DENVER, Jan. 20, 2015 /PRNewswire/ -- Antero
Resources Corporation (NYSE: AR) ("Antero" or the "Company")
today announced its 2015 capital budget and guidance.
Capital Budget and Guidance Highlights:
- Initial capital budget for 2015 is $1.8 billion, a 41% reduction from the 2014
capital budget of $3.05
billion
- Drilling and completion budget for 2015 is $1.6 billion, a 33% reduction from the 2014
capital budget of $2.4
billion
- Plan to operate an average of 14 drilling rigs between the
Marcellus and Utica Shale plays in 2015, down from 21 at year-end
2014
- Plan to complete 130 horizontal Marcellus and Utica wells in 2015, down from 179 in
2014
- Net daily production for 2015 is projected to average 1.4
Bcfe/d, an approximate 40% increase over 2014's average net daily
production of 1.0 Bcfe/d
- Net daily liquids production for 2015 is projected to
average 37,000 Bbl/d (16% of total production)
Antero plans to execute a drilling program in 2015 supported by
the following key attributes:
- Attractive per unit development costs and well economics
in the core of the rich gas Marcellus and Utica Shale plays
- Diversified firm transportation portfolio enabling Antero to
price over 70% of its natural gas production at currently favorable
TCO, Chicago and Gulf Coast
indices
- 1.8 Tcfe hedge position with a mark-to-market value of
approximately $1.6 billion at
December 31, 2014
Commenting on the 2015 capital budget and guidance, Paul Rady, Antero's Chairman and CEO, said,
"Despite the challenging commodity price environment, Antero is
well positioned to continue executing on our development program
and achieve peer-leading growth and margins. Our ability to
generate production growth of 40%, while materially reducing the
2015 drilling and completion budget, is a testament to the momentum
established and efficiencies attained from having the largest
development program in Appalachia."
Mr. Rady further commented, "Our production and capital budget
guidance assumes the deferral of completions in the Marcellus
during the second and third quarters of 2015 in order to limit
natural gas volumes sold into unfavorable pricing markets including
TETCO and Dominion South. Based on our projections for 2015,
we will not have access to favorable markets for Marcellus gas in
excess of the volumes included in our guidance until the previously
disclosed regional pipeline project is placed into service, which
is currently projected to be in the fourth quarter of 2015.
Consequently, we have adjusted our Marcellus plan so that we can
sell the vast majority of our gas into more favorable
markets. We will continue to monitor commodity prices
throughout the year and may revise the capital budget lower if
conditions warrant."
2015 Capital Budget
Antero's initial capital budget for 2015 includes $1.6 billion for drilling and completion,
$50 million for fresh water
distribution infrastructure, and $150
million for core leasehold acreage acquisitions.
Antero's capital budget excludes Antero Midstream's (NYSE:
AM) $425 million to $450 million
capital budget relating to high and low pressure gathering
pipelines and compressor stations. Antero Midstream announced
its 2015 capital budget and guidance today in a separate news
release, which can be found at www.anteromidstream.com.
The $1.6 billion drilling and
completion budget represents a 33% reduction in drilling and
completion capital as compared to the 2014 budget. The budget
decrease is primarily driven by continuing capital efficiency
improvements, a reduction in rig count and the deferral of 50
Marcellus well completions, which were previously scheduled to
occur during the second and third quarters of 2015, into
2016.
Antero has implemented 2015 well cost reduction measures and
continues to improve development efficiencies of its resource
contained in its 543,000 net acre core position in
Appalachia. The primary 2015 cost reduction measures and
development efficiencies are detailed as follows:
- Reduced service costs related to current industry
trends
- Reduced drilling days per well
- Increased average wells per pad drilled
- Increased lateral lengths
- Reduced completion stage lengths
- Eliminated drilling in step out areas that do not have
existing midstream infrastructure and access to currently favorable
natural gas markets
Approximately 60% of the drilling and completion budget is
allocated to the Marcellus Shale and the remaining 40% is allocated
to the Utica Shale. During 2015, Antero plans to operate an
average of nine drilling rigs in the Marcellus Shale in
West Virginia and five drilling
rigs in the Utica Shale in Ohio. The Company expects to
complete approximately 80 horizontal wells in the Marcellus Shale
and 50 horizontal wells in the Utica Shale.
In 2015, Antero plans to continue consolidating acreage in the
core of the southwestern Marcellus rich gas play and the core of
the Utica rich gas play in
southern Ohio. However, given the current commodity price
environment, Antero has reduced its 2015 land budget by
$300 million, or 67%, to $150 million for 2015. Consistent with
historical practices, the Company does not budget for
acquisitions.
The 2015 fresh water distribution infrastructure budget of
$50 million has been reduced by 75%
from the 2014 water infrastructure budget of $200 million. The 2015 budget includes the
addition of 78 miles of pipeline and eight fresh water storage
impoundments to Antero's fresh water distribution system.
Since Antero has completed the majority of the main water
trunklines within its consolidated acreage position, the 2015 water
distribution infrastructure budget is focused on extensions to the
existing system to accommodate the Company's development
program.
The following is a comparison of the 2014 capital budget to the
2015 capital budget.
