Antero ramping up activity in Marcellus, Utica

By Luke Geiver | February 07, 2017

In the Marcellus,

Antero Resources Corp., a Denver-based exploration and production company focused on the Marcellus and Utica shale plays, has increased its proven reserves of gas by 16 percent or 15.4 trillion cubic feet equivalent compared to 2015.

The company’s proved, probable and possible reserves also increased. The 46.4 Tcfe the company has secured represents a 25 percent increase over the previous year. The reserve increases result from ethane streams that the company said will remain in its natural gas stream “until such time as pricing supports full ethane recovery.” Ethane is commonly used in plastics production after it is stripped out of the gas stream. Antero mainly produces natural gas (61 percent), followed by natural gas liquids (37 percent) and oil (2 percent).

Advanced completions and longer laterals helped improve the type curves of Antero’s gas wells, according to the company and will help the company ramp-up production and activity this year.

This year, Antero intends to average seven drilling rigs in the Marcellus and Utica. Roughly 170 wells will be completed with another 30 left drilled but uncompleted. Of the company’s $1.5 billion 2017 budget, $1.3 billion will be spent on drilling and completion activity. The Marcellus shale will earn the majority—70 percent—of the funding.

In West Virginia, Antero will run four drilling rigs targeting 9,200 foot laterals at a cost of $0.84/1,000 ft lateral. From 2015 to 2016, Antero drastically improved its spud-to-rig-release days by 52 percent. In 2016, it took Antero 12 days to drill a well. The drilling improvements were linked to rotary steerable drilling and increased mud pump circulation rates.

In Ohio, three rigs will target the Utica formation with 9,700 foot horizontals. Six wells will be drilled per pad. As in the Marcellus, the company achieved a major improvement in the number of days needed to drill a well. Two years ago, a well required roughly 20-plus days, but in 2016, only 13 days were needed to drill a well. If work on a major gas gathering pipeline is completed in 2017, Antero expects to increase its activity in the Utica.

As lateral lengths increase for Antero, so too does the amount of proppant placed per well. In 2014, the company used roughly 1,800 pounds of proppant per lateral foot in the Marcellus, but in 2016, Antero place roughly 2,400 lbs/ft of proppant. The increase in proppant volumes has required more water per foot as well. In 2014, 32 barrels of water per foot were used to complete a well in the Marcellus, but in 2016, 46 barrels of water per foot were needed to move the increased proppant loads. The same trends happened in the Utica, although both levels of water and proppant are typically lower for Antero. For a 9,000 foot lateral in 2016 in the Marcellus, Antero earned a pre-tax rate of return of 78 percent. Development costs for the wells were $0.38/Mcfe and breakeven costs were $0.89/MMBtu.

According to Antero, the independent E&P has 4,100 economic locations and 2,400 locations delivering 20 percent rates of return at below $3.00/MMbtu. The drilling inventory would take 15 years to complete. Through 2018, the company has contracted 4 rigs, although it estimates it will need 4.5 rig crews this year, 6.5 next year and 9 in 2019. Through this year, five completion crews have been contracted, although Antero expects it will need more. Next year, Antero has 3 crews contracted, but it expects it will need more than double.