American Oil and Gas Reporter - July 2016 - 69

Rice Energy plans to drill 25 net operated dry gas wells in the Marcellus, and 12 operated
and five nonoperated dry gas wells in the Ohio Utica this year. The company reports
achieving a 35 percent reduction in drilling and completion costs in the first quarter compared with its 2015 average, while consistently maintaining wellbores within a targeted
three-foot interval.

and generating healthy returns, while creating significant future midstream value."
"The substantial majority of our acreage
position is in the core dry-gas window of
the Marcellus and Utica shales, which is
where all of our activity is based, and
generates returns of approximately 65
percent at current strip pricing," she adds.
Rice Energy is operating on both sides
of the Ohio River. Danvers says the company has 200,000 effective stacked acres:
94,000 in the Pennsylvania Marcellus,
57,000 in the Ohio Utica, and 49,000 in
the Pennsylvania deep Utica. Cumulative
net wells producing at the end of the first
quarter consisted of 130 in the Marcellus,
18 in the Ohio Utica, one in the Pennsylvania Utica, and three in the Geneseo
formation.
Danvers says Rice plans to drill 25
net operated Marcellus wells, 12 operated
Ohio Utica, and five nonoperated Ohio
Utica wells this year. It plans to bring on
line this year a net 27 operated Marcellus
wells, 13 operated Ohio Utica wells, and
14 nonoperated Ohio Utica wells.
Rice has achieved significant drilling
and completion cost reductions in the
Marcellus and Utica, according to Danvers,
which are attributable to increased operational efficiencies driven by shorter cycle
times within a favorable service price
environment.
"We continue to reduce average drilling
times, and achieved a 35 percent reduction
in the first quarter compared with our
2015 average, while consistently maintaining our wellbore within a targeted
three-foot interval," she states. "Shorter
cycle times also extended to our completion operations, where we have been able

to complete approximately 20 percent
more stages per day while maintaining
our robust completion design.
"Our leading-edge cost in the Marcellus
is $925 per lateral foot, which is a 40
percent reduction from prior levels," Danvers adds. "In the Utica, we reported
$1,380 per lateral foot during the first
quarter, a 45 percent reduction."
Danvers says Rice Energy is allocating
100 percent of its capital to 150,000 drygas acres within the core of the Marcellus
and Utica, which she says offers attractive
returns.
"Our deep inventory of more than 800
core locations generates returns of approximately 65 percent at strip pricing
and an average PV-10 break-even cost of
$2 an MMBtu Henry Hub," she claims.
"We protect our returns and balance sheet
through our robust firm transportation
portfolio and systematic hedging strategy,
which allows us to develop our assets
economically, and to grow our upstream
and midstream businesses through the
commodity price cycle."
Danvers says building a right-sized,
high-quality firm transportation portfolio
that provides diverse access to premium
markets is essential to Rice Energy's development program and price realizations.
"Our firm transportation portfolio covers more than 80 percent of expected
2016 production and delivers 70 percent
of this year's anticipated volumes to premium markets outside Appalachia," she
recounts. "By 2020, our firm transportation
portfolio will decrease to approximately
60 percent of expected production, increasing exposure to anticipated improvements to in-basin pricing."
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JULY 2016 69
American Oil and Gas Reporter - July 2016

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