CANONSBURG, Pa., Feb. 22, 2017 /PRNewswire/ - Rice Energy
Inc. (NYSE: RICE) ("Rice Energy") today announced its 2017
capital budget and guidance. Estimated capital investments and
financial guidance include:
- $1,035 billion budget for
drilling and completion activity in the Marcellus and Utica dry gas cores
- Planned Marcellus wells to average 8,500 feet, cost
$7.4 million to develop ($875 per lateral foot), yield 18.4 Bcf EUR (2.16
Bcf/1000') and expected to generate 100% IRRs at strip
pricing(1)
- Planned Utica laterals to
average 10,500 feet (12% longer than 2016), cost $13.0 million to develop ($1,235 per lateral foot), yield 24.5 Bcf EUR
(2.33 Bcf/1000') and expected to generate 80% IRRs at strip
pricing(1)
- $225 million land budget to
secure core acreage in Rice's existing focus areas
- Forecasted 2017 net production of 1,290 - 1,355 MMcfe/d, a 59%
increase from 2016(2)
- Approximately 90% of estimated 2017 production hedged at a
weighted average NYMEX floor price of $3.24 per MMBtu(2)
- Rice Midstream Holdings LLC ("RMH") capital budget of
$315 million
- Forecasted RMH gathering throughput of 1,125 - 1,185 MDth/d, a
59% - 67% increase over 2016 throughput
Commenting on the 2017 capital budget and guidance, Daniel J. Rice IV, Chief Executive Officer,
said, "Our 2017 capital budget reflects our unwavering commitment
to our long-term value strategy of allocating 100% of our E&P
capital to high-returning, core acreage in a manner that maximizes
risk-adjusted corporate returns, protects our balance sheet and
enhances our retained midstream value. This long-term value
approach has generated unparalleled growth opportunities for Rice
Energy, and our recent acquisition of Vantage Energy fortifies this
strategy and galvanizes our mission to become the lowest cost,
highest growth energy company in the US."
- Strip pricing as of February 10, 2017 and
returns based on current D&C costs per lateral foot and lateral
length.
- Based on the midpoint of
guidance.
|
2017 Capital Budget
We plan to allocate our capital investments according to the
table below:
2017 E&P
Capital Budget ($ in millions)(1)
|
|
|
Operated
Marcellus
|
$
|
585
|
|
Operated Ohio
Utica
|
$
|
300
|
|
Non-operated Ohio
Utica
|
$
|
150
|
|
Total Drilling
& Completion
|
$
|
1,035
|
|
Land(2)
|
$
|
225
|
|
Total
E&P
|
$
|
1,260
|
|
|
|
|
Rice Midstream
Holdings LLC(3)
|
$
|
315
|
|
|
- Excludes Rice Midstream Partners 2017
capital budget.
- Excluding acquisitions.
- Reflects our 75% ownership in Strike
Force.
|
Exploration and Production
Our 2017 drilling and completion capital budget is $1,035 million. In the Marcellus, we plan to spud
75 net wells with an average lateral length of 8,500 feet and turn
to sales 55 net wells with an average lateral length of 8,000 feet.
We expect our Marcellus well costs to average $875 per lateral foot in 2017, which represents
an increase of approximately $75 per
lateral foot above 2016 levels due to anticipated service cost
escalation partially offset by increased efficiency gains. On our
operated Utica acreage, we plan to
spud 20 net wells with an average lateral length of 10,500 feet and
place online 20 net wells with an average lateral length of 9,000
feet. We expect our operated Utica
well costs to average $1,235 per
lateral foot in 2017, which represents an increase of approximately
$30 per lateral foot above 2016
levels. In addition, on a non-operated basis, we expect to
participate in 10 net Utica wells
drilled and 5 net Utica wells
turned to sales with an average lateral length of 8,500 feet, all
of which are located in Belmont County,
Ohio and operated by Gulfport Energy Corporation (NASDAQ:
GPOR) ("Gulfport"). Throughout 2017, we plan to operate an average
of four horizontal rigs between the Marcellus and Utica.
We have allocated $225 million for
land capital budget in 2017. Approximately half of this capital
will add strategic organic leasehold and minerals primarily in
Greene County. The remaining half
will extend existing leases within our core development areas in
Washington and Greene Counties, Pennsylvania, and Belmont County, Ohio.
Rice Midstream Holdings
In 2017, we plan to invest $315
million to further develop our Rice Olympus Midstream
gathering system and to fund our 75% portion of capital
requirements for Strike Force, our midstream joint venture with
Gulfport.
