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Ohio Utica Shale

Antero Resources reports on mid-year reserves

By Bob Downing Published: July 16, 2014

From Antero Resources:

 

DENVER, July 15, 2014 /PRNewswire/ --

  • Mid-year 2014 proved reserves increased by 19% to 9.1 Tcfe (13% liquids) from year-end 2013
  • Proved developed reserves increased by 37% to 2.8 Tcfe (12% liquids)
  • Pre-tax PV10 of proved reserves including hedges increased by 28% to $9.0 billion
  • 3P reserves increased by 7% to 37.5 Tcfe (15% liquids)
  • Pre-tax PV10 of 3P reserves including hedges increased by 24% to $26.4 billion
  • Utica Shale dry gas position increased to 146,000 net acres and 9.5 Tcf of net resource

 

Antero Resources (NYSE: AR) ("Antero" or the "Company") today announced that proved reserves at June 30, 2014 were 9.1 Tcfe, a 19% increase compared to proved reserves at December 31, 2013, in each case assuming ethane rejection. Proved, probable and possible ("3P") reserves at June 30, 2014 totaled 37.5 Tcfe, which represents a 7% increase compared to December 31, 2013, assuming ethane rejection. Antero's June 30, 2014 proved and 3P reserves excluded 356 and 1,425 million barrels of ethane, respectively, due to the relationship between assumed ethane and natural gas prices which indicate ethane will be rejected as of June 30, 2014. The Company's proved and 3P reserves also excluded any reserves attributable to the Utica dry gas resource in West Virginia or Pennsylvania.

Antero Resources logo.

Antero's reserves at June 30, 2014 were prepared by its internal reserve engineers and have not been reviewed or audited by its independent reserve engineers.

Proved Reserves

As of June 30, 2014, proved reserves increased by 19% from year-end 2013 to 9.1 Tcfe, of which 87% were natural gas, 12% were natural gas liquids ("NGLs") and 1% was oil. The Marcellus Shale accounted for 94% of proved reserves and the Utica Shale accounted for the remaining 6%. Of the 1.5 Tcfe of proved reserves added in the six months ended June 30, 2014, 1.3 Tcfe was attributed to the Marcellus Shale. NGLs and oil increased by 49 million barrels and 6 million barrels, respectively, due to Antero's drilling program targeting liquids-rich locations in the Marcellus and Utica Shale plays. Positive performance revisions of 85 Bcfe were primarily due to improved Marcellus well performance from shorter stage length ("SSL") completions offset by the reclassification of 23 dry gas locations, representing 199 Bcfe, from proved undeveloped to the probable category due to the SEC's five-year development rule.

Approximately 26% of Antero's 488,000 net acres of current leasehold in the Marcellus and Utica were classified as proved at June 30, 2014. Based on Antero's successful drilling results to date, as well as those of other operators in the vicinity of Antero's leasehold, the Company believes that a substantial portion of its Marcellus and Utica Shale acreage will be added to proved reserves over time as more wells are drilled. Antero's estimated Marcellus and Utica proved reserves and undeveloped locations are primarily booked assuming 660 foot and 1,000 foot interlateral distance, respectively.

Proved developed reserves increased 37% from year-end 2013 to 2.8 Tcfe at June 30, 2014. The Company added 59 Marcellus wells to proved developed reserves in the six months ended June 30, 2014. Virtually all of the wells utilized SSL completions and had an average estimated ultimate recovery ("EUR") of 1.9 Bcfe/1,000 feet of lateral (12% liquids) which is consistent with previous estimates. Out of the 689 gross proved undeveloped Marcellus locations, 251, or 36% of the total, are booked assuming SSL completions.

Antero added 22 Utica wells to proved developed reserves in the six months ended June 30, 2014, consisting of 4 rich gas (1100-1200 Btu), 2 highly-rich gas (1200 to 1225 Btu), 3 highly-rich gas/condensate (1225 to 1250 Btu) and 13 condensate (1250 to 1300 Btu) wells. The wells located in the rich gas and highly-rich gas regimes had an average EUR of 2.6 Bcfe/1,000 feet of lateral (14% liquids) and 2.8 Bcfe/1,000 feet of lateral (21% liquids), respectively. The wells located in the highly-rich gas/condensate and condensate regimes had an average EUR of 1.9 Bcfe/1,000 feet of lateral (26% liquids) and 1.1 Bcfe/1,000 feet of lateral (35% liquids), respectively. These EURs are consistent with previous estimates.

The percentage of proved reserves classified as proved developed increased to 30% at June 30, 2014 as compared to 27% at year-end 2013. Proved undeveloped reserves increased by 13%, primarily as a result of the successful execution of Antero's Marcellus Shale development drilling plan. Antero's 6.3 Tcfe of proved undeveloped reserves will require an estimated $5.8 billion of development capital over the next five years, resulting in an estimated average development cost for proved undeveloped reserves of $0.92 per Mcfe.

SEC prices for reserves were calculated as of June 30, 2014 on a weighted average Appalachian index basis and were $88.82 per Bbl for oil and $3.95 per MMBtu for natural gas. Using SEC prices, the pre-tax present value discounted at 10% ("pre-tax PV10") of the June 30, 2014 proved reserves was $8.5 billion, excluding the value of the Company's natural gas and oil hedges. Including the value of Antero's hedges as of June 30, 2014 and using SEC prices, the pre-tax PV10 value of proved reserves was $9.0 billion, a 28% increase over year-end 2013. The pre-tax PV10 value of proved developed reserves was $4.4 billion excluding the value of hedges and $4.9 billion including the value of hedges, a 41% increase over year-end 2013.

