PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today reported year-end 2010 total natural gas proved reserves of 5,220 Bcfe. This represents a 28% net increase over the 4,068 Bcfe the company reported last year. Proved reserves increased in the Marcellus shale play as a result of wells drilled in 2010, continued improvement in the estimated ultimate recovery (EUR) per Marcellus well, and an increase in the projected number of Marcellus wells to be drilled over the next five years. Partially offsetting the Marcellus reserve additions was a reduction of Huron and CBM/other proved undeveloped reserves based on an assumption of reduced investments in those plays over the next five years. The net increase of reserves before production totaled 1,291 Bcfe. This increase represents a 928% reserve replacement ratio and resulted from investments of $902 million, for a finding and development cost of $0.70 per Mcfe.
EQT estimates year-end 2010 total natural gas reserves, including proved, probable and possible reserve categories (3P), at 21.2 Tcfe, a 70% net increase over 2009. This increase was driven mainly by the success of the company’s Marcellus and, to a lesser extent, Huron horizontal drilling programs. Probable reserves increased by 52% to 8.5 Tcfe.
Summarized below are the company’s estimated 3P reserves broken out by play:
| | | | | | | | | |
| Reserve Estimates (Bcfe) | | Marcellus | | Huron* | | CBM /
Other | | Total |
| Proved Developed | | 577 | | 1,092 | | 866 | | 2,535 |
| Proved Undeveloped | | 2,302 | | 383 | | 0 | | 2,685 |
| Total Proved | | 2,879 | | 1,475 | | 866 | | 5,220 |
| Probable | | 4,164 | | 4,236 | | 72 | | 8,472 |
| Possible | | 5,194 | | 1,641 | | 650 | | 7,485 |
| Total Proved, Prob. and Poss. | | 12,237 | | 7,352 | | 1,588 | | 21,177 |
| * | | The company includes the Lower Huron, Cleveland, Berea sandstone and other Devonian shales, except Marcellus, in its Huron play. |
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| | | 100% of the company’s proved reserves have been audited by Ryder Scott Company, petroleum consultants. The company’s 3P reserves have been determined in accordance with the SEC guidelines. |
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| | | Proved reserves are limited to reserves that are anticipated to be developed in five years. EQT’s five year plan is based on a development capital budget totaling $2.5 billion. |
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| Reserves by Play |
| | | | | | Years Ended |
| | | | | | December 31, |
| | (Tcfe) | | | | 2010 | | 2009 |
| | Marcellus | | | | | | |
| | Proved Developed | | | | 577 | | 153 |
| | Proved Undeveloped | | | | 2,302 | | 908 |
| | Total Proved | | | | 2,879 | | 1,061 |
| | Probable | | | | 4,164 | | 1,870 |
| | Possible | | | | 5,194 | | 1,028 |
| | Total Proved, Probable and Possible | | | | 12,237 | | 3,959 |
| | | | | | | | |
| | Huron | | | | | | |
| | Proved Developed | | | | 1,092 | | 1,014 |
| | Proved Undeveloped | | | | 383 | | 1,002 |
| | Total Proved | | | | 1,475 | | 2,016 |
| | Probable | | | | 4,236 | | 3,618 |
| | Possible | | | | 1,641 | | 1,103 |
| | Total Proved, Probable and Possible | | | | 7,352 | | 6,737 |
| | | | | | | | |
| | CBM/Other | | | | | | |
| | Proved Developed | | | | 866 | | 906 |
| | Proved Undeveloped | | | | 0 | | 85 |
| | Total Proved | | | | 866 | | 991 |
| | Probable | | | | 72 | | 88 |
| | Possible | | | | 650 | | 705 |
| | Total Proved, Probable and Possible | | | | 1,588 | | 1,784 |
| | | | | | | | |
| | Totals | | | | | | |
| | Total Proved | | | | 5,220 | | 4,068 |
| | Total Probable and Possible | | | | 15,957 | | 8,412 |
| | Total Proved, Probable and Possible | | | | 21,177 | | 12,480 |
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The company has also made an assessment of its total resource potential, including 3P reserves and its estimate of the potential resources beyond the 3P totals. This resource potential is estimated to be:
| Resource Potential | | | | Total (Tcfe) |
| Marcellus | | | | 20 |
| Huron | | | | 10 |
| CBM/Other | | | | 2 |
| TOTAL | | | | 32 |
| | | | | |
| Summary of Changes in Proved Reserves |
| Natural Gas and Oil* (in Bcfe) | | | | |
| Balance at December 31, 2009 | | | | 4,068 | |
| Extensions, discoveries and other additions | | | | 1,893 | |
| Revisions** | | | | (603 | ) |
| Purchases | | | | 3 | |
| Sales | | | | (2 | ) |
| Production | | | | (139 | ) |
| Balance at December 31, 2010 | | | | 5,220 | |
| * | | Oil is converted to natural gas reserves using a 6 Mcfe per Bbl of oil. |
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| ** | | Huron and CBM/Other reserves that were previously booked as proved undeveloped have been removed as they will not be developed over the next five years. |
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Reserve Replacement Calculations
Reserve replacement ratio is the sum of the net increase of reserves before production, divided by production. The finding and development cost is the total cost incurred related to natural gas and oil production activities calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification 932 (ASC 932) less property acquisition costs for unproved properties, divided by the net increase of reserves before production.
Cautionary Statements
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We use certain terms in this press release, such as EUR (estimated ultimate recovery) and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
Disclosures in this press release contain forward-looking statements. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of resource potential, EUR, projected well drilling plans, including the projected capital budget. These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The company has based these forward-looking statements on current expectations and assumptions about future events. While the company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the company’s control. The risks and uncertainties that may affect the operations, performance and results of the company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors” of the company’s Form 10-K filed for the year ended December 31, 2009 and in the company’s 10-K for the year ended December 31, 2010 to be filed with the SEC, as updated by any subsequent Form 10-Qs.
Any forward-looking statement speaks only as of the date on which such statement is made and the company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
EQT is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, transmission and distribution. Additional information about the company can be obtained through the company’s web site, http://www.eqt.com. Investor information is available on EQT’s web site at http://ir.eqt.com. EQT uses its web site as a channel of distribution of important information about the company, and routinely posts financial and other important information regarding the company and its financial condition and operations on the Investors web pages.