Antero Resources today released its 2012 results. Those financial statements are included in Antero Resources LLC’s Annual Report on Form10-K for the year ended December 31, 2012, which has been filed with the
Securities and Exchange Commission. Recent Developments On January 30, 2013, Antero announced the private placement of $225 million of additional 6% senior unsecured notes due 2020 priced at 103% of par equating to a yield to call of 5.391%.
Antero received net proceeds of $228 million from the offering, which were used to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. Pro forma for this issuance, at year-end 2012 Antero would have had a fully undrawn credit facility and $43 million in letters of credit outstanding resulting in $657 million of readily available liquidity based on lender commitments and $1.2 billion of unused borrowing base
On January 28, 2013, Antero announced that proved reserves at year-end 2012 were 4.9 Tcfe, a 73% increase compared to proved reserves at December 31, 2011, pro forma for the 2012 divestment of Antero’s Arkoma Basin and Piceance Basin properties. Proved, probable and possible reserves (3P) increased by 94% to 26.1 Tcfe. The 3P reserves were comprised of 21.2 Tcfe in the Marcellus Shale and 5.0 Tcfe in the Utica Shale. Antero’s 3P liquids reserves increased by 170% to 1.6 billion barrels at December 31, 2012, including ethane and other natural gas liquids (NGLs).
All-in finding and development costs for proved reserve additions from all sources including drill bit, acquisitions, leasehold additions and all price and performance revisions averaged $0.64 per Mcfe in 2012
while replacing 2,243% of production from drilling. Antero’s 3-year all-in finding and development costs for proved reservesfrom all sourcesthrough 2012 averaged $0.51 per Mcfe.
Also on January 28, 2013, Antero announced a $1.65 billion capital budget for 2013 including $1.15 billion for drilling and completion, $350 million for the construction of gathering pipelines and facilities in the Appalachian Basin (including $150 million for water-handling infrastructure, primarily in the Marcellus Shale) and $150 million for leasehold. Approximately 74% of the capital budget is allocated to the Marcellus Shale and the remaining 26% is allocated to the Utica Shale.
All operational figures are as of the date of the release unless otherwise noted. Antero’s current gross operated production is 487 MMcf/d and estimated net production is 390 MMcfe/d, including 2,500 Bbl/d of NGLs and 175 Bbl/d of oil. Virtually all of the Company’s production is from 135 Antero-operated horizontal Marcellus wells.
Antero has an additional estimated 115 MMcfe/d of net production in the Marcellus and Utica Shales associated with seven new horizontal wells that are shut-in waiting on infrastructure and a number of producing wells that are constrained and waiting on pipeline, compression or processing facilities. During the fourth quarter of 2012, Antero completed 13 gross operated wells (13 net wells) and currently has 50 gross operated wells (48 net wells) in various stages of drilling, completion or waiting on completion.
Marcellus Shale — Antero is operating 13 drilling rigs in the southwestern core of the Marcellus Shale play, including two shallow rigs, all of which are drilling in northern West Virginia. The Company plans to add an additional big drilling rig in May 2013. Antero has 485 MMcf/d of gross operated production in the play virtually all of which is coming from 135 horizontal Marcellus Shale wells, resulting in 389 MMcf/d of net production. The 389 MMcfe/d net is comprised of approximately 374 MMcf/d of tailgate gas, 2,500 Bbl/d of NGLs and 100 Bbl/d of condensate. Antero has 31 horizontal wells either in the process of completing or waiting on completion and has three fully-dedicated frac crews currently working in West Virginia along with several spot frac crews as needed.
The 135 horizontal Marcellus wells that Antero has completed and placed on line to date have an average 24-hour peak rate of 13.8 MMcf/d, an average EUR of 10.5 Bcfe assuming ethane rejection and an average lateral length of 6,956 feet. Antero previously announced the completion of the MarkWest Energy Partners, L.P. (MarkWest) owned and operated Sherwood I cryogenic processing plant located in Doddridge County, West Virginia. Sherwood I is currently operating in ethane rejection mode and recovering approximately 3,000 Bbl/d gross of propane and heavier products. Antero has committed to a second 200 MMcf/d gas processing plant, Sherwood II, which is under construction and islocated on the same site as Sherwood I. Sherwood II is expected to go in service in the second quarter of 2013. Antero has also committed to a third 200 MMcf/d gas processing plant, Sherwood III, which is expected to go on line early in the fourth quarter of 2013, giving Antero access to a total of 600 MMcf/d of Marcellus gas processing capacity by the end of 2013.
