Highlights for the second quarter 2012 versus second quarter 2011 include:
- Production sales volumes were 28% higher;
- Marcellus sales volumes were 74% higher;
- Midstream gathered volumes were 24% higher; and
- EQT average wellhead sales price was 32% lower.
RESULTS BY BUSINESS
Driven by drilling in the Marcellus Shale, EQT Production achieved sales volumes of 60.0 Bcfe in the second quarter 2012, which was 28% higher than the second quarter 2011 and 11% higher than first quarter 2012. Sales volumes from the Marcellus averaged 354 MMcfd for the second quarter 2012, up from 203 MMcfd in the second quarter 2011. The Company reiterates its full-year 2012 volume guidance of between 250 and 255 Bcfe, 30% higher than 2011; and initiates third quarter 2012 guidance of 66 Bcfe.Operating income for EQT Production was $17.7 million in the second quarter of 2012, compared to $99.8 million in the same period last year, while revenues for the quarter were $158.6 million; $38.2 million lower than the second quarter 2011. There was a 28% increase in sales volume for the quarter, although related operating revenue was more than offset by a 37% decrease in realized price. The lower realized price resulted from a 49% decrease in NYMEX natural gas prices on our unhedged volumes, a 37% decrease in liquids price and a 24% increase in third-party gathering, processing and transmission revenue deductions. Natural gas hedges contributed $85.4 million to revenues during the quarter. Second quarter 2012 revenues were reduced by $7.1 million due to selling unused capacity on the El Paso 300 line, at prices lower than paid by EQT. In addition, there was an $8.2 million revenue reduction due to an adjustment of a financial derivative applicable to prior periods. Combined, these two items reduced the realized price by $0.26 per Mcfe.