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Antero Again Committing to Double-Digit Appalachian Production Growth

Antero Resources Corp. on Thursday said the “significant capital efficiencies” achieved in recent years are allowing it to target double-digit production growth through 2022 and slice $2.9 billion from a previous capital spending forecast for the period. 

The company reaffirmed plans targeting compound annual production growth of 20% over the next three years and introduced a goal of 15% production growth in both 2021 and 2022.

Antero’s natural gas liquids (NGL) exposure, firm transportation portfolio, hedge book and operational gains -- such as longer laterals and improved cycle times -- should help it do more with less, management said in an operations update released ahead of an analyst day in New York City on Thursday.

The Appalachian pure-play expects production to average 2.7 Bcfe/d this year, which would represent 20% year/year growth. Antero set a 2018 capital expenditures (capex) budget of $1.45 billion, including $1.3 billion for drilling and completion (D&C), $25 million for maintenance and $125 million for discretionary expenditures to continue blocking up a core position in Ohio and West Virginia. The capex plan is down slightly from the $1.5 billion budgeted in 2017, but year/year D&C spending would be the same, as it’s remained essentially flat for three consecutive years.

By its calculations, Antero became the nation’s leading NGL producer in 3Q2017. This year’s production guidance indicates it wants to retain the crown with a forecast of 23% year/year liquids growth to 130,000 b/d.

In keeping with a broader upstream sector theme as the New Year unfolds, Antero said the bulk of its capex would be funded with cash flow from operations. Any additional funds required beyond that would be footed by the company’s credit facility. CEO Paul Rady said “2018 will be a transformational year for the company as we move toward free cash flow generation, while maintaining our peer-leading high margin growth profile.”

The company plans to dedicate 80% of its D&C spending to the Marcellus Shale and the remainder to the Utica Shale. Plans this year call for five drilling rigs and four completion crews in the Marcellus, and for one rig and one completion crew in the Utica.

Antero plans to extend average Marcellus lateral lengths to 9,300 feet from last year’s target of 9,200 feet. In the Utica, the company wants to go longer, planning to extend laterals to 11,600 feet from last year’s average of 9,700 feet.

In all, Antero plans to complete up to 150 wells in each shale play, with up to 125 to be finished in the Marcellus.

During 4Q2017, Antero said it produced 2.347 Bcfe/d, up by 18% from the year-ago period and by 1% compared to 3Q2017. Fourth quarter production was negatively impacted by a delay in the start up of Rover Pipeline’s Phase 1B, it said.

Rover Phase 1B came on line last month. Ten of Antero’s Utica wells that were expected to be placed to sales in November were delayed as a result. Those wells are now flowing on restricted choke at 175 MMcfe/d, the company said.

Antero Midstream Partners LP (AM), meanwhile, said it has budgeted $650 million for low- and high-pressure gathering pipelines, compressor stations, processing and fractionation facilities, water delivery and the company’s new wastewater treatment infrastructure. AM’s 2018 budget is up from $525 million last year. 

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