PITTSBURGH, Jan. 5, 2021 /PRNewswire/ -- EQT Corporation
(NYSE: EQT) today reported year-end 2020 total proved reserves of
19.8 Tcfe, an increase of 2.3 Tcfe or 13% compared to year-end
2019. The increase was driven by the efficiencies realized from the
execution of EQT's combo-development strategy, and reserve
additions associated with EQT's acquisition of Chevron's upstream
Appalachian assets, which closed on November
30, 2020 (the Chevron Acquisition).
EQT actively hedged throughout 2020 and now sits with
approximately 80% of its expected 2021 production hedged, an
increase of approximately 60% as compared to the hedge position at
the beginning of 2020.
Year-End Proved Reserves
Proved developed reserves increased by 1.2 Tcfe year-over-year,
or 10%, to 13.6 Tcfe. This increase was driven by 1.2 Tcfe of
reserve additions associated with the Chevron Acquisition.
During 2020, EQT continued its digital transformation, which
included undergoing a reliable technology study of its reserves. In
conjunction with an independent consultant, EQT performed this
study to document the technologies in place that provide reasonable
certainty of the future performance and economics of EQT's wells. A
combination of statistical methods and geologic evaluations were
employed, resulting in an increase to EQT's proved reserves
area. The outcome of the study provides a high degree of
qualitative and quantitative confidence in EQT's premier reserve
base.
Proved undeveloped reserves increased by 1.1 Tcfe
year-over-year, or 23%, to 6.2 Tcfe, primarily as a result of
reserve enhancements driven by a more efficient and optimized
future development cadence, with 0.2 Tcfe of the increase
attributable to the Chevron Acquisition. These reserves include 279
wells planned to be developed over the next five years, in
accordance with US Securities and Exchange Commission (SEC)
Regulation S-X Rule 4-10(a). EQT has an additional 13 Tcfe of
reserves that meet the definition of proved reserves, except they
are planned to be developed beyond five years and are therefore not
included in the current estimate of proved reserves.
Over the past 18 months, EQT has realized improvements in well
performance driven by a combo-development focused operations
schedule and the application of standardized well designs. However,
approximately 60% of the year-end 2020 proved developed reserve
conversions were subject to sub optimal legacy management
development, impacting the expected ultimate recovery (EUR) applied
to the proved undeveloped reserves. Over the next 5 years, EQT
expects approximately 80% of the proved undeveloped locations are
set for highly efficient combo-development. As these reserves are
developed, the application of the improving EUR's is expected to
enhance the remaining proved undeveloped reserve portfolio.
Future development costs for proved undeveloped reserves are
estimated to be approximately $2.26
billion, or $0.37 per Mcfe, a
29% improvement as compared to 2019.
Proved Reserves by Play (Bcfe)
|
|
Year Ended
December 31,
|
|
|
2020
|
|
2019
|
Proved developed
reserves
|
|
|
|
|
Marcellus
|
|
11,943
|
|
|
10,513
|
|
Upper
Devonian
|
|
839
|
|
|
880
|
|
Ohio Utica
|
|
757
|
|
|
947
|
|
Other
|
|
102
|
|
|
104
|
|
Total
|
|
13,641
|
|
|
12,444
|
|
Proved undeveloped
reserves
|
|
|
|
|
Marcellus
|
|
6,061
|
|
|
4,584
|
|
Ohio Utica
|
|
100
|
|
|
441
|
|
Total
|
|
6,161
|
|
|
5,025
|
|
Total proved
reserves
|
|
19,802
|
|
|
17,469
|
|
|
|
|
|
|
|
|
Year-end 2020 reserves are based on a $1.99 per MMBtu natural gas price (NYMEX), which
is $0.59 lower than the price used to
estimate the 2019 reserves. Prices are determined in accordance
with the SEC requirement to use the unweighted arithmetic average
of the first-day-of-the-month price for the preceding twelve months
without giving effect to derivative transactions.
Netherland Sewell and Associates,
Inc. an independent consulting firm hired by management, reviewed
100% of the total net natural gas, NGLs and oil proved reserves
attributable to EQT's interests as of December 31, 2020.
Hedging Update (as of January 1,
2021)
During the fourth quarter of 2020, EQT continued executing on
its hedge strategy to protect against downside commodity risk in
2021. As a result, EQT currently has approximately 80% of its
expected 2021 production hedged, assuming maintenance level
production, pro forma for the Chevron Acquisition. This represents
an increase of approximately 15% as compared to the third-quarter
2020 hedge position.
