New Orleans (Platts)--27Mar2012/606 pm EDT/2206 GMT

Marcellus Shale natural gas producers remain proactive, even in the face of low prices, speakers at an industry gathering in New Orleans said Tuesday.

Marcellus pioneer Range Resources plans to spend 85% of its $1.6 billion capital budget for 2012 in the Marcellus, mostly in the wet gas southwestern Pennsylvania part of the play, but 23% of it in the dry northeast part of the state, CEO Jeff Ventura told attendees at Howard Weil Energy Conference.

The Houston-based company has 75% of its 2012 gas production hedged at $4.45/Mcf, Ventura said. Range's costs in the Marcellus were 89-cents/Mcf in 2011 and Ventura predicted they would be 80-cents/Mcf this year, giving the Range a 58% profit margin at $3/Mcf gas prices.

Pittsburgh-based EQT's response to low prices was to stop drilling in West Virginia and Kentucky's Huron Shale, CEO David Porges said, and to slightly scale back its Marcellus efforts to stay within the company's cash flow.

Still, EQT plans to drill 132 Marcellus wells this year, Porges said, focusing on Greene County in southwest Pennsylvania and Tioga County in the northeast for dry gas, and Doddridge and Wetzel counties in West Virginia for gas and liquids.

Low prices are "a great opportunity for EQT and our competitors to figure out a better way to operate," Porges said. "We're better for figuring out how to operate profitably" in a low price environment.

Nonetheless, Porges said while natural gas liquids only comprised 20% of EQT's production mix, they accounted for 80% of its revenue in 2011. He said EQT is profitable even with gas prices below $3/Mcf, with finding and developing costs of $1.13/Mcf.

"We've got lots of natural gas. Our job is to figure out a way to extract value from that," he said.

Even a coal company is bullish on the Marcellus, Consol Energy CEO J. Brett Harvey said. With 361,000 acres of leasehold, much of it contiguous with its coal holdings, Consol should produce about 1 Bcf/d from the Marcellus and has 50% of its volumes hedged at $5.25/Mcf.

Consol will move 50% of its production to liquids in 2012, Harvey said, but its gas production is still profitable because its is low cost and close to high-priced markets.

Harvey did not provide a finding and development number, but said Consol will drill 99 wells in the Marcellus in 2012 and 22 wells in the adjacent Utica Shale. Consol has 50% joint ventures in both plays with Noble and Hess, respectively.

And the coal company executive thinks Pittsburgh is the epicenter of a new hydrocarbon powerhouse between the Marcellus and the Utica.

"We believe that this region of the country, in 30, 40, 50 years, is going to be as strong as the Gulf is," Harvey proclaimed.

--Bill Holland, bill_holland@platts.com

Similar stories appear in Gas Daily. See more information at http://www.platts.com/Products/gasdaily