PDC Energy Inc. plans to defer its Utica Shale activity this year in favor of the Permian Basin and Colorado's Wattenberg field, the company said.
The company paid $1.5 billion last year to acquire two privately held operators and 57,000 net acres in the Delaware sub-basin of West Texas. For years now, it has been focused on a wetter production mix, and while the Utica has been a key part of its portfolio, the company is considering "various strategic options" for its 65,000 net acres in Southeast Ohio.
CEO Bart Brookman said the company spent 2016 positioning itself for "growth in two premier basins," referring to the Wattenberg and Delaware. "In 2017, we have an intense operational and technical focus on unlocking the tremendous value of our Delaware Basin asset," he said. "The ongoing, reliable growth of the Wattenberg continues to serve as the foundation of the company."
PDC has budgeted $725-775 million this year. Of that just $18 million was earmarked for the Utica, where the company had planned to turn to sales two wells in Guernsey County, OH. But now PDC will put those plans on hold as it decides what to do with the Utica asset and instead shift the funds to the Delaware, where the company has already added a third rig well before the fourth quarter when it originally intended to do so.
PDC produced 6.4 million boe in the fourth quarter, compared to 4.8 million boe in the year-ago period. Quarterly production got a boost from solid results in the Wattenberg and the addition of the Delaware assets late last year. The company now holds 61,500 net acres in Texas and 96,000 acres in its core Wattenberg. For the full year, PDC produced 22.2 million boe, compared to 15.4 million boe in 2015.
The company is guiding for 82,000-90,400 boe/d of production this year, with up to a 45% liquids mix. Brookman said that ratio wouldn't go higher on the third Delaware rig because it's not expected to have an effect until late in the year.
The company turned to sales its first operated Delaware well, the Argentine, in December. Management said the 4,600 foot lateral Wolfcamp A well showed encouraging results with a 30-day initial peak production rate of 1,185 boe/d.
PDC reported a fourth quarter net loss of $55.6 million (minus 94 cents/share) on revenue of $108.1 million, compared to net income of $3 million (7 cents) on revenue of $168.6 million in the year-ago period. For the full year, PDC reported a net loss of $245.9 million (minus $5.01) on revenue of $382.9 million, compared to a net loss of $68.3 million (minus $1.74) on revenue of $595.3 million in 2015.