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[STK] NYSE:AR NYSE:SXL
[IN] OIL UTI GAS
[SU] ERP
-- WITH PHOTO -- TO BUSINESS, AND ENERGY EDITORS:
Antero Resources Operations and Firm Transportation Update
DENVER, April 14, 2014 /PRNewswire/ --
-- First quarter 2014 average net daily gas equivalent production is
estimated to be 783 to 787 MMcfe/d, a 105% increase over the prior
year quarter and 16% sequentially
-- First quarter 2014 average net daily liquids production is
estimated to be 16,000 to 16,500 Bbl/d, a 580% increase over the prior
year quarter and 45% sequentially
-- First quarter 2014 average realized natural gas price before
hedging is estimated to be $5.02 to $5.06 per Mcf, an approximate
$0.08 to $0.12 premium to NYMEX after Btu upgrade; average natural gas
equivalent price including NGLs, oil and hedges is estimated to be
$5.76 to $5.80 per Mcfe, a 10% increase compared to the first quarter
of 2013
-- First 15 Marcellus Shale wells with shorter stage length (SSL)
completions had an average 180-day production rate of 8.1 MMcfe/d, 25%
above the Company's non-SSL reserve report type curve
-- Latest 9 Utica Shale wells had an average 30-day production rate of
15.3 MMcfe/d in ethane rejection (50% liquids)
-- Utica Condensate and Highly-Rich Gas/Condensate type curves and
regimes were revised downward based on recent unconstrained production
history
-- Second Utica compressor station was recently placed in service,
resulting in a combined 240 MMcf/d of Antero-committed compression
capacity in Ohio
-- Firm transportation and firm gas sales were increased to an average
2.6 Bcf/d in 2016 (assuming 1,000 Btu gas)
-- Entered into an agreement to be the anchor supplier to the planned
Ascent ethane cracker project in West Virginia with 30,000 Bbl/d
ethane commitment
-- Entered into an agreement to be the anchor shipper on the proposed
Mariner East II pipeline and export project in Pennsylvania with
51,500 Bbl/d NGL commitment
Antero Resources (NYSE: AR) ("Antero" or the "Company") announced
today recent operational highlights and an increase in its firm
transportation position.
Operating Update
All operational figures are as of the date of this release unless
otherwise noted.
Antero's net daily production for the first quarter of 2014 is
estimated to average 783 to 787 MMcfe/d, including 16,000 to 16,500
Bbl/d of liquids (12% liquids). The midpoint of the first quarter
2014 estimated production represents an organic production growth rate
of 16% and 105% from the fourth quarter of 2013 and first quarter of
2013, respectively, despite severe winter weather and challenging
operating conditions during the quarter. The midpoint of the first
quarter 2014 estimated liquids production represents an organic
production growth rate of 45% and 580% from the fourth quarter of 2013
and first quarter of 2013, respectively. The Company has completed a
combined 266 horizontal wells in the Marcellus Shale and Utica Shale
since commencing drilling operations in Appalachia in 2009.
Antero's average realized natural gas price before hedging for the
first quarter of 2014 is estimated to be $5.02 to $5.06 per Mcf, a 2%
premium to the NYMEX average for the period. Approximately 45% of
Antero's first quarter 2014 natural gas revenue was realized at the
Columbia Gas Transmission (TCO) index and the remaining natural gas
revenue was realized at various other index pricing points including
Dominion South, TETCO M2 and NYMEX. The midpoint of the estimated
realized gas price before hedging represents a $0.10 premium to NYMEX,
at the high end of the Company's 2014 guidance of a $0.00 to $0.10
premium.
Antero's average realized Y-grade C3+ NGL price for the first quarter
of 2014 is estimated to be $60.00 to $62.00 per barrel, or an average
of approximately 62% of the NYMEX WTI oil price average for the
period, and the average realized oil price is estimated to be $87.00
to $89.00 per barrel. Average natural gas equivalent price including
NGLs and oil, but excluding hedge settlements, is estimated to be
$5.78 to $5.82 per Mcfe.
