Montage Resources Corp. has cut its 2020 capital spend to $145-165 million from $190-210 million, a 23% reduction at the midpoint. Full year production of 570-590 MMcfe/d (82% natural gas, 18% oil and natural gas liquids) has been reaffirmed, primarily driven by expected outperformance in production from this year’s first quarter, improved cycle times for remaining 2020 turn-to-sales, and a gassier 2020 well mix.
The updated capital expenditure budget is based upon a front-loaded one rig drilling program and is allocated 90% for drilling and completions activities and 10% for land and other expenditures. Development activity is concentrated in the stacked pay area within the Ohio Marcellus and Utica Dry gas areas located in Monroe County, Ohio.
The budget assumes drilling 12-16 gross horizontal shale wells, the completion of 13-17 gross horizontal shale wells, and 12-16 gross horizontal shale wells turned to sales, with 65% of the capital spend weighted toward the first half of the year. Some 75% of the wells drilled are expected to be in the Ohio Utica acreage and 25% in the Ohio Marcellus acreage—a shift from the 35% Utica dry/65% Marcellus split in its previous capital spending plan.
Montage Resources was created from the 2019 closing of a deal to combine Eclipse Resources Corp., State College, Pa., and Blue Ridge Mountain Resources Inc., Irving, Tex. (OGJ Online, Mar. 1, 2019).