000 acres and is the best well result in that area. The company enjoys a 100% working interest and has an 87.5% net revenue interest in both wells.
EQT remains focused on the development of Marcellus shale in order to enhance capital efficiency. Hence, the successful completion of the Greene County extended lateral well is a part of the company’s endeavor to reduce the development cost per Mcfe. Management is particularly keen on extending average lateral length per well, which is restricted by acreage geometry.
We appreciate the company’s success related to these two experimental wells that reflects its exceptional technical and operating potential. We also believe that the company will continue to deliver consistent production growth on the back of its sizable acreage position in Huron Shale and Marcellus Shale plays. Moreover, an investment-grade balance sheet provides the financial flexibility for further growth.
The company expects its production in the range of 129 – 131 Bcfe this year, representing approximately 30% growth over 2009.
However, the positives are offset by our cautious outlook for natural gas prices in the near-to-medium term. Consequently, we have a Zacks #5 Rank (short-term “Strong Sell” rating) and maintain our long-term Neutral recommendation on EQT shares.
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