Rice Energy Inc. plans to double down this year in its narrow Utica Shale position, where its only three wells at the end of 2014 were each producing at a stabilized rate of about 16 MMcf/d.

The Appalachian pure-play operator, which went public early last year (see Shale Daily, Jan. 31, 2014), set out to prove its Ohio Utica acreage in 2014 and CEO Daniel J. Rice said the results have “exceeded our expectations.” Those assets are primarily concentrated in just four Belmont County townships, where the company also has an area of mutual interest with Gulfport Energy Corp.

“Because of the strong production profile of our Utica wells and our confidence in its repeatability across our 50,000 acre position, we expect rapid growth in 2015 and beyond,” he said. “Geologically, this shale is very, very homogenous, and there’s no geohazard, so it’s very quiet. There’s not going to be any anomalies that could throw this thing off from one well to the next.

“I think our confidence interval around just the potential consistency and results across our position is probably better here than it it is in the Marcellus.”

The Utica is key for Rice Energy; it’s only other assets are located in Washington and Greene counties, PA, where it has focused heavily on the Marcellus Shale in recent years. The company has announced a plan to cut its drilling and completion budget by 40% to $890 million. Rice still plans to drill 39 Marcellus wells and turn 26 of those to sales this year. In the Utica, it plans to drill 12 wells and turn seven to sales.

It had drilled and completed just three wells in the Utica by the end of last year. The Bigfoot 9H, which had an initial production rate of nearly 42 MMcf/d when it came online in June, had produced 3.7 Bcfe through February (seeShale Daily, June 2, 2014). The company’s other two Utica wells, the Blue Thunder 10H and 12H, have each been online since September, producing a combined 2.5 Bcfe through last month.

The company has since turned inline two more Utica wells this quarter that are currently producing 16 MMcf/d. Rice said the company has also spud its first Utica well in Greene County, PA.

“Based on competitor results and geologic control we have in the area, we think the reservoir quality is similar to what we have in Belmont County,” he said of expectations for the Greene County well. “If all goes according to plan, we anticipate first production sometime during the fourth quarter of this year.

“While we expect the well to be pretty expensive, it’s going to be pretty exciting to see what we can do with this formation at these depths and pressures,” he added. “And the best time to test an expensive deep well like this one is in the [lower] cost service environment like the one we’re in now.”

The Utica wells helped lift Rice’s production last year. It produced 274 MMcfe/d, compared to 126 MMcfe/d in 2013 (see Shale Daily, March 13, 2014). Fourth quarter production increased to 398 MMcfe/d from 154 MMcfe/d in the year-ago period.

The company’s acreage position also increased from 93,000 net acres to 141,000 net acres last year, primarily with a 22,000 net acre acquisition in Greene County from Chesapeake Energy Corp. (see Shale Daily, July 7, 2014). Although management said they would be cautious this year about adding assets, they said it could be easier to consolidate their position in both Ohio and Pennsylvania given the commodity price environment.

“On the land acquisition side, prices have come down. We’re in this period where landowners are still getting used to the lower price environment, so you’ve seen a lag in the response from them to accept some terms,” said COO Toby Rice. “For sure, leasing activity has slowed down, while we’re still active in picking-up core pieces of acreage and being successful, we’re not seeing the level of competition that we did even six to 12 months ago.”

CFO Grayson Lisenby also said “despite the flurry” of recent equity offerings from exploration and production companies facing lower commodity prices, Rice would not be issuing any stock this year. He said the company is “very comfortable” with its $1 billion liquidity position and confident that it will be enough to fund its budget this year.

Including hedges, the company’s average realized natural gas price dropped in the fourth quarter to $3.06/Mcf, compared to $4.25/Mcf during 4Q2013. Rice has 84% of its forecasted 2015 production hedged at an average of $3.60 MMBtu. Even with lower gas prices, Lisenby said the company will continue to add hedges throughout the year to protect it heading into 2016. The goal, he said, is to exit the year with at least 50% of its production hedged.

The company added more firm transportation commitments last year that once in-service will bring its portfolio to 1.2 Bcf/d over the next several years. For now, though, the company will not add any more firm transportation, management said.

Rice reported fourth quarter revenue of $129.4 million, up from $27.9 million in 4Q2013. Full-year revenue was $391 million, compared to $88.7 million in 2013.

The company reported fourth quarter net income of $103.8 million (76 cents/share), compared to a net loss of $15 million (minus 17 cents) in the year ago period. Full year net income increased to $218.5 million ($1.70) from a net loss of $35.8 million (minus 44 cents) in 2013.