Antero's initial capital budget for 2016 includes $1.3 billion for drilling and completion and $100 million for core leasehold acreage acquisitions and extensions. Antero's 2016 capital budget excludes Antero Midstream's(NYSE: AM) $435 million capital budget relating to low and high pressure gathering pipelines, compressor stations, fresh water pipelines and advanced wastewater treatment infrastructure. Antero Midstreamannounced its 2016 capital budget and guidance today in a separate news release, which can be found at www.anteromidstream.com.
The $1.3 billion drilling and completion budget represents a 21% reduction in drilling and completion capital as compared to 2015. The budget decrease is primarily driven by continuing capital efficiency improvements, a reduction in rig count and the deferral and carryover of a total of 70 Marcellus and Ohio Utica well completions into 2017. Twenty of the deferred completions are Marcellus wells located on Antero acreage in West Virginia that are dedicated to a third-party midstream provider that were carried over from 2015 and will now be carried over into 2017.
Approximately 75% of the drilling and completion budget for 2016 is allocated to the Marcellus Shale and the remaining 25% is allocated to the Ohio Utica Shale. Antero plans to operate an average of five drilling rigs in the Marcellus Shale in West Virginia and two drilling rigs in the Utica Shale in Ohio. In the Marcellus, Antero has budgeted the completion of 21 wells in its Highly-Rich Gas / Condensate regime and 59 wells in its Highly-Rich Gas regime, or a total of 80 wells. In the Ohio Utica, Antero has budgeted the completion of 11 wells in itsHighly-Rich Gas regime and 19 wells in its Rich Gas regime, or a total of 30 wells. The relative shift in activity in 2016 from the Ohio Utica to the Marcellus is primarily driven by firm transportation constraints in the Ohio Utica, as the Company projects utilizing all of its 600,000 MMBtu/d of Rockies Express capacity during the year. Beyond Antero's Rockies Express capacity to Chicago, the Company's next available outlet would be Tetco M2, a current unfavorably priced index, until the Rover Pipeline project is completed. For this reason, Antero plans to shift some activity from the Ohio Utica to the Marcellus Shale in 2016. The Company will gain an additional 800,000 MMBtu/d of takeaway capacity from the Ohio Utica upon the completion of the Rover Pipeline, which is now anticipated to be placed into service in mid-2017. The Rover Pipeline will enable Antero to transport incremental Ohio Utica gas production in the second half of 2017 and beyond to the favorably priced Chicagoand Gulf Coast markets.
Antero entered 2016 running 10 drilling rigs, but is forecasting a step down throughout the year to average a total of seven rigs for the year. As six drilling contracts expire over the course of the year, Antero has the flexibility to reduce its 2016 capital budget further should market conditions deteriorate.Read the entire release by clicking here.
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