Antero Resources enjoys increase in production

According to Paul Rady, Antero’s chairman and CEO, the company executed a 2016 development program ahead of schedule and under budget and was able to increase its production in doing so.

“Our ability to generate production growth of 24 percent year over year, including liquids growth compared to 2015,” he said. “By completing this ahead of plan and under budget, we were able to accelerate 18 wells into the fourth quarter of 2016 without a change to our 2016 drilling budget of $1.3 billion.”

Rady said this was primarily a function of the drilling efficiencies and cost reduction achieved in 2016.

“We don’t anticipate that there will be any meaningful increase to well costs in 2017,” he said.

In 2016, the company had seven drilling rigs running and plans to keep those seven drills in operation for 2017. Kennedy said Antero drilled 128 wells last year and plans to drill 170 in 2017.

“An increase in production of 19 percent is projected for 2017,” Kennedy said.

The companies budget to drill new wells in 2017 is in line with the 2016 budget of $1.3 billion, he said. This is a reduction from the 2015 budget of $1.6 billion.

In addition, the company purchased 74,000 net acres of land in 2016, bringing the size of Antero’s land holdings to 624,000 acres.

Antero contributed to state economy through taxes. The company paid $66.5 million in production and property taxes in 2016, which was a 15 percent decrease from 2015, Kennedy said.

Antero expects to invest up to $800 million through 2020 in regards to the joint venture in Doddridge County.

Of the $800 million, $155 million was paid upon execution of the agreement, Kennedy said.

Antero Midstream and MarkWest will jointly develop processing assets at the Sherwood processing facility in Doddridge County and an additional still-to-be-designated facility also located in West Virginia in the southwestern core of the Marcellus Shale.

As part of the agreement, Antero Midstream will release to the joint venture its right to provide processing services on 195,000 gross acres held by Antero Resources in Ritchie, Tyler and Wetzel counties.

“This venture provides Antero with tremendous clarity and certainty around the next 11 Antero dedicated processing plants,” Kennedy said. “The (joint venture) is important to Antero Resources as the company’s long-term growth targets will require significant processing capacity in the basin.”

In addition, the joint venture resulted in further diversification of Antero Midstream’s asset base and moved the partnership closer to becoming a full value chain midstream provider, Kennedy said.

In other news, announced earlier in February, the company will take away an additional 800,000 MMBtu/d of capacity from the Ohio Utica upon the completion of the Rover Pipeline.

“This will enable Antero to transport incremental Ohio Utica gas production to the favorably priced Chicago and Gulf Coast markets. In turn, this will allow the company further development of the Ohio Utica Shale,” Kennedy said. “This will allow the company to tie in its Marcellus shale production, adding further access to favorable markets.”

“We are looking forward to the Rover start-up and we are prepared to begin filling it as soon as it opens,” Rady said. The company expects it to be ready in July.

According to Glen Warren, Antero’s president and chief financial officer, there is expected to be a fairly steady completion schedule for drilling throughout 2017.

“We are watching Rover closely, and once we are able to see the spades in the ground we may want to accelerate,” he said.

Warren said acceleration is not yet determined, but could be seen more in the third and fourth quarter.

Kennedy said with the industry-leading hedge book and extensive firm transportation portfolio, which allows Antero to sell its gas at the most favorably priced market, Antero has protection from the commodity price weakness over the last few years.

“Lower liquids pricing has impacted Antero’s natural gas liquids realizations, and Antero feels that the improvement in pricing will continue on through 2017,” he said. “Antero has a lot of exposure to liquids, so this bodes well.”

Because of these previously mentioned reasons, Antero officials are not expecting any financial hardship and expect to grow their workforce.

The company had 237 employees in Appalachia in 2015 and by the end of 2016, that number was up to 267.

“The company recently announced long-term guidance of 20-22 percent compound annual growth in net gas equivalent production through the end of the decade,” he said. “Antero plans to deliver this long-term growth while keeping its aggregate drilling and completion budget within consolidated cash flow from operations, resulting in a declining leverage profile through 2020.

“The ability to target this type of growth for long-term bodes extremely well for the company’s future both operational and financially as the company continues to be the leading operator in one of the most prolific basins in the U.S.,” Kennedy said.