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Depressed natural gas prices deepen 4Q loss at EQT Corp.

| Thursday, Feb. 4, 2016, 7:42 a.m.
Guy Wathen | Trib Total Media
The EQT Beazer Pad in Morgan Township near Waynesburg on Wednesday, Jan. 28, 2015.

EQT Corp. will continue looking to expand the acreage it controls in the Marcellus shale but does not expect to land any blockbuster deals given the continued low price of gas.

The Downtown-based company sought to buy some assets for the past year but tightened its focus on drilling a smaller core area of the shale just as potential sellers came down in price, CEO David Porges told analysts Thursday.

“It seems to us reasonably likely that there will be some actual transactions in the first half of 2016,” Porges said while discussing fourth-quarter and full-year financial results for 2015. “However, given our tighter focus, as well as some other attributes to the current market, smaller asset transactions seem more likely than larger or whole company deals.”

Gas prices tumbled all year, hitting 16-year lows in December and cutting the average price EQT got by 32 percent from 2014. The down market thwarted some potential deals, chief financial officer Philip Conti said.

The low prices cut deeply into income at EQT, offsetting another boost in production and increased revenue from its pipeline business.

The state's fifth-largest producer reported a net loss of $134.6 million, or 88 cents per share, for the fourth quarter, deeper than the loss of $14.7 million, or 10 cents per share, in the same period a year before.

Its stock closed down 1.9 percent to $59.76.

EQT pulled 27 percent more gas and liquids from the ground and gathered 28 percent more in its pipeline system. But full-year profit for 2015 slipped to $85.2 million, or 56 per share, down from $387 million, or $2.54 per share, in 2014.

“The high-level story for the year as well as the fourth quarter was very strong volume growth and a lower commodity price environment,” Conti said.

The fourth-quarter results include a $94.3 million write-down on impaired assets in the Permian oil basin in Texas and a $19.7 million write-down on Marcellus assets outside EQT's core areas.

A warm start to winter further crushed demand in the fourth quarter, worsening a supply glut caused by increased production and inadequate pipelines in Appalachia to move supplies to market. Most producers cut drilling programs and several have laid off workers.

EQT in December announced a lower capital spending plan for 2016 that focuses its drilling efforts on a core area of existing operations in the Marcellus and Utica shales stretching from Allegheny County south to Marion County, W.Va., and west to Wetzel County, just below the Northern Panhandle.

Porges called a conservative approach appropriate, given questions about when overall production might slow and prices could rebound.

EQT will continue to explore the deeper Utica shale, which has shown big production potential from wells, but President Steven Schlotterbeck cautioned against drawing too many conclusions from those few wells' performance.

“There's going to be some areas of the Utica that are exceptionally good and with the cost (reductions) that we've already achieved, the economics of those types of locations will be superior to probably any of the Marcellus opportunities that we have,” Schlotterbeck said. “But we need to define where those areas are, how big they are, how repeatable they are.”

David Conti is the assistant business editor at the Tribune-Review. Reach him at 412- 388-5802 or

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