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Antero Resources Corp., a producer of natural gas, natural gas liquids and oil, expects 3.39–3.41 billion cubic feet equivalent per day (Bcfepd) in average output for 2023, the Denver city-based company said.
“We now expect production volumes to increase by approximately 225 MMcfe/d [million cubic feet equivalent a day], or 7 percent, from the 2022 exit rate to the 2023 exit rate”, chair, chief executive and president Paul Rady said in Antero’s press release for its third quarter results.
Antero cited strong well performance and capital efficiency gains in raising output guidance, though it expects oil and gas production in the USA to be weighed down by the recent slump in the number of active drilling rigs.
On the other hand it revised down the high end of its production expense forecast by $0.05 per thousand cubic feet equivalent (Mcfe) to $2.35-2.4 per Mcfe on lower fuel costs and ad valorem taxes.
Antero averaged 3.5 Bcfepd in net production during the August-September 2023 period, up nine percent from the same quarter in 2022, according to its performance report posted on its website. Liquids production surged 18 percent year-on-year, while natural gas production increased four percent by year-ago comparison.
Production and ad valorem tax expenses fell 0.22 percent year over year to $0.1 Mcfe.
Antero collected $17.81 million in net profit from the third quarter. Adjusted for non-recurring or extraordinary items, net earnings stood at $25.49 million. Earnings before deductions totaled $271.2 million.
“During the first nine months of 2023 both our drilling and completion teams set numerous Company records”, Rady noted.
“On the macro front, we see natural gas storage levels normalizing on the back of record Natural Gas Power Burn (natural gas fired electrical generation), strong LNG [liquefied natural gas] exports and U.S. natural gas exported through pipelines to Mexico”, the Antero boss added. “At the same time, we anticipate that U.S. production growth will be limited in the coming months following the dramatic decrease in drilling rigs”.
The USA rotary rig count decreased by 147 to 624 in the week to October 20 compared to the same week last year, Baker Hughes reported Friday.
The slowdown in drilling activity coincides with weaker natural gas prices for most of this year, compared with relatively high prices for most of last year, the USA Energy Information Administration (EIA) said in a report Wednesday
“When natural gas prices are low, producers often decrease their drilling activity, reducing the number of active drilling rigs deployed”, the EIA explained in the report posted on its website. “Producers may not respond immediately to decreases in natural gas prices; it typically takes four to six months for producers to respond to price changes. The extent to which producers respond to price changes is based on several factors, such as uncertainty around future prices, volatility in the market, price hedging, and current costs of materials, equipment, and labor”.
Rady said the weakening of USA oil and gas production would boost prices for forward natural gas supply contracts.
“Further, as we move closer to the startup of additional LNG export capacity over the next 12 months, we are seeing increasing premiums at our delivery points within the LNG corridor relative to NYMEX [New York Mercantile Exchange”, Rady said. “We are uniquely positioned to benefit from increasing NYMEX prices with approximately 75 percent of our natural gas being sold at Antero’s premium delivery points in the LNG corridor”.
Across its operations, Antero generated $183.38 million in net cash for the third quarter. It achieved negative free cash flow during the period as investing expenditure exceeded cash generation from operating activities. But Antero posted $90.76 billion in working capital as of the end of the period, while current liabilities stood at $1.46 billion.
To contact the author, email jov.onsat@rigzone.com
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