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Antero Lifts Reserves Significantly, Expects Numbers to Climb Higher

Antero Resources Corp. continues to grow its holdings in the Appalachian Basin, reinforcing its position as one of the region's most active drillers by reporting on Tuesday a 78% increase in proved reserves and a 62% increase in proved, probable and possible (3P) reserves at the end of last year.

The Marcellus Shale accounted for 95% of the company's proved reserves, with the Utica Shale accounting for the rest. Probable and possible reserves were boosted mainly by the acquisition of 51,000 net acres in northern West Virginia's Marcellus Shale and a 28,000 net acre acquisition in the Utica Shale of southern Ohio. The sharp increase in reserves meant the company replaced an astounding 1,857% of estimated production in 2013.

Antero has yet to report 4Q2013 earnings, but after having gone public only in October (see Daily GPI, Oct. 11, 2013), the company continues to surprise, reporting that production more than doubled year/year in the third quarter and issuing guidance for this year at 75-85% above its totals for 2013 (see Shale Daily, Nov. 8, 2013; Jan. 30).

The company said Tuesday that proved reserves spiked from 4.2 Tcfe at year-end 2012 to 7.6 Tcfe at the end of last year. Antero said 88% of its proved reserves by volume were natural gas; 11% were natural gas liquids (NGL); and 1% was oil. Just 23% of Antero's 450,000 net acres in the Marcellus and Utica were classified as proved, the company said.

In addition to its recent acreage acquisitions in both plays and a strong core acreage position, the company said last month that it had transitioned to completing nearly all of its wells in the Marcellus with shorter stage lengths (SSL). Antero said Tuesday it recently decided to complete "virtually all its wells" with this technology and as a result of the benefits, and the success of other operators nearby, it expects "that a substantial portion of its Marcellus and Utica Shale acreage will be added to proved reserves over time as more wells are drilled."

Antero added 3.7 Tcfe of proved reserves last year, primarily in the Marcellus Shale. NGLs and oil increased by 98 million bbl and 7 million bbl, respectively, due to a program targeting liquids-rich locations in both the Marcellus and Utica. Proved developed reserves increased 117% from the end of 2012 to more than 2 Tcfe at the end of last year. The company said it added 113 Marcellus wells to proved developed reserves in 2013.

Those wells had an average estimated ultimate recovery (EUR) of 10.6 Bcfe and an average lateral length of 7,308 feet. Antero placed on line 26 Marcellus wells using SSL completions. As a result, Antero has increased its EUR per 1,000 feet of lateral by 18% to 1.73 Bcf for 1,768 of its 3,067 SSL undeveloped Marcellus locations.

In the Utica, the company added 11 wells to its proved developed reserves, with two in the rich gas, four in the highly-rich gas and five in the highly-rich condensate windows of its acreage there. Antero said wells located in the rich gas and highly-rich gas windows had an average EUR, normalized to a 7,000 foot lateral, of 18.8 Bcfe and 20.5 Bcfe, respectively. Wells in the condensate window, though, had an EUR of 11.3 Bcfe, or 18% less than previous estimates due to what the company said was a lower production performance at those wells last year.

The company's 3P reserves, or those it believes it has access to, increased 62% to 35 Tcfe. They consisted of 29.6 Tcf of natural gas, 811 million bbl of NGLs and 91 million bbl of oil.

Including hedges, Antero said the pre-tax value of its proved reserves at year-end 2013 was $7 billion, or 133% higher than at the end of 2012. Antero's reserve life based on estimated 2013 production is approximately 40 years.

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