American Oil and Gas Reporter - May 2020 - 46

SpecialReport: Dry Gas Strategies
aren't going to be rewarded for more activity; they will get rewarded for using
the cash flow to pay down the debt."
Montage is using several existing technologies in different ways to implement
cost savings and efficiencies, Kris says.
The company's cycle times from well
spudding to sale have dropped from 225
days down to about 140, with completion
crews completing between nine and 12
stages a day on average.
"The company tries to have numerous
operations going on at the pad. From a
production standpoint, you want the production activity ready to go as soon as
completions are done. That decrease in
downtime allows the company to have
those efficiencies on the completion cadence and a reduction in cycle times,
which leads to accelerated cash flows,"
Kris describes.
In developing the stacked formations,
he says Montage drills the deeper Utica
first, to hold its rights to the shallower
Marcellus. The Utica is the more challenging play because it is a higher-pressure
formation, the drilling crew must focus
on staying in the pay zone, and costs are
slightly higher, Kris notes.
Over the course of the past year, Montage has been able to meaningfully lower
its drilling and completion costs by at
least 20%, recording a 5% cut in 2020
alone, he says. During that time, company
executives renegotiated the gas gathering
agreement with one of the Appalachian
Basin's largest providers and revised a

Marcellus processing agreement to lower
costs and provide additional payout from
ethane sales into the gas stream.
Capital And Cash Flows
Range Resources has cut its 2020 allin capital budget to $430 million from
$520 million, but says it expects to maintain production at 2.3 Bcfe/d for 2020.
In its late March announcement, the company said, this continues Range's previous
actions and commitment to prioritizing
its balance sheet and aligning capital
with projected cash flows.
"Having met our firm transportation
commitment in the Marcellus, we have
flexibility in our development program
as evidenced by the 40% reduction in
2020 capital spending compared with
last year," assesses Jeff Ventura, Range's
chief executive officer. "Given near-term
challenges in commodity pricing, having
a sustainably low maintenance capital is
paramount, and I believe this updated
capital budget further demonstrates
Range's peer-leading capital efficiency,
as our decline rate, well costs and capital
spending per unit of operation all remain
best-in-class."
The company says its first quarter
2020 production has averaged 2.3 Bcfe/d,
and it expects to maintain that production
for the remainder of the year. Range reported peer-leading capital efficiency results, recording the lowest capital development costs on a per unit basis in Appalachia.

Range Resources says its Marcellus Shale inventory includes 3,300 undrilled Marcellus
wells across southwestern Pennsylvania, with the company's core acreage targeting the
Utica and Upper Devonian as well as the Marcellus.

46 THE AMERICAN OIL & GAS REPORTER

According to Range, its Marcellus inventory includes 3,300 undrilled Marcellus
wells alone in southwestern Pennsylvania,
which it says equates to decades of development. The company's core acreage
also holds significant Utica and Upper
Devonian prospects. The company says
it has drilled three Utica wells in Washington County, Pa., and its most recent
Utica well appears to be one of the best
dry gas Utica wells in the basin.
Range is well positioned to survive a
period of low commodity prices by maintaining low-maintenance capital paired
with improving capital efficiencies. The
company says this will help it target free
cash flow generation, which is driven by
its core Marcellus and Utica assets.
Given the U.S. natural gas base decline
rate of 26%, the country needs about 27
Bcf/d of new gas each year to hold production flat. Range predicts that as industry
follows a maintenance capital approach,
production growth should slow meaningfully
for the rest of 2020 and into the next year,
if strip prices hold. The company sees total
demand growth exceeding 20 Bcf/d through
2025 from LNG and exports to Mexico,
backed by industrial and electric power
demand growth.
"Looking beyond short-term demand
headwinds, we see the potential for meaningful improvements in natural gas and
NGL pricing as significant reductions in
energy investment across U.S. shale are
occurring while global demand for cleaner,
efficient fuels like natural gas and NGLs
is increasing," Ventura says.
Cutting Costs
A drilling and completion efficiencies
program, supported by midstream cost
savings, gives Antero Resources Corp.
$600 million in savings in 2020 compared
with the previous year's initial budget.
Its 542,000 net acres in the southwestern
core of the Marcellus and Utica shales-
451,000 acres in the Marcellus play in
northern West Virginia and 91,000 acres
in eastern Ohio's Utica Shale-holds 19.0
trillion cubic feet of new proved reserves,
the company says.
In addition to its production holdings,
Antero owns a 29% interest in Antero
Midstream, which owns and operates
gathering lines, compression, processing
and water handling/treatment assets.
"Our reduced 2020 drilling and completion capital budget highlights the continued momentum in our capital cost savings initiative that was launched in early
2019," described Paul Rady, the company's

American Oil and Gas Reporter - May 2020

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