Antero recently completed compression facilities located in Ritchie County that add 50 MMcf/d of compression capacity and will connect our first Ritchie County wells to the Sherwood processing facilities. Additionally, Antero has signed agreements with various third parties to provide compression in central and eastern Doddridge County that will add a combined total of 360 MMcf/d of incremental capacity during the course of 2013. This additional capacity is expected to relieve an estimated 90 MMcfe/d of currently constrained Marcellus production by the end of third quarter 2013.
Antero has completed the White Oak lateral, a 20-mile high pressure pipeline, which will transport rich gas production from western Doddridge and eastern Ritchie Counties to the Sherwood processing facilities. Additionally, a high pressure lateral located in eastern Doddridge County was completed by a third party allowing Antero to transport rich gas production from western Harrison County to the Sherwood processing facilities.
The Antero-built Canton low pressure lateral is in service and currently delivering rich gas to Sherwood I. Antero is planning the construction of a low pressure gathering line connecting third party compression located in central Doddridge County to the Sherwood processing facilitiesto allow for incremental rich gas gathering capacity. This low pressure pipeline, expected to go into service in the fourth quarter of 2013, is ultimately expected to be converted to a high pressure gathering line serving central Doddridge County.
Additionally, Antero is constructing a 16” low pressure gathering line in Ritchie and Tyler Counties to further expand our gathering infrastructure into higher-BTU areas to allow for delivery of highly rich gas to the Sherwood processing facility. This line is expected to go in service by the third quarter of 2013. Antero has 305,000 net acres in the Marcellus Shale play of which only 20% was associated with proved reserves at year-end 2012. Approximately 80% of Antero’s Marcellus leasehold contains processable rich gas.
Utica Shale — Antero is currently operating two drilling rigs in the rich gas/condensate window of the southern core of the Utica Shale play in Ohio. In December 2012, Antero placed its first well on line which is currently producing to sales and has an additional 25 MMcfe/d of net production that is shut-in waiting on infrastructure associated with the two remaining wells completed during2012. In total, Antero has completed three horizontal wells in the Utica play, and has drilled an additional four wells, three of which5 are currently being completed. The three wells that are currently being completed are drilled on one pad and are the Company’s first increased density pilot in the Utica.
Antero has an agreement with MarkWest to provide processing, fractionation and NGL marketing services in the liquids rich/condensate window of the Utica Shale play. As a result, MarkWest is currently constructing the Seneca processing complex in Noble County, Ohio to process Antero’s rich gas production. Seneca I, a 200 MMcf/d cryogenic gas processing facility, is expected to begin operations by early fourth quarter 2013. The processing agreement provides for the construction of an additional 200 MMcf/d facility, Seneca II, which is expected to be installed in the fourth quarter 2013.
Additionally, MarkWest is building a high pressure lateral connecting the Seneca complex to its existing Cadiz processing complex in Harrison County, Ohio in order to provide Antero preferred access to 185 MMcf/d of combined refrigeration and cryogenic natural gas processing capacity. This lateral is expected to be on line by the end of the second quarter 2013.
Antero is an anchor producer and will have up to 50 MMcf/d of preferred processing capacity at Cadiz as well as sufficient interruptible overflow capacity until Seneca I becomes operational. Antero plans to place several additional wells on line late in the second quarter of 2013 when the Cadiz
processing capacity becomes available. Antero is in the process of laying both low and high pressure gathering pipeline to transport its initial Utica production to connect with the MarkWest high pressure lateral to the Cadiz processing complex and eventually to the Seneca processing complex.
Antero has signed a compression and condensate stabilization agreement with a third party to provide and operate two compressor stations in Noble and Monroe Counties with a combined capacity of 200 MMcf/d as well as two condensate stabilization facilities with a combined capacity of 7,000 Bbl/d, all of which are fully dedicated to Antero. The compressor stations and condensate stabilization facilities are expected to start up late in the third quarter of 2013. Antero has assembled over 88,000 net acres of leasehold in the southern core of the Utica Shale play of eastern Ohio. Almost all of the acreage is believed to be located in the rich gas/condensate window.
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