Fourth quarter 2012 net income was $48.0 million, compared to $90.8 million in 2011. The 2012 results were negatively impacted by items totaling $39.1 million, including a $23.3 million charge for the termination of an interest rate hedge, $4.5 million in expenses related to the pending sale of Equitable Gas, and a $4.4 million lease impairment. Fourth quarter 2012 adjusted EPS was $0.48, down from $0.59 in 2011. Operating cash flow was $268.9 million in 2012, vs. $243.7 million in 2011; and adjusted cash flow per share was $1.79, vs. $1.62 last year. See the Non-GAAP Disclosures section of this press release for detailed adjustments related to net income, EPS, and cash flow per share.
In the fourth quarter of 2012, EQT’s operating income was $151.0 million, a 13% decrease from the same quarter of 2011. Higher net operating revenues, from an increase in production, gathering and transmission volumes was more than offset by lower commodity prices, lower storage, marketing and other net revenues, and higher costs related to the increased volumes. Net operating revenues rose 13% to $419.5 million in the quarter, while net operating expenses were $268.5 million, an increase of $71.3 million compared to last year -- consistent with the growth of the EQT Production and EQT Midstream businesses.
RESULTS BY BUSINESS
EQT ProductionDriven by horizontal drilling in the Marcellus shale, EQT Production achieved record production sales volumes of 258.5 Bcfe for 2012, representing a 33% increase over 2011. Approximately 58% of EQT’s 2012 production sales volumes came from Marcellus wells, and Marcellus volumes increased by 85% over last year. Production operating income totaled $187.9 million in 2012, $199.2 million lower than 2011. Operating revenue was $793.8 million, $2.5 million higher than last year. Increased revenue from sales volume growth was nearly offset by lower realized commodity prices that included an $8.2 million reduction related to a financial derivative adjustment, and a $10.0 million reduction from the resale of unused transportation capacity. The average wellhead sales price to EQT Corporation was 21% lower than last year at $4.26 per Mcfe, with $3.05 per Mcfe allocated to EQT Production; and $1.21 per Mcfe allocated to EQT Midstream.