BRIDGEPORT, W.Va. — Natural gas producer EQT has often been perceived as a bully and a “my way or the highway” outlier among its fellow producers.
That’s one reason the Rice brothers led a takeover of the company, new EQT President and CEO Toby Rice told a crowd of landowners Monday evening at a town hall in Bridgeport.
“One thing that’s changed, we care about our landowners,” he said. “We want to be good partners. … We believe in a different way to run an oil and gas business.”
This was the third of four landowner town halls EQT planed in the West-Virginia-Pennsylvania-Ohio Marcellus shale footprint.
On July 10, EQT shareholders elected seven board members supported by Toby and Derek Rice, brothers who previously ran Rice Energy which EQT acquired. The shareholders also elected five board members, which the Rice brothers and EQT also approved. The board then named Toby Rice the company’s president and CEO.
The Rice brothers led the takeover after expressing discontent with what they termed EQT’s inefficiency and poor profitability in drilling its Marcellus shale holdings. Toby Rice set the town halls to communicate EQT’s new vision and mission.
One example of the previous EQT: failed lawsuits aimed at allowing EQT to deduct post-production costs from landowners’ royalty checks, which often led to negative checks where the owner owed EQT money.
A second: a much-loather and repeatedly failed EQT-backed forced pooling bill that wanted to assume that a lease allows for pooling unless it’s expressly forbidden.
Rice said he and his brother brought four key values from their old company: trust, heart, teamwork and evolution.
“Do what you say you’re going to do. Do the right thing always.”
Trust requires transparency, Rice said, which further requires collaboration and communication, resulting in shared ideas and innovation.
An example of innovation, and making EQT more efficient, he said, is Big Combo Drilling. This means halting the patchwork approach to drilling: a lateral or two at one pad, going off to another, coming back, going away, coming back over and over.
It means drilling multiple wells sequentially from adjacent pads in linked units. Big Combo Drilling means faster drilling, fewer return trips, decreased mineral shut-ins, more productive walls, and happier employees and landowners.
Under the old method, he said, developing 1 million horizontal feet required 27 well pads, 80 rig moves and 80 frack jobs. The new way will require seven pads, 14 rig moves and 14 frack jobs to develop the same acreage.
During the Q&A session, one landowner asked Rice about EQT’s plans for West Virginia development.
Rice said all three states it straddles have good geology and good pipelines. But Pennsylvania and Ohio allow for longer laterals – 12,000 feet compared to between 6,000 and 8,000 in West Virginia – which allows for more efficient production.
Rice told the landowners he’d rather achieve longer laterals here through negotiating good deals for lease modification and modernization rather than pursuing new legislation.