Privately held Ascent Resources plans to stay on its current robust production growth trajectory in 2019 as it continues to develop its core Ohio Utica acreage, Ascent CEO Jeff Fisher said in an interview.
In the last several years, Ascent has seen giddy production growth, increasing its output to 1.25 Bcf/d in 2018, almost double its 660 MMcf/d production in 2017.
"We had a tremendous operational year in 2017, followed up with another in 2018," Fisher said.
"We're firing on all cylinders," Fisher said. "We really had a strong fourth quarter, driven by higher [natural] gas prices and extremely good well results and production."
Ascent achieved record daily production of about 2.4 Bcfe/d gross and 1.9 Bcfe/d net in December 2018. The company is currently the largest producer in the Utica.
In its recently published guidance for 2019, the company forecasts its net production will average between 2.0 Bcf/d and 2.2 Bcfe/d, comprising about 90% gas, 7% NGLs and 3% crude.
Ascent's strategy to focus on production growth comes in marked contrast to that of many of its publicly traded peers, which have given guidance calling for more modest production growth as they pursue cash flow improvements as their primary goal, as demanded by Wall Street analysts and their stockholders.
Fisher pointed to acquisitions the company made last year, which expanded its footprint in the Utica play. "In four transactions, we increased our acreage positions to 311,000 net leasehold and 71,000 fee mineral acres."
The acquisitions helped allow Ascent to drill longer lateral wells, thereby improving its per-well production rates, he said.
UTICA PLAY DEBOTTLENECKED
"Another great thing over the last couple of years is the new pipelines have essentially debottlenecked, not only the Utica but essentially the whole Appalachian Basin," Fisher said.
"The in-basin basis differential has really come down and is running around 30 cents[/MMBtu] so far this year and is even projected out on the forward curve at below 40 and 50 cents," he added.
As pipeline infrastructure has come online in northeastern US production areas, takeaway capacity has increased and prices at the TETCO M-3 pricing point close to the Utica region have strengthened compared with those at the benchmark Henry Hub, according to S&P Global Platts data.
Ascent is a major shipper on Rockies Express Pipeline and on Rover Pipeline. The company has roughly 2.0 Bcf/d of total firm takeaway capacity on REX, Rover and the Columbia Gas pipelines, according to S&P Global Platts Analytics.
"There is ample takeaway and there are still some additional pipelines coming into the basin," Fisher said. "We have some additional firm capacity out of the basin and at this point we will be growing our presence in-basin."
In addition to seeing expanded markets for its gas production, Fisher said the market for NGLs has also improved in recent months after Energy Transfer's Mariner East 2 pipeline, which will carry liquids across southern Pennsylvania to the petrochemical complex and export facilities at Marcus Hook, Pennsylvania, entered service.
With its recent acreage acquisitions, Ascent is in a good position to remain focused on the Utica play for years to come, Fisher said.
"We're of an ample size at this point we don't think need to make significant acquisitions to continue to grow the business," he said.
From the beginning of its effort to develop the play, the producer has been employing pad drilling as its development strategy. "When we form a unit we usually drill that out and that's anywhere from three to five wells per pad," Fisher said. "Our focus on development has been to drill out units as we go."
In 2019, the average Ascent well drilled will have an average lateral length of just under 12,000 feet, Fisher said. "We've not been a big fan of the 20,000-foot laterals that some have tried. We're still focused on completion efficiencies along those horizontals and think that 11,800-foot laterals have been in the sweet spot."