Antero's average realized natural gas price for the first quarter of
2014 including hedges is estimated to be $5.00 to $5.04 per Mcf, a
decrease of approximately 2% as compared to the first quarter of
2013. Average natural gas equivalent price including NGLs, oil and
hedge settlements is estimated to be $5.76 to $5.80 per Mcfe, an
increase of approximately 10% as compared to the first quarter of 2013
due to the significant increase in liquids production. For the first
quarter of 2014, Antero realized estimated hedging losses of
approximately $1.1 million, or $0.02 per Mcf, due to the sharp rise in
natural gas prices this past winter.
Commenting on Antero's estimated first quarter 2014 results and firm
transportation update, Paul Rady, Antero's Chairman of the Board and
CEO, said, "Our estimated first quarter results demonstrate Antero's
positive momentum and high growth profile with over 100% production
growth compared to the prior year quarter. Additionally, our
forward-looking integrated strategy has resulted in the accumulation
of an extensive portfolio of firm takeaway capacity and firm sales
both for natural gas and NGLs. This portfolio results in diversified
exposure to index prices in Appalachia, the Midwest and the Gulf
Coast. It also gives Antero the ability to sustain high growth well
into the future. The midpoint of our 2014 guidance targets 80%
production growth compared to the prior year. Additionally, now that
we have incremental firm transportation capacity in hand, we are
targeting compound annual growth in net production of 45% to 50% in
2015 and 2016."
Marcellus Shale - Antero utilized shorter stage length completions on
all of its Marcellus wells during the first quarter of 2014. Antero
continues to be encouraged by its SSL well results. To date, the
Company has completed and placed on line 38 Marcellus wells utilizing
SSL completions that have at least 30 days of production history.
The various actual average production rates are compared to the
non-SSL reserve report type curve in the table below:
SSL vs Non-SSL Average Rate Comparison (MMcfe/d)
30-day rate 90-day rate 180-day rate
SSL Well Count 38 23 15
SSL Average Rate - MMcfe/d 11.3 9.0 8.1
1.5 Bcf/1,000' Type Curve Average Rate - MMcfe/d 8.7 7.5 6.5
SSL % Rate Improvement 30% 20% 25%
The 15 wells that have been on line for at least 180 days are 25%
above Antero's 1.5 Bcf per 1,000 feet of lateral non-SSL type curve.
The average well cost for an SSL well, defined as a well with stage
lengths less than 225 feet, is approximately 10% to 15% higher than a
comparable non-SSL well with an average stage length of 350 feet.
Antero is currently operating 15 drilling rigs in the Marcellus Shale
play. The Company has 79 gross (75 net) horizontal wells either in
the process of drilling, completing or waiting on completion in the
Marcellus. Antero currently has three dedicated frac crews and five
spot frac crews working in West Virginia.
During the first quarter of 2014, Antero added approximately 9,000 net
acres and currently holds approximately 354,000 net acres in the
southwestern core of the Marcellus play. Approximately 27% of this
net acreage was associated with proved reserves and approximately 8%
with proved developed producing reserves at year-end 2013.
Additionally, approximately 70% of the leasehold is prospective for
processable rich gas assuming an 1100 Btu cutoff.
Marcellus Processing Update
Antero currently has access to a total of 600 MMcf/d of cryogenic
processing capacity at the MarkWest Sherwood processing facility
located in Doddridge County, West Virginia. Antero has committed to
three additional 200 MMcf/d cryogenic processing plants, Sherwood IV,
V and VI. Sherwood IV is expected to go on line in the third quarter
of 2014, Sherwood V is expected to go on line in the fourth quarter of
2014, and Sherwood VI is expected to go on line in the second quarter
of 2015. These commitments provide Antero access to a total of 1.2
Bcf/d of Marcellus cryogenic processing capacity. Ethane is currently
being rejected at the processing facility and left in the gas stream.
Utica Shale - Since the fourth quarter operations update on January
27, 2014, the Company has completed and placed on line nine additional
wells in the Utica that have at least 30 days of production history.