2017 Financial and Operational Guidance
Exploration and Production
Our 2017 guidance is based on the key assumptions in the table
below:
|
2017
Guidance
|
Net
Wells
|
|
Spud
|
|
Online
|
Operated
Marcellus
|
|
75
|
|
55
|
Operated Ohio
Utica
|
|
20
|
|
20
|
Non-operated Ohio
Utica
|
|
10
|
|
5
|
Total Net
Wells
|
|
105
|
|
80
|
|
|
Lateral Length
(ft.) of Wells
|
|
Spud
|
|
Online
|
Operated
Marcellus
|
|
8,500
|
|
8,000
|
Operated Ohio
Utica
|
|
10,500
|
|
9,000
|
Non-operated Ohio
Utica
|
|
9,500
|
|
8,500
|
|
|
|
|
|
Net Production
(MMcfe/d)
|
|
|
|
|
|
|
|
|
Appalachia
|
|
|
1,205
|
|
-
|
|
1,265
|
Barnett
|
|
|
85
|
|
-
|
|
90
|
Total Net
Production
|
|
|
1,290
|
|
-
|
|
1,355
|
% Natural
gas
|
|
|
|
99%
|
|
|
% Operated
|
|
|
|
94%
|
|
|
% Marcellus
|
|
|
|
65%
|
|
|
% Utica
|
|
|
|
28%
|
|
|
|
|
|
|
|
|
Pricing:
|
|
|
|
|
|
FT fuel and variables
($/Mcfe)
|
|
|
($0.11)
|
|
|
Heat content
(Btu/Scf)
|
|
|
|
|
|
Marcellus
|
|
|
|
1,050
|
|
|
Utica
|
|
|
|
1,080
|
|
|
|
|
|
|
|
|
|
Operating Costs
($/Mcfe)
|
|
|
|
|
|
|
Lease operating
expense
|
|
$
|
0.16
|
|
-
|
|
$
|
0.18
|
Gathering and
compression expense
|
|
$
|
0.45
|
|
-
|
|
$
|
0.47
|
Firm transportation
expense
|
|
$
|
0.25
|
|
-
|
|
$
|
0.27
|
Production taxes and
impact fees
|
|
$
|
0.04
|
|
-
|
|
$
|
0.06
|
Total Operating
Costs
|
$
|
0.90
|
|
-
|
|
$
|
0.98
|
|
|
E&P G&A
(excluding stock compensation expense) ($ in millions)
|
|
$
|
85
|
|
-
|
|
$
|
90
|
Rice Midstream Holdings
We are unable to provide a projection of full-year 2017 RMH net
income, the most comparable financial measure to RMH Adjusted
EBITDA, calculated in accordance with GAAP. We are unable to
project RMH net income because this metric includes the impact of
certain non-cash items such as depreciation expense that we are
unable to project with any reasonable degree of accuracy without
unreasonable effort. Please see the "Supplemental Non-GAAP
Financial Measure" section of this news release.
Our RMH Adjusted EBITDA is expected to be within a range
of $85 - $95
million(1)(2) for 2017. We expect RMH
gathering throughput to be within a range of 1,125 - 1,185 MDth/d.
RMH G&A is expected to be within a range of $15 - $20 million(1).
1.
|
Reflects our 75%
ownership in Strike Force.
|
2.
|
Giving effect
to Gulfport Midstream's 25% ownership interest in Strike
Force, we expect 2017 RMH Adjusted EBITDA to be within a range of
$95 - $105 million.
|
About Rice Energy
Rice Energy Inc. is an independent natural gas and oil company
focused on the acquisition, exploration and development of natural
gas and oil properties in the Appalachian Basin.
For more information, please visit our website at
www.riceenergy.com.
Forward Looking Statements
This release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Such forward-looking
statements are subject to a number of risks and uncertainties, many
of which are beyond our control. All statements, other than
historical facts included or incorporate herein that address
activities, events or developments that we expect or anticipate
will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof),
projected operational results, production growth, basis exposure,
hedging, the timing and number of well completions, forecasted
gathering volumes, revenues, projected returns, distribution
growth, distributable cash flow, the timing of completion and
nature of midstream projects, business strategy and measures to
implement strategy, competitive strengths, goals, expansion and
growth of our business and operations, plans, market conditions,
references to future success, references to intentions as to future
matters and other such matters are forward-looking statements. All
forward-looking statements speak only as of the date of this
release. Although we believe that the plans, intentions and
expectations reflected in or suggested by the forward-looking
statements are reasonable, there is no assurance that these plans,
intentions or expectations will be achieved. Therefore, actual
outcomes and results could materially differ from what is
expressed, implied or forecast in such statements.
We caution you that these forward-looking statements are subject
to risks and uncertainties, most of which are difficult to predict
and many of which are beyond our control, incident to the
exploration for and development, production, gathering and sale of
natural gas, NGLs and oil. These risks include, but are not limited
to: commodity price volatility; inflation; lack of availability of
drilling and production equipment and services; environmental
risks; drilling and other operating risks; regulatory changes; the
uncertainty inherent in estimating natural gas reserves and in
projecting future rates of production, cash flow and access to
capital; the timing of development expenditures; and risks related
to joint venture operations. Information concerning these and other
factors can be found in our filings with the Securities and
Exchange Commission, including our Forms 10-K, 10-Q and 8-K.
Consequently, all of the forward-looking statements made in this
news release are qualified by these cautionary statements and there
can be no assurances that the actual results or developments
anticipated by us will be realized, or even if realized, that they
will have the expected consequences to or effects on us, our
business or operations. We have no intention, and disclaim any
obligation, to update or revise any forward-looking statements,
whether as a result of new information, future results or
otherwise.
Supplemental Non-GAAP Financial Measure
(Unaudited)
Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of our consolidated
financial statements, such as securities analysts, investors and
lenders. We define Adjusted EBITDA for RMH as net income (loss)
before interest expense, income tax benefit, depreciation and
amortization, stock compensation expense and incentive unit
expense. Adjusted EBITDA is not a measure of net income as
determined by GAAP.
Logo -
http://photos.prnewswire.com/prnh/20140123/DA51701LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/rice-energy-announces-2017-capital-budget-and-guidance-300412068.html
SOURCE Rice Energy Inc.