EQT posts $110.9 million profit in latest quarter
EQT Corp. is prepared to take a $15 million risk on Pennsylvania’s Utica shale.
Leaders of the Downtown-based gas company said on Thursday that they’re ready to test their deepest well ever, to tap a promising pool of dry natural gas below the popular Marcellus layer in Greene County.
“There’s little disagreement that there’s a tremendous amount of gas in place in the play. The question is whether the gas can be profitably produced, as each well can cost as much as $15 million,” Steve Schlotterbeck, an executive vice president at EQT, said during a conference call discussing the company’s profit in the second quarter. “We realize that this well is an experiment and could result in a $15 million dry hole.”
The announcement comes about three months after EQT expressed disappointment in Utica wells it drilled on the edge of proven fields in Ohio. Company leaders said they watched competitors get good results in Greene County, where EQT has Marcellus well pads and infrastructure.
“They’ve been cautious in talking about the Utica and approaching it,” said Stewart Glickman, an energy equity analyst in New York with S&P Capital IQ. He noted that companies have less experience in parts of the Utica that produce only gas and no liquid. “Cautious makes a lot of sense.”
EQT’s earnings report for the three months that ended June 30 provided mixed news. The company posted $110.9 million in net income, or 73 cents per share, a 27 percent increase over the $86.9 million profit, or 58 cents a share, it recorded in the quarter last year. Revenue increased to $526 million from $473 million a year ago, despite a 10 percent drop in its average sale price for gas.
The profit was less than the $192.2 million it posted in the first quarter, though, and the company missed expectations of earnings of 86 cents per share and $597 million in revenue.
Officials said they came up short on production because of delays in connecting 22 Marcellus wells to pipelines.
Glickman called the explanation “understandable,” given problems many companies are having as pipeline building catches up with drilling.
Investors seemed not to mind. EQT stock rose $4.26 to $104.18.
The company reported a 17 percent increase in the amount of gas it sold and greater revenue from midstream transmission, the pipelines and facilities it owns that move the gas to market. It drilled 89 wells during the quarter, 55 of them in the Marcellus shale.
The results include profit from EQT Midstream Partners, a spin-off in which the parent has an interest. The midstream company reported $52.1 million in net income during the quarter, up from $40.7 million last year, on $91.6 million in revenue.
CEO David Porges said the company would build the Ohio Valley Connector, a 35-mile pipeline from West Virginia to Clarington, Ohio, where it will connect to lines headed to the Rockies and Texas.
David Conti is a Trib Total Media staff writer. Reach him at 412- 388-5802 or [email protected].