Eight of the nine additional wells are located in the 1250 to 1300 Btu
regime and had an average 30-day production rate (in ethane rejection)
of 14.8 MMcfe/d (52% liquids), representing a 58% improvement over the
average 30-day production rate of the five previously disclosed wells
in the same Btu regime of 9.4 MMcfe/d (36% liquids). One of the nine
additional wells is located in the new 1225 to 1250 Btu regime and had
a 30-day production rate (in ethane rejection) of 19.0 MMcfe/d (36%
liquids), representing a 36% improvement over the 30-day production
rate of the one previously disclosed well in the same Btu regime of
14.0 MMcfe/d (23% liquids).
Antero is currently operating 5 drilling rigs in the Utica Shale
play. The Company has 18 gross (13 net) horizontal wells either in
the process of drilling, completing or waiting on completion. Antero
currently has one full time dedicated frac crew and one spot crew
working in Ohio.
During the first quarter of 2014, Antero added approximately 3,000 net
acres and currently holds approximately 108,000 net acres in the core
of the Utica Shale play. Approximately 6% of this net acreage was
associated with proved reserves and approximately 3% with proved
developed producing reserves at year-end 2013. Additionally,
approximately 75% of the leasehold is prospective for processable rich
gas assuming an 1100 Btu cutoff.
Utica Type Curve Revisions and New Regime Delineation
As Antero has further delineated its Utica position, the Company has
divided its acreage into five different type curve regimes, based on
Btu content and estimated ultimate recoveries (EURs). This compares
to the previous methodology in which Antero divided its acreage into
four different type curve regimes. Based on additional production
history, Antero has divided the Highly-Rich Gas/Condensate regime,
previously spanning the 1250 to 1300 Btu range, and the Highly-Rich
Gas regime, previously spanning the 1200 to 1250 Btu range, into three
regimes instead of two. The new regimes are defined as Condensate
(1250 to 1300 Btu), Highly-Rich Gas/Condensate (1225 to 1250 Btu) and
Highly-Rich Gas (1200 to 1225 Btu).
The EUR/1,000' of lateral assumption has been adjusted downward by 31%
to 1.1 Bcfe/1,000' in the Condensate regime to reflect lower expected
recoveries of condensate and rich gas based on several months of
relatively unconstrained production. Early in the first quarter of
2014, Antero gained access to the first 120 MMcf/d of third-party
operated compression. This compression allowed for normal operating
pressure and unconstrained production history. The EUR assumption in
the new Highly-Rich Gas/Condensate regime is 1.9 Bcfe/1,000' or 34%
below the previous assumption for this area which was previously a
subset of the Highly-Rich Gas regime. This regime is considered a
transition zone between the Highly-Rich Gas regime and the Condensate
regime. While the Company has seen some encouraging early results,
there is still uncertainty regarding EURs in the Highly-Rich
Gas/Condensate regime due to limited well population and limited
production history. The Company has undertaken several initiatives in
order to improve the ultimate recovery of wells located in the
Condensate and the Highly-Rich Gas/Condensate regimes, including
shorter stage lengths, restricted choke pilots and artificial lift
measures.
There are no material changes to the Highly-Rich Gas (1200 to 1225
Btu), the Rich Gas (1100 to 1200 Btu) or the Dry Gas (less than 1100
Btu) regimes. Please refer to page 24 of the April Company
Presentation on Antero's website for revised Utica well assumptions at
www.anteroresources.com. The new EUR regime assumptions are
summarized below.
