From Denver-based Antero Resources on Thursday:
Antero Resources LLC Revises 2013 Capital Budget and Updates Hedge Position
Denver, Colorado, June 13, 2013—
Antero Resources LLC (Antero) today revised its 2013 capital budget and provided a natural gas hedging update.
2013 Capital Budget
Antero’s Board of Directors has approved an 18% increase in the company’s 2013 capital budget to $1.95 billion, including $1.2 billion for drilling and completion, $250 million for leasehold acquisitions and $500 million for midstream infrastructure including the construction of a water pipeline system and gas gathering pipelines and facilities. The $300 million capital budget increase is comprised of $150 million for midstream infrastructure, $100 million for additional leasehold and $50 million for drilling and completion. The capital budget excludes acquisitions. Antero’s capital expenditures totaled $548 million in the first quarter of 2013.
The incremental midstream capital will be used to fund the acceleration of our 80-mile water pipeline system in West Virginia and Ohio and to fund 25 miles of additional low-pressure and high-pressure gas gathering infrastructure in Doddridge County, West Virginia associated with two new third-party compressor stations. The incremental leasehold capital will be used to fund the acquisition of additional leasehold in the core of the Marcellus and Utica liquids-rich gas shale plays. The $50 million increase in drilling capital will be used to drill one additional horizontal Utica well, to lengthen planned 2013 Utica laterals as well as to fund the cost of higher working interests in Utica wells, driven by our successful leasing efforts.
All of the $1.2 billion drilling and completion budget is allocated to Antero-operated drilling, and substantially all of the drilling and completion budget is allocated to drilling liquids-rich gas acreage. Approximately 85% of the drilling and completion budget is allocated to the Marcellus Shale and the remaining 15% is allocated to the Utica Shale. During 2013, Antero plans to operate an average of 15 drilling rigs in the Marcellus Shale and two drilling rigs in the Utica Shale.
Antero plans to drill approximately 135 horizontal wells in the Marcellus Shale in 2013 as well as 21 horizontal wells in the Utica Shale. As of May 31, 2013, Antero drilled 51 wells in the Marcellus and six wells in the Utica Shale in 2013. The Company has 40 wells in the Marcellus and five wells in the Utica Shale that are in various stages of drilling, waiting on completion and completing. Antero is currently operating 15 drilling rigs in the Marcellus Shale and two drilling rigs in the Utica Shale.
Antero estimates that its water pipeline system will reduce completion costs by up to $600,000 per well. In addition to well cost savings, Antero expects the water pipeline system to deliver a reliable year-round water supply and to reduce water truck traffic. Antero estimates that over 30% of its planned 2013 well completions and 90% of its planned 2014 well completions will benefit from the new water pipeline infrastructure. The 2014 figure represents a 20% increase over the previous 75% estimate due to the acceleration of spending associated with the water pipeline system.
The 2013 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 potential future capital markets transactions.
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Rig Count Interactive Map by Baker Hughes, an energy services company.
Shale Sheet Fracking, a Youngstown Vindicator blog.
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Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
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