Antero Update – Drilling 80-85 Wells in 2021, New $550M Investor

Antero Resources, one of the largest drillers in the Marcellus/Utica (working primarily in West Virginia) issued its 4Q and full-year 2020 update yesterday. During 4Q Antero pumped an amazing 3.65 billion cubic feet per day equivalent (Bcfe/d) of natural gas. Antero is the third-largest producer of natural gas in the U.S. The company drills in the wet gas region and reports selling 132,000 barrels per day of NGLs to both Marcus Hook (near Philadelphia) and Hopedale (in Ohio). Antero is the second-largest NGL producer in the U.S.
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Weekly Shale Drilling Permits for PA, OH, WV: Feb 1-5

Two of three M-U states received permits to drill new shale wells last week. Pennsylvania received 22 new permits (second week in a row with 22 new permits). Ohio received zero new permits. And West Virginia received 6 new permits (down from 8 new permits the previous week).
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Credit Loosens for M-U Drillers – Range, Antero Bonds Sell Out

We’ve noticed a flurry of new “notes” (i.e. bonds) being offered by Marcellus/Utica companies. We call notes/bonds IOUs. Typically a company will issue new notes (a promise to pay in the future, with interest) in order to retire older notes coming due. Notes are a form of self-financing by using debt instead of issuing new shares of stock (diluting existing shares). M-U drillers Range Resources and Antero Resources both quickly sold out of their recent note offerings at higher prices than originally requested. According to S&P analysts, the Range and Antero fast sellout is proof that credit is loosening for drillers in the M-U and in other shale plays.
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Haynesville Shale Growing – Chief Competitor to Marcellus/Utica

The Marcellus/Utica is the #1 natural gas producing play in the country. Last month the M-U region produced 33.6 billion cubic feet per day (Bcf/d), according to the U.S. Energy Information Administration’s December Drilling Productivity Report (see DPR: Most Shale Plays, Incl. M-U, Continue Big Drop in Production). The second highest-producing region was the Permian, producing 16.9 Bcf/d. Third highest was the Haynesville at 11.3 Bcf/d. So why do we say the Haynesville is the chief competitor to M-U?
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M-U Drilling Co. Stocks Boomed in 2020, Positive Outlook 2021

As we entered 2020, the stock price for most Marcellus/Utica drillers was near or even at the lowest it had ever been (see Marcellus/Utica Drillers’ Stock Prices Near/At Historic Lows). Then the twin catastrophes of an oil price war (launched by Russia and Saudi Arabia) and a worldwide pandemic hit in March. As it turns out, the catastrophes ended up benefitting our shale drillers. Stock prices improved dramatically for a number of major gas drillers in the M-U after March.
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Weekly Shale Drilling Permits for PA, OH, WV: Dec 14-18

Last week Pennsylvania issued 25 new shale well drilling permits in both northeast and southwest PA, although most of the permits for SWPA. Ohio issued 4 new shale well permits, all of them to the same company (Encino Energy) and the same well pad (in Harrison County). West Virginia issued 6 new shale well permits, one in Lewis County and the rest in Tyler County.
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3Q Financial Health of Top Marcellus/Utica Drillers Troubling

Capital expense (capex) investments made by drillers in the Marcellus/Utica during the third quarter of 2020 were the lowest in at least six years according to a new report (full copy below) from the Institute for Energy Economics and Financial Analysis (IEEFA). The report looks at nine of the top drillers in the M-U and finds collectively they cut capex investment by more than one-third in 3Q20 over 3Q19. And yet those same nine collectively spent a half-billion dollars more during 3Q on drilling and building projects than they earned in revenue from selling oil and gas. That’s troubling.
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Weekly Shale Drilling Permits for PA, OH, WV: Nov. 16-20

Last week Pennsylvania issued 11 new shale well drilling permits, all but one of them in the northeastern (dry gas) part of the state. Ohio issued one new permit, and West Virginia issued 2 new shale well permits.
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Weekly Shale Drilling Permits for PA, OH, WV: Nov. 2-6

Last week Pennsylvania issued a paltry 3 new shale well drilling permits (lowest we’ve seen in months), Ohio issued a single new permit, and West Virginia issued 5 new shale well permits. All 3 PA permits were issued in Greene County. The OH permit was issued in Carroll County (bit of a surprise). And all 5 WV permits were issued in Tyler County.
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Weekly Shale Drilling Permits for PA, OH, WV: Oct. 26-30

Last week Pennsylvania issued 16 new shale well drilling permits, and West Virginia issued 7 new shale well permits. Ohio issued no new shale permits last week.
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Antero 3Q Update: Canceling 300 MMcf/d Pipe Capacity in 2021

Antero Resources, one of the largest drillers in the Marcellus/Utica, working primarily in West Virginia, issued its third-quarter 2020 update yesterday. The company lost $536 million due to a $749 million “unrealized commodity hedge movement in fair value.” High finance stuff. Production averaged 3.8 billion cubic feet equivalent per day (Bcfe/d), which includes a lot of liquids (NGLs).
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Marcellus/Utica Driller Stock Prices Trend Up with NatGas Price

We spotted a couple of stories, one in Barron’s the other in the Wall Street Journal, about the pickup in the futures price of natural gas over the past week, and how those recent gains have led to impressive gains in the share price for Marcellus/Utica drillers. Yesterday the NYMEX Henry Hub futures price closed up 4.11% to $2.74/Mcf. The rising tide lifts all boats.
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Weekly Shale Drilling Permits for PA, OH, WV: Sep 21-25

An unusual situation for permits to drill new wells for last week. Pennsylvania only had 5 new permits while West Virginia had 12 new permits. It’s typically the other way around. Could this be the beginning of the effects from PA raising the permit fee from $5,000 to $12,500 per well? Maybe! Ohio had no new Utica permits issued last week. Drilling seems to have slowed in the Buckeye State.
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Peregrine Buys Royalty Rights from Doddridge County, WV Landowners

Peregrine Energy Partners, headquartered in Dallas, Texas, continues a program to buy royalty rights in the Marcellus/Utica. Peregrine announced yesterday the company has cut a deal to buy “producing royalties in Doddridge County, West Virginia from several private sellers.” The private sellers are landowners/rights owners with wells drilled by Antero Resources and Jay-Bee Oil & Gas. No details on how much the deal was for.
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Antero Res. Selling $250-$300M in New Notes to Pay Down Debt

Today is “notes” day on MDN. Yesterday three major Marcellus/Utica drillers, including Southwestern, Range, and the subject of this post–Antero Resources–all said they are issuing notes, or what we think of as IOUs (debt) in varying amounts. All of the notes issued are for the same reason–to pay down debt. Issue new debt to pay down old debt. Only in the world of high finance! For Antero, the company is issuing $250 million with an extra option to issue another $50 million, or $300 million total, potentially.
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