Two of Appalachia’s largest producers have announced plans to cut spending through the end of the year and are guiding for even tighter budgets in 2020 as the outlook for natural gas prices remains grim.
Antero Resources Corp. said last week that its well cost reduction initiatives helped push drilling and completion (D&C) spending in the third quarter to just $290 million, or the lowest since the company went public in 2013. That helped drive down the company’s expectations for full year D&C spending by 4% to a range of $1.3-1.375 billion.
The company also increased full-year production guidance to the top end of its previously announced range, or 3.250 Bcfe/d on stronger well performance.
Antero anticipates spending even less next year and released a preliminary 2020 budget of $1.20-1.25 billion for D&C and land expenses. The company expects to complete up to 120 wells with an average lateral length of 12,100 feet next year and grow production by 8-10%.
Antero managed to release 250 MMcf/d of firm transportation capacity to third parties for the September 2019 to March 2020 timeframe for savings of $15 million.
“These capacity releases are expected to result in lower net marketing expenses than expected in 2020,” said CEO Paul Rady. “General and administrative costs per Mcfe have also declined by 25% since the first half of this year and we are targeting a further 10% reduction by mid-2020.”
Antero produced 3.367 Bcfe/d in the third quarter, up 24% from the year-ago period. Average realized prices declined to $3.13/Mcfe from $3.98/Mcfe over the same time.
The company reported a net loss of $879 million ($2.86/share), compared to a net loss of $154 million (49 cents) in the year-ago period. The loss was mainly related to a $1 billion non-cash impairment charge related to Utica Shale properties that was tied to lower future commodity prices.
CNX Resources Corp. is also slashing spending for the remainder of the year to $1.200-1.245 billion from its previous range of $1.205-1.275 billion. But production guidance has been increased to a range of 530-540 Bcfe compared to the previous range of 510-530 Bcfe.
The company is also planning to slash spending significantly next year to $570-650 million. It is guiding for 2020 production of 535-565 Bcfe.
“These changes to our 2019 and 2020 guidance reflect our ability to make decisions in a fast-moving world,” said CEO Nicholas Deluliis. “Commodity prices dropped, which meant our capital allocation options adjusted and our decision making changed with them...With the 2020 production guidance change, we simply built inventory and an easier path for 2021 and beyond.”
CNX produced 128 Bcfe in the third quarter, up 8% from the year-ago period. Average realized prices were $2.51/Mcfe, compared to $2.92/Mcfe at the same time last year.
The company reported net income of $116 million (61 cents/share), compared to a net income of $125 million (59 cents) in the year-ago quarter.