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Spending, Rigs Down, But Antero Plans Busy 2016

While it plans to cut its budget and reduce its rig count this year, Appalachian pure-play operator Antero Resources Corp. still has plans for a robust 2016, calling for $1.4 billion in capital expenditures to complete 110 horizontal shale wells in the Marcellus and Utica shales.

The strategy would easily keep Antero one of the basin's most active operators. Its $1.4 billion budget, which includes $1.3 billion for drilling and completion, is 23% lower than the $1.8 billion it spent last year. But production is still forecasted to grow 15% from 1.493 Bcfe/d in 2015 to 1.715 Bcfe/d this year (see Shale Daily, Jan. 14). Liquids production is also projected to grow 24% from 2015 levels to 60,000 b/d.

"We have structured our 2016 development program to give us significant operational flexibility to react to significant changes in commodity prices -- up or down -- throughout the year," said CEO Paul Rady. "For example, we have the ability to reduce our current $1.3 billion development plan as six of our rig contracts expire over the course of the year. Conversely, to the extent commodity prices improve from current levels, we are well positioned to accelerate activity as a result of our sizable inventory of drilled but uncompleted wells."

The company ran 14 rigs last year but entered 2016 with 10 drilling rigs. It plans to reduce its contracted fleet to a total of seven rigs throughout the year. Five of those rigs would run in the Marcellus of West Virginia, Antero said, where it plans to complete 80 wells. In the Ohio Utica, Antero plans to run two rigs and complete 30 wells. More activity in the Marcellus, the company added, is related to firm transportation constraints in the Utica.

The company also intends to exit the year with 70 drilled but uncompleted wells, 20 of which would be carried over from 2015.

Rady said the company has "sold essentially all of" its forecasted 2016 and 2017 production forward through hedging at fixed prices. It also anticipates positive natural gas basis differentials to the New York Mercantile Exchange benchmark price this year. That estimate relates to the completion of the Stonewall gathering pipeline and the early termination of unfavorable firm sales contracts, the company said.

Antero said the stonewall system allows it to shift volumes from Dominion South and Texas Eastern Transmission Co. M2 to the more favorable Columbia Gas Transmission and Gulf Coast markets. The company reports year-end financial results on Feb. 24.

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