EQT's total natural gas production NYMEX hedge positions
are:
|
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Swaps:
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
|
|
997
|
|
|
366
|
|
|
69
|
|
|
2
|
|
Average Price
($/Dth)
|
|
|
|
$
|
2.69
|
|
|
$
|
2.65
|
|
|
$
|
2.48
|
|
|
$
|
2.67
|
|
Calls – Net
Short:
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
|
|
407
|
|
|
284
|
|
|
77
|
|
|
15
|
|
Average Short Strike
Price ($/Dth)
|
|
|
|
$
|
2.93
|
|
|
$
|
2.89
|
|
|
$
|
2.89
|
|
|
$
|
3.11
|
|
Puts – Net
Long:
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
|
|
227
|
|
|
135
|
|
|
69
|
|
|
15
|
|
Average Long Strike
Price ($/Dth)
|
|
|
|
$
|
2.59
|
|
|
$
|
2.35
|
|
|
$
|
2.40
|
|
|
$
|
2.45
|
|
Fixed Price
Sales:
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMDth)
|
|
|
|
72
|
|
|
4
|
|
|
3
|
|
|
—
|
|
Average Price
($/Dth)
|
|
|
|
$
|
2.50
|
|
|
$
|
2.38
|
|
|
$
|
2.38
|
|
|
$
|
—
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EQT has also entered into derivative instruments to hedge basis.
EQT may use other contractual agreements from time to time to
implement its commodity hedging strategy.
About EQT Corporation
EQT Corporation is a leading independent natural gas production
company with operations focused in the cores of the Marcellus and
Utica Shales in the Appalachian Basin. We are dedicated to
responsibly developing our world-class asset base and being the
operator of choice for our stakeholders. By leveraging a
culture that prioritizes operational efficiency, technology and
sustainability, we seek to continuously improve the way we produce
environmentally responsible, reliable and low-cost energy. We
have a longstanding commitment to the safety of our employees,
contractors, and communities, and to the reduction of our overall
environmental footprint. Our values are evident in the way we
operate and in how we interact each day – trust, teamwork, heart,
and evolution are at the center of all we do.
EQT Management speaks to investors from time to time and the
analyst presentation for these discussions, which is updated
periodically, is available via EQT's investor relations website at
https://ir.eqt.com.
Cautionary Statements
This news release contains certain forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and Section 27A of the Securities Act of 1933, as
amended. 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 news
release specifically include the expectations of plans, strategies,
objectives and growth and anticipated financial and operational
performance of EQT Corporation and its subsidiaries (collectively,
the Company), including reserves estimates and projections of the
Company's reserves; guidance regarding the Company's strategy to
develop its reserves and wells to be developed, including the
timing of developing such reserves and wells; the number of wells
to be developed within the next five years and beyond; projections
of the Company's wells set for combo-development; projected costs
to develop the Company's proved undeveloped reserves; projected
natural gas prices; and the Company's hedging strategy. These
forward-looking 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, taking into
account all information currently available to the Company. 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, many of which are difficult to predict and 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,
volatility of commodity prices; the costs and results of drilling
and operations; access to and cost of capital; uncertainties about
estimates of reserves, identification of drilling locations and the
ability to add proved reserves in the future; the assumptions
underlying production forecasts; the quality of technical data; the
Company's ability to appropriately allocate capital and resources
among its strategic opportunities; inherent hazards and risks
normally incidental to drilling for, producing, transporting and
storing natural gas, NGLs and oil; cyber security risks;
availability and cost of drilling rigs, completion services,
equipment, supplies, personnel, oilfield services and water
required to execute the Company's exploration and development
plans; the ability to obtain environmental and other permits and
the timing thereof; government regulation or action; environmental
and weather risks, including the possible impacts of climate
change; uncertainties related to the severity, magnitude and
duration of the COVID-19 pandemic; and disruptions to the Company's
business due to acquisitions and other significant transactions.
These and other risks are described under Item 1A, "Risk Factors,"
and elsewhere in the Company's Annual Report on Form 10-K for the
year ended December 31, 2019, as
updated by Part II, Item 1A, "Risk Factors" in the Company's
subsequently filed Quarterly Reports on Form 10-Q and other
documents the Company files from time to time with the Securities
and Exchange Commission. In addition, the Company may be subject to
currently unforeseen risks that may have a materially adverse
impact on it.
Investor Contact:
Andrew
Breese
Director, Investor Relations
412.395.2555
ABreese@eqt.com
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SOURCE EQT Corporation