Rice Energy is boosting its expectation for how much natural gas it will extract from shale this year despite low prices that have some Marcellus companies planning to dial back their production.
The Cecil-based company on Thursday outlined results from new Marcellus and Utica shale wells that analysts called impressive and helped more than double production over last year. CEO Daniel Rice IV said he expects the driller can repeat those results from 17 more wells coming online through June, which will increase production even as the number of new wells being connected levels off in the third quarter.
“We’ve played a steady hand in our expectations,” he told analysts while discussing first quarter financial results. He said the expected increase comes from being “more confident in repeatability.”
Some producers in the northeast corner of the state including Cabot Oil & Gas, Chesapeake Energy and Seneca Resources say they are curtailing production from wells or plan to do so because of low natural gas prices exacerbated by a scarcity of pipelines to carry the commodity to lucrative markets.
Rice’s updated estimate of average daily production from its wells in Washington and Greene counties and Belmont County, Ohio, is about 20 percent higher than last year’s daily output. That prediction lines up closer to producers such as Range Resources, Consol Energy and EQT Corp. which have heavy concentrations in this part of the state.
Over the past few weeks, those companies discussed plans to focus more on exploration of the dry Utica shale — which does not produce many related liquids such as ethane — below Marcellus operations in Greene and Washington counties.
“It’s a tremendous resource to be tapping into,” Consol CEO Nick DeIuliis said this week.
Rice is testing the deeper Utica shale in Pennsylvania but will stay focused on its current locations.
“We’re pretty darn content with developing the Marcellus and Utica we have right now,” Dan Rice said.
The company more than doubled its production in the first three months of the year, compared to the first quarter of 2014. But like fellow shale producers, low prices cut into the bottom line.
Rice reported net income of $152,000 or 0 cents per share, compared to $129 million or $1.03 profit per share during the same quarter last year, which was boosted by a joint venture purchase.
This article was written by DAVID CONTI from The Pittsburgh Tribune-Review and was legally licensed through the NewsCred publisher network.