EQT Releases 3rd Quarter Results; Touts Utica Drilling Program
From Seeking Alpha's transcript of EQT's 3rd quarter earnings call:
Moving to the Deep Utica, we continue to make progress on our Deep Utica testing efforts. We are becoming more confident that we will achieve a combination of lower costs with higher EURs per foot that will result in similar, if not better, economics to our core Marcellus economics. As we mentioned last quarter, we’ve already lowered costs down nearly to our target range of $12 million to $13 million per well.
Based on our progress, we think that we’ll reach our target range soon. We have also seen an improvement in productivity from changes we’ve made to our frac design on the last two wells. Given our well cost expectations, we think we need between 3 and 3.5 Bcf per 1,000 feet of pay to achieve returns which are competitive with our Marcellus opportunities. We’re not there yet, but we aren’t far off, and are certainly encouraged by our progress.
Our current thinking is that you should expect a one rig Deep Utica program in 2017 drilling between six and eight wells. We believe this level of drilling will allow us to achieve our cost and productivity objectives as well as begin delineation of the economic extent of the Deep Utica with the goal of establishing a Deep Utica development program in 2018.
As far as progress reports, we believe it’s in our shareholders’ best interest not to share specifics of our techniques or results as we are currently the only company investing in the Deep Utica. Before moving into development mode, we need to ensure that we can effectively move the gas, so we’ve been working closely with our Midstream group on gathering system designs. Based on pressures in the production profile of the Deep Utica, our initial estimate is that per unit gathering costs for Deep Utica would be about half that of the Marcellus.
In summary, we continue to make solid progress on both the cost and recovery efforts and we’re encouraged that the Deep Utica can compete with or surpass our core Marcellus economics in the near future.Read more of the earnings call transcript by clicking here.
Click here to see EQT's press release with 3rd quarter results.
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