Antero Resources announced its 2012 capital budget today. Among the plans: 79 percent of the drilling budget is allocated to Marcellus Shale. Antero currently operates six drilling rigs in the Marcellus. They also announced today they are selling a portion of their Marcellus gathering pipeline system to Crestwood Holdings for $375 million in cash.
Antero Resources today announced its planned capital budget for 2012 as well as its 2012 outlook and an update on its hedge position. Antero’s capital budget for 2012 is $861 million and includes $711 million for drilling and completion, $100 million for leasehold and $50 million for the construction of gathering pipelines and facilities primarily in the Marcellus Shale. The capital budget excludes acquisitions but includes $95 million of Appalachian-focused leasehold additions.
Approximately 95% of the $711 million drilling and completion budget is allocated to Antero-operated drilling and 65% of the drilling and completion budget is allocated to drilling in rich gas areas. Approximately 79% of the drilling and completion budget is allocated to the Marcellus Shale, 15% is allocated to the Piceance Basin and 6% is allocated to the Woodford Shale and Fayetteville Shale. During 2012, Antero plans to operate an average of nine drilling rigs in the Marcellus Shale and one drilling rig in the Piceance Basin. Antero currently operates six drilling rigs in the Marcellus Shale and one rig in the Piceance Basin. The 6% of the capital budget which is allocated to the Woodford Shale and the Fayetteville Shale is primarily for participation in drilling non-operated wells.
The capital budget is expected to be funded internally from operating cash flow, through the use of the undrawn capacity under Antero’s bank credit facility and through anticipated sales of non-core assets. Today, in a separate press release, Crestwood Midstream Partners LP (NYSE: CMLP), Crestwood Holdings Partners LLC (together, "Crestwood") and Antero jointly announced the execution of definitive agreements whereby Crestwood will acquire a portion of Antero’s Marcellus Shale gathering system assets as well as future gathering and compression rights in an area of dedication for $375 million in cash. The transaction is expected to close in March 2012, subject to regulatory approvals and customary closing conditions. The proceeds will initially be used to repay bank debt, then to partially fund Antero’s 2012 capital budget. Based on outstanding borrowings under Antero’s bank credit facility as of today, after giving pro forma effect to the receipt of the anticipated net proceeds as of the closing of the transaction, Antero would have had approximately $780 million of undrawn bank commitments and over $1.1 billion of unused borrowing base capacity.*
*Antero Resources (Feb 27, 2012) – Antero Resources Announces 2012 Capital Budget and Outlook