Feb 17, 2015 2 min read

Rice Energy Inc. Tuesday announced a reduced 2015 capital budget of $890 million, down $210 million from the $1.1 billion it spent in 2014.

The Southpointe-based independent natural gas and oil company said in a news release it is estimating net production of between 450 million cubic feet per day and 470 MMcfe/d, an expected increase of 64 to 72 percent over 2014 net production.

Of the $890 million spending plan, Rice said it budgeted $680 million in Marcellus and Utica shale exploration and production activities to be funded entirely with $712 million of liquidity exiting 2014 and expected 2015 cash flow.

It said $210 million of budgeted retained midstream investments are to be funded entirely with newly created $300 million midstream credit facility.

The company said 84 percent of its forecasted 2015 production is hedged at an average price of $3.60/MMBtu, based on mid-point of guidance.

Rice also said 100 percent of its forecasted 2015 production is covered by firm transportation with approximately 65 percent of estimated production delivered to markets outside Appalachia

“Our 2015 capital budget reflects both our disciplined approach to managing our business and our prudent investment strategy,” said Chief Executive Officer Daniel J. Rice IV. “This allows us to focus our efforts on driving shareholder value through continued successful development of our low-cost, high-returning Marcellus and Utica shale assets.”

While acknowledging a 40 percent reduction for previous capital spending plans, Rice noted the company is lowering its production forecast by only 8 percent “decreasing exposure to unhedged local prices.”

In Pennsylvania, Rice said the company expects to spud 43 horizontal Marcellus wells of which it will turn to sales 31 horizontal Marcellus wells with an average lateral length of 7,100 feet. He added Rice Energy is drilling its first Pennsylvania Utica well, which it expects to complete and turn to sales in the second half of 2015.

In Ohio, it plans to spud 19 horizontal Utica wells and turn to sales 12 of the wells with an average lateral length of 9,500 feet.

Rice also plans to spud 38 horizontal Utica wells on its nonoperated properties in Ohio, turing to sales 15 of them, each with an average lateral length of 7,200 feet.

The company is currently operating two horizontal rigs in Pennsylvania and two horizontal rigs in Ohio. It plans to release one Ohio horizontal rig at the end of its contract in mid-2015 and operate three horizontal rigs for the remainder of 2015.

Rice said its capital budget excludes Rice Midstream Partners LP 2015 capital budget of $180 million relating to infrastructure development and compressor station installation in Pennsylvania.