Antero Resources 2011 Results for the Marcellus
Antero Resources released 2011 operating and financial results yesterday. Below are portions from their statement that are relevant to the Marcellus Shale:
On February 27, 2012 Antero announced an $861 million capital budget for 2012 which includes $711 million for drilling and completion, $100 million for leasehold additions and $50 million for the construction of gathering pipelines and facilities primarily in the Marcellus Shale. The 2012 capital budget includes the planned drilling of 93 Antero-operated wells in the Appalachian Basin and 53 Antero-operated wells in the Piceance Basin. Approximately 65% of the 2012 drilling budget is directed towards liquids rich gas and approximately 95% is allocated to Antero-operated drilling.
Also on February 27, 2012 Antero announced the execution of definitive agreements whereby Antero agreed to sell certain Marcellus Shale gathering system assets located in Harrison and Doddridge Counties, West Virginia to Crestwood Midstream Partners LP and Crestwood Holdings Partners LLC for $375 million in cash plus an earn-out (which could allow Antero to earn an additional purchase price payment of up to $40 million). The agreements include future gathering and compression rights in an area of dedication covering almost 50% of Antero’s 222,000 net acre Marcellus Shale leasehold. The proceeds from the sale will be used initially to repay bank debt and will ultimately be used for further development of Antero’s Appalachian drilling inventory as well as future leasehold acquisition. The transaction is expected to close in late March 2012.
Antero’s capital spending in 2011 totaled $930 million, comprised of $554 million in drilling costs, $108 million for leasehold additions, $193 million for a Marcellus Shale acquisition, $73 million in gathering costs and $2 million for other capital costs.
In 2011 Antero entered into a gas processing agreement with MarkWest Energy Partners, L.P. in the Marcellus Shale where a new 200 MMcfd gas processing plant is being built in the heart of Antero’s leasehold position in West Virginia. The new plant is expected to come online in the third quarter of 2012 and is fully dedicated to Antero. Antero also recently signed an agreement to ship up to 20,000 Bbl/d of ethane on Enterprise Products Partners L.P.’s Appalachia to Texas ATEX pipeline (ATEX Express) as an anchor shipper. ATEX Express will originate in southwest Pennsylvania with a delivery interconnect at MarkWest’s Houston, Pennsylvania processing and fractionation facilities. The ATEX Express is expected to begin service in the first quarter of 2014. As a result of these agreements, beginning at year-end 2011 Antero now reports NGLs separately from natural gas for its Marcellus Shale reserves.
Antero is operating six drilling rigs in the Marcellus Shale play, all of which are drilling in northern West Virginia. The Company has a seventh drilling rig under contract that is expected to spud its first well in late March and two additional drilling rigs that are expected to be delivered in April 2012. Antero has 236 MMcfd of gross operated production of which 98% is coming from 68 horizontal wells, resulting in 180 MMcfd of net production. Antero has 17 horizontal wells either completing or waiting on completion and has one fully dedicated frac crew currently working in West Virginia. A second Antero-dedicated frac crew is scheduled to begin service in April 2012. In 2011 Antero drilled and completed 38 horizontal wells with an average 24-hour peak rate of 15.5 MMcfd and an average lateral length of approximately 6,700’. Antero booked gross reserves of 10 Bcf per well on average for these 38 wells and completed well cost was $7.9 million on average, including allocated well pad costs.
Antero has 222,000 net acres of leasehold in the Appalachian Basin Marcellus Shale play of which only 17% was classified as proved at year-end 2011.*
*Antero Resources (Mar 21, 2012) – Antero Resources Reports 2011 Operating and Financial Results (PDF)