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Monday, November 2, 2015

Third Quarter Results Rundown: Range Resources, Antero Resources, Williams Partners, Hess, Marathon, Seventy Seven Energy

Third quarter results are pouring in from drillers.  Here is a rundown of some of the points of interest from the various reports that have come out, along with links to view the entire releases if you are so inclined.

RANGE RESOURCES
Southern Marcellus Shale Division - 
Production for the third quarter averaged 999 net Mmcfe per day for the division, a 28% increase over the prior-year quarter. The division's third quarter net production included 635 Mmcf per day of gas, 51,967 barrels per day of NGLs and 8,676 barrels per day of condensate. During the third quarter, 23 wells were turned in line in southwest Pennsylvania. The division averaged completing 7.5 frac stages per day in the third quarter of 2015, compared to 5.2 stages in the third quarter of 2014, a 44% increase. 
During the third quarter, Range brought online a second Washington County Utica well, the Claysville Sportsman's Unit 9H. The well was completed with a lateral length of 5,228 feet, utilizing 32 stages. Both dry Utica wells are now producing under restricted rates into the newly constructed dry gas pipeline infrastructure. Based on our extensive reservoir modeling combined with production history for the first well, the Claysville Sportsman's Unit 11H, we estimate the EUR to be approximately 15 Bcf, or considering the 5,362 foot lateral, 2.8 Bcf per 1,000 feet of lateral. The second well is being produced utilizing choke management at 13 Mmcf per day designed to manage the near-wellbore pressure drawdown and was completed with a higher sand concentration. To date, the second well appears to have greater estimated reserves than the first well. In addition, a third Utica well is currently drilling from a nearby pad, and is expected to be completed in early 2016. Range holds approximately 400,000 net acres in southwest Pennsylvania, considered prospective for Utica dry gas. 
During the third quarter, Range brought online 22 Marcellus wells, four in the super-rich area, 10 in the wet gas area and eight in the dry gas area. The 14 wells brought online in the wet and super-rich areas had a 24-hour IP average of 16.1 Mmcfe per day (6.6 Mmcf of gas, 1,179 barrels of NGLs and 404 barrels of condensate), from an average lateral length of 5,360 feet, utilizing 27 stages. In the dry gas area, the 24-hour IP averaged 15.7 Mmcf per day, from an average lateral length of 5,293 feet, utilizing 28 stages. Most of the facilities that Range is currently constructing are designed to limit initial flow, resulting in flatter initial production while achieving lower facility cost.
ANTERO RESOURCES
Highlights for the Third Quarter of 2015: 
  • Net income of $534 million, or $1.93 per share, a 162% increase compared to the prior year quarter
  • Adjusted net income of $14 million, or $0.05 per share, an 80% decrease compared to the prior year quarter
  • Adjusted EBITDAX of $291 million, flat compared to the prior year quarter
  • On a per unit basis, cash production expense declined 18%, or $0.28 per Mcfe, and G&A expense declined 10%, or $0.03 per Mcfe, compared to the prior year quarter
  • Net daily gas equivalent production averaged 1,506 MMcfe/d, a 39% increase compared to the prior year quarter and a 1% increase compared to the prior quarter
  • Net daily liquids production, included in the above, averaged 52,250 Bbl/d, a 109% increase compared to the prior year quarter and a 14% increase compared to the prior quarter
  • Realized natural gas equivalent price including NGLs, oil and settled derivatives averaged $3.83 per Mcfe
  • Increased credit facility borrowing base by 12.5% to $4.5 billion from $4.0 billion
  • Closed drop down of water business and received $794 million of cash proceeds and approximately 11.0 million common units of Antero Midstream Partners

WILLIAMS PARTNERS
Access Midstream provides gathering, treating, and compression services to producers under long term, fee-based contracts in Pennsylvania, West Virginia, Ohio, Louisiana, Texas, Arkansas, Oklahoma and Kansas. Access Midstream also includes a non-operated 50 percent interest in the Delaware Basin gas gathering system in the Mid-Continent region and a 62 percent interest in Utica East Ohio Midstream LLC, a joint project to develop infrastructure for the gathering, processing and fractionation of natural gas and NGLs in the Utica Shale play in Eastern Ohio. Additionally, Access Midstream operates 100 percent of and owns an approximate average 45 percent interest in 11 natural gas gathering systems in the Marcellus Shale region. 
Access Midstream reported adjusted EBITDA of $351 million for third quarter 2015, compared with $322 million of adjusted EBITDA in third quarter 2014. The increase in adjusted EBITDA between years was driven by higher fee-based volumes, minimum volume commitments and the increased ownership interest in the Utica East Ohio Midstream joint venture. 
Year-to-date 2015, Access Midstream segment reported adjusted EBITDA of $1.01 billion, compared with $322 million previously reported for the same period last year. Williams Partners’ results for first and second quarter 2014 are on a pre-merger basis and exclude Access Midstream.
HESS
Utica (Onshore U.S.): On the Corporation’s joint venture acreage, 5 wells were drilled and net production averaged 28,000 boepd in the third quarter of 2015 compared with 11,000 boepd in the prior-year quarter. The Corporation completed the sale of an additional 13,000 dry gas exploration acres for a sale price of approximately $120 million, including a note in the amount of $37 million.
MARATHON
"We continue to implement our strategy of growing the more stable cash-flow segments of our business, and our sponsored master limited partnership MPLX LP continues to be an important part of that strategy," added Heminger. "We look forward to finalizing the combination of MPLX and MarkWest Energy Partners, L.P. later this year." 
Announced in mid-July, the combination will create one of the industry's largest master limited partnerships (MLPs). "Through this transaction, we will combine MarkWest's robust organic growth opportunities with MPC's large and growing $1.6 billion inventory of MLP-qualifying earnings before interest, taxes, depreciation and amortization," said Heminger. "This growth will also be supported by MPC's and MPLX's strong financial position, creating a large-cap, diversified MLP with an attractive distribution growth profile over an extended period of time. The strategic combination will drive substantial long-term value for the unitholders of both partnerships and MPC shareholders." 
Heminger noted that at the time MPLX announced its combination with MarkWest, the partnership provided distribution growth guidance through 2019. "MPLX remains committed to the growth profile provided in that guidance," Heminger said. "Given the significant change in MLP valuations and the resultant higher yield environment the sector has experienced recently, we now expect dropdown transactions or some form of MPC support as early as 2016." 
Consistent with the previous guidance of a 25 percent compound annual distribution growth rate for the combined entity through 2017, Heminger said MPLX expects distribution growth of 25 percent in 2016.
SEVENTY SEVEN ENERGY
SSE reported total revenues of $213.5 million for the third quarter of 2015, a 28% decrease compared to revenues of $295.1 million for the second quarter of 2015, and a 59% decrease compared to revenues of $526.8 million for the third quarter of 2014. SSE’s adjusted EBITDA was $41.1 million for the third quarter of 2015, compared to adjusted EBITDA of $44.3 million for the second quarter of 2015 and adjusted EBITDA of $129.0 million for the third quarter of 2014. 
Adjusted net loss, which excludes impairments, gains or losses on sales of property and equipment, severance-related costs, loss on sale of a business and exit costs, and gains on debt extinguishment, for the third quarter of 2015, was $47.6 million, or $0.93 per fully diluted share. Net loss for the third quarter of 2015 was $48.5 million, or $0.95 per fully diluted share, compared to net loss of $74.7 million, or $1.50 per fully diluted share, for the second quarter of 2015 and net loss of $1.8 million, or $0.04 per fully diluted share, for the third quarter of 2014.

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