EUR Regime Condensate Highly-Rich Gas/Condensate Highly-Rich Gas Rich Gas Dry Gas
Btu Range 1250-1300 1225-1250 1200-1225 1100-1200 <1100
EUR (Bcfe): 7.4 13.3 19.9 18.5 16.6
EUR (MMboe): 1.2 2.2 3.3 3.1 2.8
% Liquids: 35% 26% 21% 14% 0%
Lateral Length (ft): 7,000 7,000 7,000 7,000 7,000
Stage Length (ft): 240 240 240 240 240
Well Cost ($MM): $11.0 $11.0 $11.0 $11.0 $11.0
Bcfe/1,000': 1.1 1.9 2.8 2.6 2.4
Gross Locations (Undeveloped): 193 75 91 180 211
Commenting on the Utica Shale, Glen Warren, President and CFO, said
"The downward type curve revision in our Condensate and Highly-Rich
Gas/Condensate regimes affects 268 or approximately 6% of our total
4,843 gross undrilled 3P locations. We have maintained since our
first Utica completions that EURs in the condensate heavy areas would
be less predictable than rich gas and dry gas areas due to retrograde
condensate challenges. Because the Condensate and Highly-Rich
Gas/Condensate regimes provide Antero with significant exposure to
wellhead condensate and highly-rich processable gas, we plan to
continue developing these areas as we adjust completions and apply
various production enhancement measures. We are seeing improvement in
30-day rates in the condensate heavy areas but we need more production
history to judge whether these improved results are sustainable. "
Utica Compression Update
A second third party owned and operated compression and condensate
stabilization facility was recently placed in service resulting in
total Antero-dedicated compression capacity of 240 MMcf/d and total
condensate stabilization capacity of 11,000 Bbl/d. A third
compression station and condensate stabilization facility is expected
to start up in the third quarter of 2014. Antero continues to lay
both low-pressure and high-pressure gathering pipelines to connect the
wells to compression and transport its production to the MarkWest
Seneca processing complex.
Firm Transportation and Firm Sales
Antero has entered into firm transportation agreements with various
pipelines and firm sales agreements with various counterparties who
hold firm transportation capacity in order to facilitate the delivery
of its production to preferred markets and diversify its exposure to
basis concentration risk. The firm transportation agreements
generally have a term of ten to thirty years and include fixed and
variable cost components referred to as demand and commodity charges,
respectively. The firm sales agreements are sales to other firm
shippers, are typically two to five years in term, are settled on an
agreed-to price based on a local index, and do not involve demand or
commodity charges.
Natural Gas
On April 14, 2014, Kinder Morgan Energy Partners, L.P. announced that
KMP unit Tennessee Gas Pipeline Company ("TGP") awarded Antero
Resources 100% of the capacity offered in TGP's binding open season
for its proposed Broad Run Flexibility ("BRF") and Broad Run Expansion
("BRE") Projects located in West Virginia. The BRF Project provides
590,000 MMBtu/d of firm transportation capacity from TGP's Broad Run
Lateral in TGP Zone 3 to delivery points along the Gulf Coast. The
anticipated in service date of the BRF Project is November 1, 2015.
The BRE Project provides an additional 200,000 MMBtu/d of firm
transportation capacity on the same capacity path to the Gulf Coast.
The anticipated in service date of the BRE Project is November 1,
2017. The term of this agreement is 15 years and provides Antero with
the ability to access Gulf Coast pricing hubs as well as international
LNG markets.
Further, Antero successfully bid on an additional 600,000 MMBtu/d of
firm gas transportation directed to the Gulf Coast. The primary
delivery point for this firm transportation capacity is located near
growing Gulf Coast petrochemical demand and the future LNG export
corridor. In the near term, this new firm capacity gives Antero the
option to redirect gas from its Midwest-directed capacity to Gulf
Coast pricing when commodity prices are more favorable than Midwest
pricing. Should Antero elect not to redirect this gas, this firm
capacity will likely be utilized as release capacity to transport
third party gas out of the constrained Northeast area offsetting
Antero's firm transportation costs associated with this capacity. In
the longer term, Antero ultimately expects to link to this capacity by
committing volumes either to existing east to west pipelines or
support a new-build project connecting Antero's Utica Shale to this
new firm transportation. In the latter case, the 600,000 MMBtu/d of
firm transportation will be incremental to Antero's firm
transportation portfolio from the Utica Shale to the Gulf Coast.
Below is a summary schedule of Antero's average annual firm
transportation and sales volumes for each of the years presented.
2014 - Average 2015 - Average 2016 - Average
MMbtu/d MMbtu/d MMbtu/d Pricing Region
Firm Transportation
Columbia 403,000 595,000 582,000 Appalachia or Gulf Coast
REX/Other 306,000 600,000 600,000 Midwest or Gulf Coast
Tennessee - 100,000 590,000 Gulf Coast
Other Regional 395,000 615,000 625,000 Appalachia
Firm Sales 250,000 240,000 223,000 Appalachia, NYMEX
Total Firm Commitments 1,354,000 2,150,000 2,620,000
By 2016, the above firm transportation portfolio provides Antero the
ability to direct 49% of its production to the Gulf Coast, 28% to
Appalachia and 23% to Midwest pricing, including Chicago and Detroit.
