Rice Energy’s 2017 Production and Capital Expenditure Guidance



Operational highlights

For 4Q16, Rice Energy (RICE) reported total production of 1,145 MMcfe/d (million cubic feet equivalent per day), which was 83.0% higher year-over-year.

In 2016, RICE’s total production was 831 MMcfe/d, compared to 552 MMcfe/d in 2015.

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Rice’s price realizations in 4Q16

Rice’s average natural gas price realization, including the effect of hedges, was $2.75 per thousand cubic feet in 4Q16 compared to $2.82 per thousand cubic feet in 4Q15. Its 4Q16 earnings release noted that nearly 67.0% of its 4Q16 production received favorable Gulf Coast, TCO (Columbia Gas Transmission), and Midwest pricing.

RICE’s average basis differential in 3Q16 was -$0.56 per MMBtu (million British thermal units), which was below the NYMEX (New York Mercantile Exchange) Henry Hub.

Production and capital expenditure guidance for 2017

Rice Energy’s 2017 production guidance is 1,320 MMcfe/d. As you can see in the above graph, that represents a CAGR (compound annual growth rate) of ~70.0% since 2014.

RICE’s E&P (exploration and production) guidance is ~$1.3 billion. Of that amount, ~$1.0 billion will be used for drilling and completion expenses. Of the $1.0 billion, $685.0 million will be used at Marcellus, and the remainder will be spent at the Utica Shale.

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Commenting about synergies created by its Vantage acquisition, RICE management said in its 4Q16 earnings release, “We have increased the projected average lateral length on all expected 2017 wells drilled across the acquired acreage from 5,900 feet to over 8,000 feet. We believe that the combination of increased infill organic leasing and our growing economies of scale will allow us to continue to further extend lateral lengths across our Greene County acreage over time.”

The EIA (U.S. Energy Information Administration) believes that drilling longer laterals is a key step toward increasing drilling efficiency. Another company that has been focusing on longer laterals is Chesapeake Energy (CHK). You can read more about that at Why CHK Is Focusing on Drilling Longer Laterals in the Eagle Ford.


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