All CATEGORIES
☰ Menu
Ohio Utica Shale

Rice Energy running two rigs in Marcellus, one rig in Utica

By Bob Downing Published: March 13, 2014

From Rice Energy today:

Highlights

  • Fourth quarter 2013 net production of 154 MMcf/d, representing a 120% increase relative to the fourth quarter of 2012 and a 20% sequential increase relative to the third quarter of 2013
  • Full year 2013 production of 126 MMcf/d, representing a 166% increase relative to 2012 production
  • Fourth quarter and full year 2013 Adjusted EBITDAX(1) of $39.2 million and $107.8 million, respectively
  • As of March 1, 2014, firm transportation portfolio covers approximately 330,000 MMBtu/d in 2014, 654,000 MMBtu/d in 2015 and 761,000 MMBtu/d in 2016
  • Previously announced agreement to acquire gathering assets for $110 million de-risks Marcellus takeaway plan and provides optionality for production acceleration
  • Currently running two horizontal rigs in Marcellus Shale and one horizontal rig in Utica Shale with 40 gross operated wells (approximately 230,000 net horizontal feet) in various stages of development today
  • Marcellus Shale leasehold position of 43,351 net acres and Utica Shale leasehold position of 46,488 net acres as of December 31, 2013

Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "2013 was a transformative year for Rice Energy. Over the course of the year we brought online 22 Marcellus wells totaling approximately 138,500 lateral feet with an average 60-day gross initial production rate of 11.0 MMcf/d and since year end we have turned online four additional Marcellus wells that averaged 11.8 MMcf/d per well for the initial 30 days. These results are a testament to the quality of our acreage and the proficiency of our shale-specific team.

"We measure our success, however, by our ability to make meaningful strides in the context of a long-term plan to maximize the value potential of our acreage positions in the cores of the Marcellus and Utica Shales. To that end, we believe we have further improved our positioning for long-term success with several key transactions. Our initial public offering in January 2014 was the second largest U.S. independent E&P IPO in history, providing us increased liquidity to pursue production growth and the ability to invest in strategic midstream and leasehold opportunities in order to support long-term value creation. Additionally, over the course of the last year we have selectively added to our robust portfolio of firm transportation contracts that now stands at 330,000 MMBtu/d, 654,000 MMBtu/d and 761,000 MMBtu/d of firm transportation in 2014, 2015 and 2016, respectively, supporting our ability to grow production and diversify our pricing exposure to Gulf Coast, Midwest and Northeast markets. Lastly, in February 2014, we bolstered the support for near-term production growth by entering into an agreement to acquire midstream assets in eastern Washington and Greene Counties. We believe that these transactions collectively will strengthen our near-term execution and drive long-term value creation for shareholders."

2013 Results

 

For the Three
Months Ended
December 31, 2013

 

For the Year Ended
December 31, 2013

 

(Unaudited)

Production data (MMcf/d) – 100% natural gas

154

   

126

 

Average prices before effects of hedges per Mcf

$

3.90

   

$

3.89

 

Average prices after effects of hedges per Mcf(1)

$

4.25

   

$

4.01

 

Average costs per Mcf:

     

Lease operating

$

0.33

   

$

0.36

 

Gathering, compression and transportation

$

0.52

   

$

0.55

 

Production taxes and impact fees

$

0.08

   

$

0.06

 

General and administrative

$

0.58

   

$

0.44

 

Depletion, depreciation and amortization

$

1.34

   

$

1.57

 

 

Estimated proved reserves at December 31, 2013 – Natural gas (Bcf)(2):

     

Total estimated proved reserves

   

602

 

Total proved developed reserves

   

250

 

Proved developed producing reserves

   

177

 

Proved developed non-producing reserves

   

73

 

Proved undeveloped reserves

   

352

 

Percent developed reserves

   

42

%

PV-10 of proved reserves (in millions)(3)

   

$

709

 

 

(1)

The effect of hedges includes realized gains and losses on commodity derivative transactions.

(2)

Our estimated pro forma proved reserves and PV-10 were determined using a 12-month average price for natural gas consistent with requirements established by the SEC. The prices used in the reserve reports prepared by our independent petroleum engineers yield weighted average wellhead prices, which are based on index prices and adjusted for energy content, transportation fees and regional price differentials. The index price and the equivalent wellhead price as of December 31, 2013 were $3.67 per MMBtu and $3.90 per Mcf, respectively.

(3)

PV-10 is a non-GAAP financial measure and generally differs from standardized measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Our pro forma standardized measure was approximately $443.7 million as of December 31, 2013. Neither PV-10 nor standardized measure represents an estimate of the fair market value of our natural gas properties. We and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities.

Financial Results

Our production volumes were 14.2 Bcf for the quarter ended December 31, 2013, with natural gas price realizations, including the effect of hedges, of $4.25 per Mcf. For the quarter ended December 31, 2013, per unit cash production costs (lease operating; gathering, compression, and transportation; and production taxes and impact fees) were $0.93 per Mcf, depreciation, depletion and amortization expense was $19.0 million and loss on derivative instruments was $20.4 million. These factors contributed to a net loss of $8.7 million ($0.07 per diluted share) for the quarter ended December 31, 2013.

Our production volumes were 45.9 Bcf for the year ended December 31, 2013, with natural gas price realizations, including the effect of hedges, of $4.01 per Mcf. For the year ended December 31, 2013, per unit cash production costs were $0.97 per Mcf, depreciation, depletion and amortization expense was $71.9 million and restricted unit expense was $32.9 million. These factors contributed to a net loss of $16.5 million ($0.13 per diluted share) for the year ended December 31, 2013.

