Antero 2017: Big Swing from Red into Black, 9 Long Marc. Laterals
Lots of news coming out of Antero Resources, one of the Marcellus/Utica’s biggest (and best) drillers. Antero issued its fourth quarter and full year 2017 update, along with a statement about the company’s proved reserves, earlier this week. Perhaps the biggest news is that after losing $849 million in 2016, net income for Antero in 2017 was $615 million–a $1.4 billion swing (to the good) over the course of a single year! Average daily production in 2017 was 2.25 billion cubic feet equivalent per day (Bcfe/d)–a 22% increase over 2016. Zooming in on just the fourth quarter, Antero completed and placed on line 28 Marcellus and 10 Utica wells. Antero said they are getting into long laterals. Of the Marcellus wells drilled in 4Q17, nine had laterals over 12,000 feet, with two of those exceeding 14,000 feet in length (over 2.5 miles horizontally underground). Even with long laterals, Antero decreased the average number of days it takes to drill a well–from 15 to 12 (20% less). They also upped the amount of sand they use in fracking by 23%–to over 2,000 pounds of sand per foot. At the end of 2017, Antero estimates it had 17.3 trillion cubic feet equivalent of natural gas sitting in the ground that can be extracted using today’s technology at today’s prices (“proved reserves”). That 17.3 Tcfe is 12% higher than at the end of 2016. Below is the whole enchilada–two updates from Antero, excerpts from the analyst phone call, and the latest and greatest PowerPoint presentation…
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Yesterday Range Resources released a pair of press releases. One outlines a high level overview for what the company will spend in 2018 and beyond, for the next five years. The other release trumpets Range’s “proved reserves.” As for 2018, Range says they are reducing the amount of money they will spend to drill this year versus what they spent last year. Range previously said they would spend $1.15 billion this year. That’s now been reduced to $941 million. Last year Range spent $1.27 billion, so this year’s spending is down 26% over last year. That’s a pretty hefty decrease. The good news is that Range will spend 80% of this year’s budget on drilling in the Marcellus, mainly in southwestern Pennsylvania. Even though Range will spend and drill less this year, they predict production will grow another 25%. As for the 5-year outlook, Range says almost all growth will come in the Marcellus (not the Louisiana Haynesville, their other drilling location). Range still has some 3,200 locations where they can drill new wells. Range CEO Jeff Ventura says shale has entered a “new era” of shale development where companies (like Range) have “captured the most prolific resources” and will now switch to focus on returns for shareholders. Translation: We won’t be drilling as much as we did in the past so we can concentrate on bottom line profitability. Which explains why Range is spending less this year than last. In the release Range calls the Marcellus its “flagship asset” and clearly signals the company will keep its focus here, in our region. As for proved reserves (how much gas and oil is in the ground, retrievable with today’s technology and at today’s costs), Range says proved reserves as of December 31 increased by 26% from the prior-year, now at 15.3 trillion cubic feet equivalent (Tcfe). That’s alotta gas! We have the Range announcements below, along with an updated PowerPoint slide deck chocked full of useful information…
Antero Resources, one of the biggest and best drillers in the Marcellus/Utica concentrating on just those two plays, turned in their second quarter 2017 numbers last week, and held an earnings call to discuss the results. The company has a lot to crow about. Antero’s gas (and liquids) production hit a new record high of 2.2 billion cubic feet equivalent per day (Bcfe/d) in 2Q17. They continue to be the best hedging company in the Marcellus/Utica, getting an average of $3.15 per thousand cubic feet (Mcf) for the gas they sold BEFORE hedging. After hedging Antero got $3.41/Mcf for gas and equivalents (oil, NGLS). Antero’s hedging program is one of the greatest untold success stories of the Marcellus/Utica. The company lost $5 million in 2Q17, a vast improvement over losing $596 million in 2Q16. Antero completed and placed online 29 horizontal Marcellus wells during 2Q17 with an average lateral length of 9,380 feet. They drilled an average of 5,200 lateral feet per day, a 50% increase compared to 2016. In the Utica, Antero completed and placed online 5 horizontal wells with an average lateral length of 11,222 feet. During 2Q17, Antero set a record for drilling its longest lateral to date at 17,380 feet. The company also announced a big bump up in proved reserves…
