Antero placing gas bets elsewhere
Antero Resources is selling its natural gas holdings in western Colorado’s Piceance Basin, the company says.
The Denver-based company said in a news release today that it is selling the assets to a private company, which it didn’t identify, for $325 million in cash plus the assumption of Rocky Mountain gas transportation obligations.
Locally, Antero operates primarily in the Rifle-Silt area, and holds about 61,000 acres of leases. Antero chairman and Chief Executive Officer Paul Rady said in a news release the sale will let it redeploy capital and human resources to its Marcellus and Utica shale projects in the eastern United States. The transaction, along with the sale earlier this year of its assets in the Arkoma Basin, which is centered in Arkansas and Oklahoma, completes Antero’s transformation to an Appalachian producer of liquids-rich natural gas and oil, Rady said. Natural gas richer in liquids such as propane and butane can be more profitable when natural gas prices are low.
The transaction is expected to close in December.
Under the deal, the buyer also would assume a $91 million liability for future gas transportation contracts. In addition to the cash infusion, Antero will gain from cash proceeds of about $100 million related to Rockies hedge contracts locking in certain gas prices. Sales transactions and hedge proceeds initially will be used to repay bank debt, the company said.
The sale includes about 30 miles of pipelines.
Antero says its Piceance Basin assets contain 205 billion cubic feet equivalent of proven, developed reserves and is producing 59 million cubic feet equivalent per day from 284 wells. The term “equivalent” is used to roll the energy value of associated liquids and oil production into the gas volumes.
Just last week, Denver-based Bill Barrett Corp. said it is selling what eventually will amount to about a quarter interest in its natural gas holdings south of Silt to Houston-based Vanguard Natural Resources, LLC. Vanguard, a publicly traded company, also was the purchaser of Antero’s Arkoma Basin assets.
Antero generated controversy in the Battlement Mesa area starting in 2009 with its announcement of plans to drill up to 200 wells there. However, with natural gas prices low, it had yet to drill within the unincorporated community.
It similarly drew heavy criticism from some residents in the Silt Mesa/Peach Valley area north of Silt when it proceeded with drilling exploratory wells in those areas. But it earlier had earned praise for voluntarily working with residents to create a community development plan aimed at reducing its impacts from Rifle to New Castle.
“They have been a good corporate citizen and I hope that whoever purchases (the Piceance assets) from them will continue that,” said Garfield County Commissioner Tom Jankovsky.
Antero has done minimal Piceance Basin drilling in recent years with gas prices being low and the company working on developing its Appalachian assets. Dave Devanney, a member of the group Battlement Concerned Citizens, said the sale wasn’t entirely surprising given that many companies are going to boom areas where they can maximize profits.
He’s interested in learning who the buyer is and what its plans for Battlement Mesa may be.
“Hopefully they will be perhaps more interested in doing the right thing as far as drilling for oil and gas inside a residential community,” he said.