2013 and 2014 Operational Highlights

During the fourth quarter of 2013, we averaged 154 MMcf/d of net production, an increase of 120% over the prior year's comparable quarter and 20% over the third quarter of 2013. The sequential period production growth was the result of three pads consisting of seven new Rice-operated Marcellus wells being turned into sales in the fourth quarter of 2013. The following table provides certain operational data as of March 1, 2014 related to the seven wells added in the fourth quarter of 2013.

       

Aggregate Periodic Flow
Rates (MMcf/d)

0-90 Days

       

Wells per
Pad

 

Average Lateral Length (Feet)

     

D&C ($/Foot)

3

 

6,317

 

34.6

 

$

1,309

1

 

3,800

 

8.5

 

$

2,032

3

 

9,000

 

47.2

 

$

1,165

The following table provides certain operational data related to our proved developed producing Marcellus Shale wells as of December 31, 2013. We are the operator of each of these wells.

               

Periodic Flow Rates (MMcf/d) (1)

   

Year(s)

 

Wells
Turned
Into Sales

 

Average
Wells per Rig
Move

 

Average
Lateral Length
(Feet)

 

0-90

 

91-180

 

181-360

 

361-720

 

D&C
($/Foot) (2)

2010-2011

 

6

 

1.4

 

3,281

 

5.5

 

6

 

4.4

 

2.9

 

$

2,341

2012

 

9

 

2

 

5,731

 

9

 

10

 

6.8

 

N/A

 

$

1,609

2013

 

22

 

2.1

 

6,286

 

11.1

 

10.3

 

9.2

 

N/A

 

$

1,461

Total

 

37

 

1.9

 

5,664

 

9.7

 

9.3

 

6.3

 

2.9

 

$

1,640

 

(1)

Based on production data through March 1, 2014.

(2)

D&C costs are shown gross of our working interest's proportionate share.

Financial Position and Liquidity

Pro forma for our initial public offering, we had $311.9 million of total debt, $347.0 million of cash and cash equivalents on hand, and $317.1 million available and zero drawn under our revolving credit facility.

First Quarter 2014 Operational and Hedging Update

Despite the severe weather experienced in Ohio and Pennsylvania during the first two months of 2014, we have been able to maintain high levels of producing well uptime. In addition, we brought online a four-well Marcellus pad (average lateral length of 6,691 feet) in Washington County, Pennsylvania. These wells are producing in line with management expectations, with a combined 30-day average gross production rate of 47.1 MMcf/d (average 11.8 MMcf/d per well) and a combined day 30 spot production rate of 53.8 MMcf/d (average 13.4 MMcf/d per well) on a restricted-choke program.

We maintain a natural gas hedging program and have continued to add to our derivative positions. Please see the "Derivatives Information" table at the end of this press release for more detailed information about our derivative position as of March 1, 2014.

2014 Capital Budget and Guidance

Our updated capital budget for 2014 is expected to be $1,230 million, consisting of the following:

  • $430 million for drilling and completion in the Marcellus Shale;
  • $150 million for drilling and completion in the Utica Shale;
  • $385 million for leasehold acquisitions; and
  • $265 million for midstream infrastructure development.

This represents a 96% increase over our $629 million 2013 capital budget. The 2014 updated capital budget excludes $100 million of cash paid with respect to the purchase of the remaining interests in our Marcellus joint venture and approximately $110 million expected to be paid for our previously-announced agreement to acquire midstream assets.

Of the $580 million 2014 drilling and completion budget, approximately 85% is related to Rice Energy-operated drilling and approximately 74% is allocated to the Marcellus Shale. Furthermore, approximately $200 million of the drilling and completion budget is for wells that Rice plans to begin producing in 2015. We anticipate running two horizontal rigs in the Marcellus Shale and one horizontal rig in the Utica Shale throughout 2014.

Assuming the execution of the $1,230 million capital plan discussed above, we anticipate that 2014 average net daily production will be between 260 MMcf/d and 310 MMcf/d (100% natural gas), representing a 106% to 146% increase over 2013 average net daily production. This increase is expected to be driven primarily by increasing development of our core Marcellus Shale acreage in southwestern Pennsylvania. Furthermore, in 2014, we anticipate that we will spud 43 net and initially produce 37 net horizontal Marcellus Shale wells, and that we will spud 13 net and initially produce 7 net horizontal Utica Shale wells. The production guidance presented above is based on the key assumptions in the table below.

 

2014 Guidance

 

Low

 

High

Forecasted average daily production (MMcf/d)

260

   

310

 

Forecasted natural gas as a percentage of production

100%

   

Heat content (Btu/Scf)

1,050

   

Average costs per Mcf:

     

Lease operating

$

(0.40)

   

$

(0.35)

 

Gathering, compression and transportation

$

(0.55)

   

$

(0.45)

 

Production taxes and impact fees

$

(0.03)

   

$

(0.02)

 

Cash general and administrative (in millions)

$

40.0

   

$

35.0

 

Conference Call

Rice Energy will host a conference call on March 13, 2014 at 10 a.m. ET (9 a.m. CT) to discuss fourth quarter and full year 2013 earnings and operational results and to provide 2014 guidance. Interested parties are invited to participate on the call by dialing (888) 323-9686 (Conference ID: RICE ENERGY) at least 15 minutes prior to the start of the call. A replay of the call will be available on the Rice Energy website for a fourteen-day period following the call.

About Rice Energy

Rice Energy Inc. is an independent natural gas and oil company engaged in the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin. For more information, please visit our website at www.riceenergy.com.

Print
Add This

SUBSCRIBE VIA RSS

OHIO.COM VIDEOS

See the most recent drilling report and an injection wells map From NewsOutlet.org
Prev Next

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.