The Potential Gas Committee (PGC), a private non-profit organization loosely affiliated with the Colorado School of Mines, performs a comprehensive study of potential supplies of natural gas in the United States every two years. In April of 2013 MDN reported the committee’s findings of just how much gas is down there (see 
It’s that time of year for energy companies to issue updates on just how much oil and gas they own in the ground, recoverable at current prices. Yesterday CONSOL Energy announced their total proved reserves had hit 6.3 trillion cubic feet equivalent (Tcfe), as of December 31, 2016. That number is an 11% increase compared to the previous year. The vast majority of CONSOL’s reserves (99%) are in the Marcellus and Utica Shale plays. Of the 6.3 Tcfe total proved reserves, some 423 billion cubic feet equivalent (Bcfe), or 6.8%, is in oil, condensate and other liquids. Meaning 93.2% of CONSOL’s reserves are in good ole natural gas (i.e. methane). As part of CONSOL’s update we get some interesting stats about the wells they drilled in 2016. In the Marcellus, CONSOL and its JV partner turned-in-line 47 wells with an average lateral (horizontal) length of 7,300 feet and expected ultimate recoveries (EUR) averaging 2.3 Bcfe per thousand feet. In the Utica Shale, CONSOL and their JV partner turned-in-line 15 wells with an average lateral of 8,000 feet and EURs up to 2.2 Bcfe per thousand feet. Here’s the update from CONSOL…
Little known fact: There is a Utica Shale layer in Canada–along the St. Lawrence River Valley–in the Province of Quebec. On and off over the years we’ve mentioned it, largely in connection with an ongoing moratorium on shale drilling in Quebec (
EQT, one of the biggest and best drillers in the Marcellus/Utica, issued their fourth quarter and full year 2016 update yesterday. The bad news is that EQT lost $453 million last year ($192 loss in 4Q16). But the bad financial news was offset by a lot of good news. EQT’s full-year production volumes hit a new high of 759 billion cubic feet equivalent (Bcfe), up 26% from 2015. The company drilled 135 gross wells, including 117 Marcellus wells, with an average length of 7,300 feet. EQT predicts production of 190-195 Bcfe in 1Q17. In 2017, EQT plans to use 6-8 rigs to drill a total of 119 wells in the Marcellus, 81 wells in the Upper Devonian, and 7 wells in the Utica. In a separate announcement also issued yesterday, EQT reports year-end 2016 proved reserves of 13.5 trillion cubic feet equivalent (Tcfe), up 35% from 2015. Below are the two updates from yesterday, along with the latest company PowerPoint presentation, loaded with great slides…
Range Resources released details on their proved reserves last Friday. The company reports proved reserves are 12.1 trillion cubic feet equivalent (Tcfe), a 22% jump from 9.9 Tcfe at the end of 2015. Excluding acquisitions and divestitures, Range’s proved reserves were actually up 11%. Range CEO Jeff Ventura said the company replaced 292% of production from its drilling activities in 2016. They have driven down development costs to 34 cents per thousand cubic feet. If it costs an average of 87 cents to gather and get the gas to market (PA IFO estimate), that means it costs Range $1.21 to find, extract and get the gas to market. Range’s announcement was pretty amped-up on their newest purchase of acreage in Louisiana. However, in 2016, almost all of the added proved reserves came in the Marcellus–1,315 out of 1,394 billion cubic feet (or 94%)…
Our favorite government agency, the U.S. Energy Information Administration (EIA), yesterday released their annual report of proved oil and natural gas reserves in the United States for 2015. The report, titled “U.S. Crude Oil and Natural Gas Proved Reserves, Year-end 2015” (full copy embedded below) shows proved reserves for natural gas dropped by 64.5 trillion cubic feet (Tcf), or 16.6%. U.S. crude oil and lease condensate proved reserves also decreased–from 39.9 billion barrels to 35.2 billion barrels (down 11.8%). The drop in proved reserves for gas and oil comes after last year’s record high proved reserves (see 
Consulting and accounting powerhouse Deloitte has just issued an important new report that sounds the alarm that upstream (i.e. drillers) are not spending enough money to replace proved reserves. Deloitte says there is a “funding gap” of $2 trillion over the next five years! Natural gas is more at threat than oil, because natural gas “reserves shortfall is bigger than oil since the commodity is yet to see its best years of demand growth in the developing world.” The Deloitte report, titled “Short of Capital? Risk of underinvestment in Oil and Gas is amplified by competing cash priorities” is embedded below. An interesting read…