($ in MM)
|
|
|
|
|
|
|
|
Budget
Comparison
|
|
2014
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Drilling &
Completion
|
|
$2,400
|
|
$1,600
|
|
(33%)
|
Water
Infrastructure
|
|
200
|
|
50
|
|
(75%)
|
Land
|
|
|
|
|
450
|
|
150
|
|
(67%)
|
Total Capital
Budget
|
|
$3,050
|
|
$1,800
|
|
(41%)
|
Average Operated
Drilling Rigs
|
|
21
|
|
14
|
|
(33%)
|
Operated Wells
Completed
|
|
|
179
|
|
130
|
|
(27%)
|
|
|
|
|
|
|
|
|
|
|
|
The 2015 capital budget is expected to be fully funded through
internally generated operating cash flow and available borrowing
capacity within Antero's existing bank credit facility.
2015 Guidance
Antero's 2015 net daily production, including liquids, is
expected to average 1.4 Bcfe/d which represents an approximate year
over year increase of 40% compared to 2014 average net production
of 1.0 Bcfe/d. Net liquids production is expected to increase
to an average of 37,000 Bbl/d in 2015, primarily driven by
increasing development of rich gas areas of the southwestern core
in the Marcellus Shale and the rich gas core of the Utica
Shale. NGL production guidance assumes that Antero continues
to reject ethane, leaving it in the gas stream to be sold at gas
Btu value.
Assuming the execution of the $1.6
billion drilling and completion capital plan discussed
above, the Company is using the following key assumptions in its
projections for 2015:
Net Daily Production
(MMcfe/d)
|
|
|
1,400
|
Net Residue Natural
Gas Production (MMcf/d)
|
|
|
1,175
|
Net NGL Production
(Bbl/d)
|
|
|
33,000
|
Net Oil Production
(Bbl/d)
|
|
|
4,000
|
Cash Production
Expense ($/Mcfe)(1)
|
|
|
$1.50 –
$1.60
|
Marketing Expense,
Net of Marketing Revenue ($/Mcfe)
|
|
|
$0.20 –
$0.30
|
G&A Expense
($/Mcfe)
|
|
|
$0.23 –
$0.27
|
Natural Gas Realized
Price Differential to Nymex Henry Hub Before Hedging
($/Mcf)(2)(3)
|
|
$(0.20) –
$(0.30)
|
Oil Realized Price
Differential to Nymex WTI Before Hedging
($/Bbl)(2)
|
|
|
$(12.00) –
$(14.00)
|
Natural Gas Liquids
Realized Price (% of Nymex WTI) (2)
|
|
|
48% – 52%
|
Net Income
Attributable to Non-Controlling Minority Interest
($MM)(4)
|
|
|
$23 – $27
|
|
|
|
|
|
(1)
|
Includes lease
operating expenses, gathering, compression, transportation expenses
and production taxes
|
(2)
|
Based on current
strip pricing as of January 19, 2015
|
(3)
|
Includes Btu upgrade
as Antero's processed tailgate and unprocessed dry gas production
is greater than 1000 Btu on average
|
(4)
|
Associated with the
approximate 30% ownership interest in Antero Midstream Partners LP
held by the public
|
Commodity Price Sensitivity
Including Antero's substantial hedge position, and based on
commodity prices as of January 19,
2015, a $0.50/MMBtu change in
Nymex Henry Hub, assuming regional basis prices maintain the
current relationship to Nymex Henry Hub, results in an estimated
change to 2015 EBITDA of less than $1
million. Similarly, a $10.00/Bbl change to Nymex WTI, assuming NGLs
maintain the current price relationship to Nymex WTI, results in an
estimated change to 2015 EBITDA of $30
million.
Antero Resources is an independent natural gas and oil
company engaged in the acquisition, development and production of
unconventional liquids-rich natural gas properties located in the
Appalachian Basin in West
Virginia, Ohio and
Pennsylvania. The Company's
website is located at
www.anteroresources.com.
This release includes "forward-looking statements".
Such forward-looking statements are subject to a number of
risks and uncertainties, many of which are beyond Antero's control.
All statements, other than historical facts included in this
release, are forward-looking statements. All forward-looking
statements speak only as of the date of this release. Although
Antero believes that the plans, intentions and expectations
reflected in or suggested by the forward-looking statements are
reasonable, there is no assurance that these plans, intentions or
expectations will be achieved. Therefore, actual outcomes and
results could materially differ from what is expressed, implied or
forecast in such statements. Nothing in this press release is
intended to constitute guidance with regard to Antero Midstream
Partners LP.
Antero cautions you that these forward-looking statements are
subject to all of the risks and uncertainties, most of which are
difficult to predict and many of which are beyond the Company's
control, incident to the exploration for and development,
production, gathering and sale of natural gas, NGLs and oil. These
risks include, but are not limited to, commodity price volatility,
inflation, lack of availability of drilling and production
equipment and services, environmental risks, drilling and other
operating risks, regulatory changes, the uncertainty inherent in
estimating natural gas and oil reserves and in projecting future
rates of production, cash flow and access to capital, the timing of
development expenditures, and the other risks described under the
heading "Item 1A. Risk Factors" in Antero's Annual Report on Form
10-K for the year ended December 31,
2013.
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SOURCE Antero Resources Corporation