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EQT Reports Second Quarter 2012 Earnings

For the second quarter 2012, operating expenses for EQT Production were $140.9 million: $43.9 million higher than the same quarter last year. Depreciation, depletion and amortization (DD&A) expenses were $32.5 million higher, primarily due to an increase in produced volumes and a higher unit depletion rate. Consistent with the sales volume growth, selling, general and administrative (SG&A) expense was $7.9 million higher; lease operating expense (LOE) was $1.5 million higher; and production taxes were $1.4 million higher. Per unit LOE decreased 14% to $0.19 per Mcfe, excluding production taxes.

The Company realized an increase of $1.04 per Mcfe, which was due to its natural gas hedges, and a $0.74 per Mcfe premium over NYMEX natural gas prices, due to production from its liquids rich acreage. EQT Production’s sales volumes consisted of approximately 6% NGLs and oil, excluding ethane.

The Company drilled (spud) 37 gross wells in the Marcellus Shale play during the second quarter 2012, with an average length of pay of 5,290 feet. The Company reiterates its intent to drill 132 Marcellus wells in 2012.

EQT Midstream

EQT Midstream’s second quarter 2012 operating income was $59.8 million; $7.5 million higher than the second quarter of 2011. Net gathering revenues increased 18% to $72.1 million in the second quarter 2012, primarily due to a 24% increase in gathered volumes. Taking into account the absence of Big Sandy’s $8.1 million in revenue from the second quarter 2011, transmission revenues for the second quarter 2012 increased by $5.0 million, or 31%. Net storage, marketing and other operating revenues totaled $14.7 million, a $2.7 million increase.

Total operating expenses for EQT Midstream during the quarter were $48.6 million, $3.0 million higher than the same quarter last year. Operating and maintenance (O&M) expense was $3.7 million higher for the quarter, while second quarter 2011 O&M expense was impacted by a reduction of certain non-income taxes totaling $1.8 million. Second quarter 2012 SG&A expense was $1.4 million lower versus the same quarter last year.

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