$1.5 Billion Planned for Drilling, Completions, Extensions, Additions: 7 Rigs, 170 Horizontal Completions
Antero Resources Corporation (ticker: AR) announced its planned 2017 capital budget to $1.5 billion in a recent press release, which is a 7% increase over 2016.
$1.3 billion will be allocated to drilling and completions and the company plans to operate seven drilling rigs in the Marcellus and Utica, complete 170 horizontal wells, and exit the year with 30 DUCs.
The company also plans to continue consolidating acreage positions in the core of its Marcellus and Ohio Utica leaseholds in 2017, building onto the additions it made in 2016. $200 million has been budgeted an additional core leasehold additions and extensions, although none has been specified for acquisitions.
Efficiencies from Marcellus Applied to Utica
Four rigs will focus on the Marcellus in West Virginia, completing 135 wells including 40 DUCS from 2016 at an average lateral length of 9,200 feet. The company also plans to continue pushing drilling efficiencies in 2017, planning for nine wells per pad, up from six last year.
While continuing to focus on West Virginia, the company also plans to up its Ohio Utica activity and apply efficiencies gained in the Marcellus. Three rigs are planned to be kept running this year, completing 35 wells at an average lateral length of 9,700 feet.
Utica growth will depend on the construction timetable for the Rover Pipeline, for which Antero is an anchor shipper. If the pipeline’s planned in-service date in the second half of 2017 is pushed back, part of the drilling and completion budget will be shifted back to the Marcellus. The company says it has additional firm transportation capacity to favorably priced markets in the Marcellus beyond the 2017 forecasted growth.
2017-2020 Production Outlook
The company is currently predicting 2017 daily production to average 2,160 to 2,250 MMcfe/d, 20 to 25% higher than 2016 guidance. “While we plan to live within cash flow from a drilling and completion capital standpoint in 2017, we are forecasting a more than 50% increase in consolidated cash flow from operations in 2018, said President and CFO Glen Warren.
Compound annual growth rate for net production is targeted at 20 to 22% from 2018 through 2020, due to “improved capital efficiency and expected well recoveries, favorable price realizations due to firm transportation arrangements, significant production sold forward at attractively hedged prices, and Appalachian-leading core drilling inventory,” according to the press release. Over 70% of AR’s 2018 production is hedged at $3.91 per MMBtu.
Half a Billion for Midstream Capex
Antero Midstream (ticker: AM) also released its 2017 capex plans today, allocating $525 million to gathering pipelines, compressor stations, fresh water, and advanced wastewater treatment infrastructure.