Antero's all-in average firm transportation and firm sales cost per
MMbtu assuming full utilization, including both demand and commodity
charges, is $0.31, $0.32 and $0.42 for 2014, 2015 and 2016,
respectively. The firm transportation portfolio, based on current
futures pricing and differentials, would result in an approximate
$0.15 per MMbtu basis differential improvement in its 2016 realized
prices compared to 2014 realized prices.
NGLs
On March 26, 2014, Antero signed an agreement to become the anchor
supplier for the planned Ascent petrochemical complex to be located
near Parkersburg, West Virginia. Under the agreement, Antero intends
to provide 30,000 Bbl/d of ethane which represents almost half of the
volume required to operate the Ascent ethane cracker. This agreement
is contingent upon Ascent reaching a final investment decision once
the multi-year feasibility analysis is completed and a construction
decision has been made.
Antero recently committed to a 10 year transport, terminal and storage
agreement with Sunoco Logistics Partners LP (NYSE: SXL) on its Mariner
East II Project. Subject to the outcome of the binding open season
currently underway and all of the necessary regulatory approvals, the
Mariner East II pipeline and export project will connect the NGL
resources in the Marcellus and Utica Shale to Sunoco's existing
infrastructure and international port at its Marcus Hook facility near
Philadelphia. Mariner East II is expected to be operational in early
2016. Under the agreement, Antero will be an anchor shipper and have
firm transportation of 51,500 barrels per day (11,500 barrels of
ethane, 28,000 barrels of propane and 12,000 barrels of butane).
Antero will have the ability, through the Marcus Hook facility, to
market ethane, propane and butane to local markets in the Northeast as
well as export product to international markets. These markets are
currently paying a premium price relative to Appalachian prices.
Subject to the finalization of the agreements above, combined with the
Company's previously reported 20,000 Bbl/d firm transportation
contract on the ATEX pipeline, Antero will have access to 101,500
barrels per day of NGL takeaway capacity. This capacity is comprised
of 61,500 barrels per day of ethane takeaway, 28,000 barrels per day
of propane takeaway and 12,000 barrels per day of butane takeaway to
diversified markets both domestic and international.
Capital Spending
Antero's total capital expenditures for the three months ended March
31, 2014 are estimated to be $725 million to $745 million, including
drilling and completion costs of $490 million to $495 million,
gathering and compression costs of $110 million to $115 million, fresh
water distribution project costs of $57.5 million to $62.5 million,
leasehold acquisition costs of $57.5 million to $62.5 million and
approximately $10 million on other capital expenditures. During the
quarter, due to the success of Antero's infill acreage leasing
efforts, average drilled lateral length compared to budget increased
2%. The successful acreage adds also had the effect of increasing the
average working interest on wells drilled during the quarter from the
budgeted 95% to 97%.
Antero has increased its 2014 capital budget by $150 million to $2.75
billion. The budget has been increased for additional gathering and
compression projects to be built by the Company including two
compressor stations in the Utica Shale as well as one compressor
station and a 15 mile high pressure gathering line accessing rich gas
production in the Marcellus Shale. The additional compression and
gathering assets will be included in the contemplated master limited
partnership offering involving Antero's midstream assets.
Antero Resources is an independent oil and natural gas company engaged
in the acquisition, development and production of unconventional oil
and 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.
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.
Logo - http://photos.prnewswire.com/prnh/20131101/LA09101LOGO
SOURCE Antero Resources
-0- 04/14/2014
/CONTACT: For more information, contact Michael Kennedy - VP Finance, at (303) 357-6782 or mkennedy@anteroresources.com.
/Photo: http://photos.prnewswire.com/prnh/20131101/LA09101LOGO
/Web Site: http://www.anteroresources.com
(NYSE:AR /
NYSE:SXL) /
CO: Antero Resources
ST: Colorado
IN: OIL UTI GAS
SU: ERP
PRN
-- LA04331 --
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