Antero Resources Continues Expansion in the Marcellus

Antero Resources released its first quarter financials and operating results earlier this week. Antero reports their net production of natural gas was up 83 percent when compared to the first quarter of 2011 because of new wells in the Marcellus Shale and the Piceance Basin (Colorado). They also report that the Marcellus Shale is where they will keep their focus with seven drilling rigs and some 233,000 leased acres as compared to two rigs for the Piceance (63,000 acres) and no rigs in the other shale plays where they operate.

The relevant portion of the Antero press release:

Antero’s current gross operated production is  407 MMcfd, and estimated net production is  365 MMcfed, including non-operated production, NGLs and oil.  The estimated net production is comprised of 338 MMcfd of natural gas and 4,400 Bbl/d of NGLs and oil. During the first three months of 2012, Antero completed 32 gross operated wells (28 net wells) and currently has 29 gross operated wells (28 net wells) in various stages of drilling, completion, or waiting on completion.

Marcellus Shale—Antero is operating seven drilling rigs in the Marcellus Shale play, all of which are drilling in northern West Virginia.  The Company has an additional drilling rig under contract that is expected to spud its first well in June.  Currently, Antero has  293 MMcfd of gross operated production of which 98% is coming from  81 horizontal wells, resulting in  226 MMcfd of net production.  Antero has nine horizontal wells either completing or waiting on completion and has two dedicated frac crews currently working in West Virginia.  A third Antero-dedicated frac crew is scheduled to begin work in the fourth quarter of 2012.  The  81 horizontal Marcellus wells that Antero has completed  and placed online  to date have an average lateral length of approximately 6,500’.  In the first quarter of 2012, Antero drilled and completed nine horizontal Marcellus Shale wells with an average 24-hour peak rate of 14.0 MMcfd and an average lateral length of approximately 6,800’.

There are a number of infrastructure projects underway in Harrison and Doddridge Counties, West Virginia that will facilitate rich gas transportation to the 200 MMcfd Sherwood I gas processing plant which is scheduled to start up late in the third quarter of 2012.  MarkWest Energy Partners is building the Sherwood I processing facility as well as an NGL pipeline that will transport the plant liquids north to MarkWest fractionation facilities in Houston, Pennsylvania.  Plant liquids will initially be trucked to the fractionation facilities  until the new NGL pipeline is in service which is expected  in the fourth quarter of 2012.   Antero has committed to the fabrication of a second 200 MMcfd gas processing plant, Sherwood II, to be located on the same site as Sherwood I.  Sherwood II is expected to go in service in the second quarter of 2013, giving Antero access to a total of 400 MMcfd of gas processing capacity. MarkWest is also building the Zinnia high pressure pipeline lateral and the Pike Fork high pressure lateral which will transport rich gas  production  from western Harrison and  eastern  Doddridge Counties to the Sherwood I plant.   The high pressure laterals are expected to be in service when the Sherwood I plant goes in service in the third quarter of 2012 and will move rich gas that is gathered by Crestwood Midstream Partners in the recently announced area of dedication to the Sherwood gas processing facilities.

Antero is building the 17 mile Canton low pressure pipeline lateral which will gather rich gas in northern Doddridge County and deliver the gas to the Sherwood I plant.  The southern section of the Canton low pressure lateral is expected to be in service when the Sherwood I plant goes in service with the remainder of the pipeline expected to go in service in the fourth quarter of 2012.  MarkWest is also building compression facilities located at the Sherwood I plant to serve the Canton low pressure lateral.  Antero is also planning to build the White Oak high pressure lateral which will transport rich gas production from western Doddridge County to the Sherwood processing facilities.  The White Oak lateral is expected to be in service in the fourth quarter of 2012 along with initial compression facilities.

Antero has 233,000 net acres in the Appalachian Basin Marcellus Shale play of which only 17% was associated with proved reserves at year-end 2011.

Piceance Basin—Antero has two operated drilling rigs running in the Piceance Basin. One of the rigs continues to develop Antero’s liquids-rich Mesaverde acreage, while a second rig is drilling a horizontal well targeting the Mancos/Niobrara Shale.  The Mancos/Niobrara Shale is highly over-pressured and underlies a large portion of Antero’s Piceance acreage.  Antero has eight vertical completions in the Mancos/Niobrara and other Piceance operators have had good results drilling horizontal wells in the lean gas shale.  The Company’s gross operated production in the Piceance is currently 56 MMcfd and 60 MMcfed net including 2 MMcfed of nonoperated production from  236 wells online.  The  60 MMcfed net is comprised of approximately 39 MMcfd of tailgate gas, 2,800 Bbls/d of NGLs and  800 Bbls/d of light oil.  Antero has  five Mesaverde wells currently in the process of completing and  five
Mesaverde wells waiting on completion in its Gravel Trend rich gas area.  The Company has one frac crew currently working in the basin.

Antero has 63,000 net acres in the Piceance.

Woodford Shale—Antero is no longer operating a drilling rig in the Arkoma Woodford Shale play and has no plans to operate a rig for the remainder of 2012. Currently, the Company has 59 MMcfd of gross operated production from 134 operated horizontal wells online and 69 MMcfed of net production including net non-operated production, NGLs and oil. The 69 MMcfed net is comprised of approximately 64 MMcfd of tailgate gas, 800 Bbls/d of NGLs and 15 Bbls/d of light oil.   Antero has four non-operated Woodford Shale wells drilling or completing with a combined 43% working interest.

Antero has 66,000 net acres in the Arkoma Woodford Shale play.

Fayetteville Shale—Antero currently has 10 MMcfd of net non-operated production and 5,000 net acres in the Fayetteville Shale play.

The Company has nine non-operated Fayetteville Shale wells drilling or completing with a combined 30% working interest.*

*Antero Resources (May 14, 2012) – Antero Resources Reports First Quarter 2012 Results (PDF)

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