EQT Corporation EQT released its operational forecast for 2016.
The company projects its capital expenditure for 2016 to be $ 1 billion, of which $820 million has been allocated for well development. The capital expenditure is expected to be financed from cash generated from operations, cash in hand and funds raised from midstream asset sales to EQT Midstream Partners, LP (EQM).
EQT’s capital spending is down from $1.9 billion it announced for 2015 in Feb, which was a reduction from what it had announced a few months before.
Total production sales volume in 2016 is estimated in the range of 700 – 720 billion cubic feet equivalent (Bcfe). Of the total production, oil and natural gas liquid volume is estimated between 11,000 – 11,500 thousand barrels (Mbbls).
In 2016, EQT intends to drill 72 Marcellus wells with an average lateral length of 7,000 feet, down from 122 wells it had forecast for 2015. The wells will be drilled using multi-well pads to enhance efficiency and economics.
EQT proposes to drill five deep Utica wells with an average lateral length of 5,200 feet. Further, based on results, may drill an additional five wells. EQT holds about 400,000 net acres. EQT plans to use a total of 5 rigs in the Marcellus and Utica.
The Huron gathering system will not be dropped into the EQM, owing to the decreasing volume and cash flow. The associated revenues and expenses that were historically apportioned to EQT Midstream will be apportioned to EQT Production subsequent to the eventual dropdown transaction.
EQT also forecast lease operating expenses between $0.09-$0.11 and production taxes in the range of $0.07-$0.09. Selling, general and administrative expense are estimated in the range of $0.16-$0.18, while depreciation, depletion and amortization cost is expected in the range of $1.07-$1.10
The company also anticipates that it would grow production by about 18% in 2016.
EQT carries a Zacks Rank #4 (Sell). Some better-ranked players from the energy sector are Energy Transfer Equity, L.P. ETE, ReneSola Ltd. SOL and Boardwalk Pipeline Partners, LP BWP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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