 

Summary of Changes in Proved Reserves (in Bcfe)

 

Balance at December 31, 2013

7,632

Extensions, discoveries and additions

1,531

Performance revisions

85

Price revisions

11

Estimated Production

(152)

Balance at June 30, 2014

9,107

3P Reserves

As of June 30, 2014, 3P reserves increased by 7% from year-end 2013 to 37.5 Tcfe, of which 85% were natural gas, 14% were NGLs and 1% was oil. The Marcellus, Utica, and Upper Devonian Shale comprised 26.4 Tcfe, 6.4 Tcfe and 4.7 Tcfe of the 3P reserves, respectively. The 7% increase in 3P reserves was driven primarily by the leasehold addition of 22,000 net acres in the Marcellus Shale core in northern West Virginia and 13,000 net acres in the Utica Shale core in southern Ohio, including 6,363 net acres associated with Antero's previously announced Piedmont Lake lease acquisition.

Based on the results from SSL completions, Antero has increased the number of locations assuming SSL from 1,768 gross undeveloped 3P Marcellus locations to 1,893 gross undeveloped 3P Marcellus locations, or 62% of the 3,057 total gross undeveloped 3P Marcellus locations. Importantly, 25.5 Tcfe of Antero's 26.4 Tcfe 3P reserves in the Marcellus, or 97%, were classified as proved or probable (2P), reflecting Antero's extensive delineation and development activities in the Marcellus Shale.

Using SEC prices, the pre-tax PV10 of the June 30, 2014 3P reserves was $25.9 billion, excluding the value of the Company's natural gas and oil hedges. This represents a 27% increase from the pre-tax PV10 of the year-end 2013 3P reserves. Including the value of Antero's hedges as of June 30, 2014 and using SEC prices, the pre-tax PV10 value of 3P reserves was $26.4 billion, a 24% increase over the pre-tax PV10 of the year-end 2013 3P reserves including Antero's hedges.

The table below summarizes Antero's estimated reserve volumes using SEC pricing, broken out by operating area.

   

Marcellus Shale

 

Utica Shale

   

Gas

Liquids

Total

Gross

 

Gas

Liquids

Total

Gross

   

(Bcf)

(MMBoe)

(Bcfe)

Locations

 

(Bcf)

(MMBoe)

(Bcfe)

Locations

Proved

 

7,454

179

8,530

990

 

406

22

537

78

Probable

 

13,486

581

16,969

2,193

 

2,844

78

3,315

445

Possible

 

824

15

913

175

 

2,313

42

2,568

353

Total 3P

 

21,764

775

26,412

3,358

 

5,563

143

6,419

876

3P PV10 ($Bn)

   

$19.4

       

$6.5

 

% Liquids (1)

   

18%

       

13%

 
                     
                     
   

Upper Devonian Shale

 

Combined Total

   

Gas

Liquids

Total

Gross

 

Gas

Liquids

Total

Gross

   

(Bcf)

(MMBoe)

(Bcfe)

Locations

 

(Bcf)

(MMBoe)

(Bcfe)

Locations

Proved

 

40

0

40

9

 

7,900

201

9,107

1,077

Probable

 

811

1

816

184

 

17,141

660

21,100

2,822

Possible

 

3,502

48

3,788

928

 

6,640

105

7,269

1,456

Total 3P

 

4,353

49

4,645

1,121

 

31,680

966

37,476

5,355

3P PV10 ($Bn) (2)

   

$0.0

       

$26.4

 

% Liquids (1)

   

6%

       

15%

 
                   

(1)

Represents liquids volumes as a % of total 3P volumes. Combined total liquids comprised of 880 million barrels of NGLs and 86 million barrels of oil.

(2)

Total PV10 includes $508 million value of Antero hedges at June 30, 2014 SEC pricing.

West Virginia and Pennsylvania Utica Shale Resource

Antero has Utica Shale dry gas rights on approximately 146,000 net acres of its West Virginia and Pennsylvania Marcellus acreage position and has identified 1,359 gross undeveloped locations with a total net resource of 9.5 Tcfe. Antero expects to drill and complete an exploratory Utica Shale dry gas well in the second half of 2014.

 

Non-GAAP Disclosure

 

Pre-tax PV10 value is a non-GAAP financial measure as defined by the SEC. Antero believes that the presentation of pre-tax PV10 value is relevant and useful to the Company's investors because it presents the discounted future net cash flows attributable to Antero's reserves prior to taking into account corporate future income taxes and the Company's current tax structure. Antero further believes investors and creditors use pre-tax PV10 value as a basis for comparison of the relative size and value of Antero's reserves as compared with other companies. With respect to PV10 calculated as of an interim date, it is not practical to calculate the taxes for the related interim period because GAAP does not provide for disclosure of standardized measure on an interim basis.

 

 

 

Antero Resources is an independent oil and natural gas company engaged in the acquisition, development and production of unconventional oil and liquids-rich natural gas properties primarily located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. Antero's website is located at www.anteroresources.com.

 

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.