Page 10 - NorthAmOil Week 01

NorthAmOil PERFORMANCE NorthAmOil
Range cuts capex, suspends dividend
APPALACHIAN BASIN
SHALE producer Range Resources announced this week that it was reducing its capital expend- iture budget for 2020 to about $520mn. The company estimates its 2019 capex to be around $728mn, which is $28mn less than it originally budgeted for the year.
The company said it would also suspend its dividend as it focuses on reducing its debt. The move comes amid ongoing pressure from inves- tors on producers to prioritise capital discipline and debt reduction, though many shale industry investors have also called for a renewed focus on paying out dividends.
Range said its dividend commitments were about $20mn per year. The company, which focuses on the gas-rich Appalachian Basin, had declared a quarterly cash dividend of $0.02 per share in December.
In a January 6 statement, Range said its reduced capex budget would allow it to main- tain production at around 2.3bn cubic feet (65.1mn cubic metres) per day of gas equivalent. The company expects its output for the fourth quarter of 2019 to be at the high end of its previ- ous guidance of 2.33-2.35 bcf (66.0-66.6 mcm) equivalent per day.
Range added that it had increased its reserves to 18.2tn cubic feet (515.4bn cubic metres)
equivalent at the end of 2019. This included 1.2 tcf (34.0 bcm) equivalent of proven reserves that the company had added through drilling in the Marcellus shale. Meanwhile, the continued improvement in the performance of Marcellus wells boosted Range’s reserves by 924 bcf (26.2 bcm) equivalent. A further 577 bcf (16.3 bcm) equivalent of reserves were added that are asso- ciated with proven undeveloped locations that have re-entered the company’s five-year drilling programme, Range added.
“This is the second consecutive year the team has delivered our operational plans for less than originally budgeted, reflecting the organisa- tion’s continued focus on capital discipline and efficient operations,” Range’s CEO, Jeff Ventura, said. “Similarly, our expectation to maintain production for $520mn will make Range one of the most capital-efficient natural gas producers in North America. This efficiency is driven by peer-leading well costs of less than $625 per foot, low base decline of approximately 20%, and the high productivity of our core Marcellus assets in south-west Pennsylvania,” he added. “As the industry exhausts its core inventory, we believe Range is well-positioned with a lengthy runway of high-quality drilling locations from which we can drive long-term value.”™
PROJECTS & COMPANIES
Port Arthur LNG receives Aramco boost
TEXAS
SUBSIDIARIES of Sempra Energy and Saudi Aramco signed an interim project participa- tion agreement (IPPA) this week that takes the proposed Port Arthur LNG project in Texas one stepclosertoafinalinvestmentdecision(FID). The IPAA between Sempra LNG and Aramco Services follows a heads of agreement (HoA) signed by the two subsidiaries in May 2019. The HoA anticipated the finalisation of a 20-year deal for the purchase of 5mn tonnes per year (tpy) of LNG from Port Arthur LNG by Aramco, as well as a 25% equity investment in the project.
Details of the new IPAA were not immedi- ately available, but the deal illustrates Aramco’s strategy of expanding its natural gas operations.
“The global demand growth for LNG is expected to continue in the coming years, and we see significant opportunities in this market,” Aramco’s president and CEO, Amin Nasser, said. “This agreement with Sempra Energy is another step forward for Saudi Aramco’s long-term gas strategy, and towards becoming the global lead- ing integrated energy and chemicals company,” he added.
Sempra’s chairman and CEO, Jeffrey Martin, welcomed the agreement as “a reflection of the growing alignment between our companies’ interest in the overall success of the Port Arthur LNGproject”.
Sempra was given approval by the US Fed- eral Energy Regulatory Commission (FERC) to proceed with construction of Port Arthur LNG in April 2019. The federal Department of Energy (DoE) subsequently authorised the project to sell LNG to countries that do not have a free trade agreement (FTA) with the US in May.
The first phase of the project will involve two LNG trains and up to three storage tanks, with export capacity of 11mn tpy. Sempra noted this week that it had recently initiated the FERC pre-filing review for a subsequent potential expansion. If approved, the expansion would involve two additional liquefaction trains, bring- ing the plant’s total export capacity to around 22mn tpy of LNG.
An FID on the project had been anticipated in 2019 but was pushed back, and may now come in the first half of 2020.™
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