Utica Oil: Ascent Resources Sticking to D&C Pace at Sub-$70 WTI
“It would have to be oil prices perhaps with a $50 handle that would make us make a meaningful shift,” Jeff Fisher, Ascent Resources chairman and CEO, said.
Utica Shale oil and gas operator Ascent Resources isn’t backing off its oil-directed drilling and completions (D&C) program despite sub-$70 oil prices.
“It would have to be oil prices perhaps with a $50 handle that would make us make a meaningful shift,” Jeff Fisher, chairman and CEO, told investors and public debt-holders in an earnings call.
While privately held, Ascent Resources hosts public earnings calls.
It reported in May that it is considering an IPO, but an update wasn’t provided in the latest call.
Ascent, Ohio’s No. 2 oil producer, holds 378,500 net acres in Ohio, including 81,000 mineral acres, across all four of the Utica’s phases: black oil, volatile oil, wet gas and dry gas. The leasehold is 88% HBP or by minerals.
Its three rigs are generally targeting the volatile oil, wet gas and dry gas windows. It has one frac spread at work full-time and another spread on standby as needed.
New-well spuds this year are expected to total between 50 and 55.
“The ups and downs of the market just kind of reinforce our general strategy that we want diversity, but we're not going to chase price,” Fisher said.
One rig was moved earlier this year from the wet-gas window to the dry-gas phase, “but we're not making big adjustments.”
Second-quarter production averaged 2 Bcfe/d, 85% gas; the balance, oil and NGL, consisted of some 50,000 bbl/d.
The commodity mix means that asset-wide returns, while oil is in the mid-$60s, are generally unchanged.
“That takes some volatility out of our business and we've just got great returns across the play,” Fisher said.
Brooks Shughart, CFO, noted that Ascent has 75% of its oil hedged at more than $70.
Also, NGL prices are more than $6.50 per MMBtu, according to the Energy Information Administration.
“NGLs have remained relatively strong compared to oil,” Fisher said. “So that's a window that we've been hitting pretty hard and just making some fantastic wells.”
Ascent produced 29,000 bbl/d of Utica oil in the first-quarter. The state is expected to publish second-quarter production later this month.
Ascent Resources is Ohio’s No. 2 oil producer. EOG Resources bought Encino Energy on Aug. 1, becoming the state’s No. 1 oil producer. (Source: Hart Energy)
Gas for powergen
Ascent is also looking to participate in gas deals for power generation in Appalachia as data-center developers build campuses in the region and power companies seek to contract firm gas supply.
“We will weigh the pros and cons of different deal structures,” Fisher said.
“But more than anything, we will remain closely engaged and flexible as we assess opportunities, and we do see value formation around this important development.”
With mostly contiguous Utica leasehold, Ascent’s lateral lengths have averaged more than 16,500 ft this year.
Its gas-well payback is 93% in the first 12 months at $3/Mcf and 160% at $4.50.
Its future-well-location inventory is 21 years at a 50-well-per-year pace and 18 years at 60 wells per year.
The company said its proved reserves are 9 Tcfe, based on $76.32/bbl WTI and $2.13/MMBtu Henry Hub.
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