OKC's Ascent Resources continues Utica growth
Oklahoma City- based Ascent Resources continues its rise in Ohio's Utica Shale field.
This week, the company's latest published update shows Ascent increased its proved reserves of natural gas, oil and natural gas liquids reserves to about 7.6 trillion cubic feet of natural gas equivalent.
That's ahead of where it estimated it would be less than a year ago after executing a $ 1.5 billion plan at the end of August to buy leases and mineral rights from Hess Corp., CNX Resources, Utica Minerals Development and a fourth, undisclosed seller.
Jeff Fisher, As cent Resources' chairman and CEO, said the company continues to improve its drilling, completion and operational techniques, and credited his team for its work during 2018.
“We run very efficiently for the size of company that we have,” Fisher said in an interview with The Oklahoman on Friday. “By the end of 2018, we probably ranked within the top 10 natural gas producers in the U.S.
“We are a bit of a newcomer, but we feel like we are building a great company that will be around for a long time.”
Notable achievements the update mentioned were:
• A record total daily production of about 1.9 billion equivalent cubic feet in December.
• Fourth quarter and full year 2018 adjusted earnings before interest, taxes, depreciation, amortization and capital expenditures of $318 million and $ 844 million, respectively.
• An increased borrowing base, from $925 million to $2 billion.
• Leasehold of 311,000 acres in the southern Utica Shale, with royalty interests in 71,000 acres.
• End- of- year proved reserves of natural gas, natural gas liquids and oil of 7.6 trillion equivalent cubic feet, worth about $6 billion.
Fisher said Ascent expects to spend between $ 1.1 billion and $1.25 billion in 2019, with between $ 1 billion to $ 1.1 billion for drilling and completions.
The company expects to spud from 90 to 100 wells, complete from 100 to 110 wells, and bring 120 to 130 wells to sales during the year.
He said an average well drilled this year by Ascent Resources will have a
way on lateral length in the Utica because we have a lot of flexibility in the way we put our units together,” he said.
And like most shale operators across the country, Fisher said Ascent Resources expects its production will continue to climb, even as it holds a steady line on its tempo.
The company will run six drilling rigs this year, about the same number as what it has operated in the field the past two.
“Steady is the way to characterize it,” Fisher said.
The goal now, he said, is to begin generating freeflow cash by the end of this year.
“And that sets us up for free cash flow optionality in 2020 and beyond, and that's a good spot to be in,” he said.
On Friday, he said the company hasn't yet determined what it will do once it gets there.
“Certainly, a return to investors is an option, as is using it to continue to grow our business or to pay down our debt,” Fisher said.
Meanwhile, he said the company has continued to enjoy good pricing for its natural gas delivered into Midwest, Canadian and Gulf Coast markets, as well as local pricing within the basin the past year.
The update states Ascent Resources was the Utica Shale's top producer in 2018, operating 29 of the best 40 natural gas wells and 21 of the best 40 oil wells in Ohio during the year.
During 2019, the company expects it will produce between 2 billion and 2.2 billion cubic feet per day, with that consisting of about 90 percent natural gas, 7 percent natural gas liquids and 3 percent oil.
The update states the company hedged about 85 percent of its anticipated natural gas production and about 75 percent of its anticipated oil production for 2019.
Ascent Resources, established in 2013, operates exclusively in Ohio's Utica Shale field. The company employs 350 people, with 250 of those in Oklahoma City.
“2018 was a great growth period for the company,” Fisher said, adding, “I believe the biggest story out of the shale revolution is the reduction in energy costs that we have brought to consumers.”