Hess Sets Sights Away from Utica
Hess Corp. reported Friday that it has agreed to sell its joint venture interests in the Utica shale play in eastern Ohio to Ascent Resources – Utica, LLC.
“We continue to focus our portfolio by divesting lower return, non-core assets as part of our strategy to deliver long term value to shareholders,” Hess Corp. CEO John Hess said in a written statement.
Under its approximately $400 million net cash deal with Ascent, Hess will divest roughly 39,000 net Utica acres. Hess, which pointed out that 26,000 net acres are undeveloped, added that net production for full year 2018 is forecast to average 14,000 barrels of oil equivalent per day – approximately 70 percent of which should be residue gas. In a joint venture with CNX Resources, Hess holds a 50-percent working interest in the acreage, the company stated. Production from the liquids-rich Utica assets – located in Belmont, Harrison and Guernsey counties in Ohio – began in 2013, Hess states on its website.
According to Hess, the divestiture will enable the company to direct more resources toward onshore and offshore assets in North Dakota and South America, respectively.
“Proceeds from this transaction will be used to invest in our higher return growth opportunities in Guyana and the Bakken and to fund the company’s previously announced share repurchase program,” CEO John Hess stated.
The company noted that the sale, which will be effective April 1, is subject to customary closing conditions and adjustments and should close by the end of the third quarter 2018.
Hess’ divestiture is just one component of a combined $1.5 billion in acquisitions that Ascent Resources is making in natural gas and oil properties, according to a separate statement Friday from Ascent. Aside from Hess, Ascent is acquiring acreage from CNX, Utica Minerals Development and another, undisclosed seller, the Oklahoma City-based company said. Ascent noted that it is funding the acquisitions with at least $965 million in common equity and up to $535 million of borrowing through its revolving credit facility. It stated that some highlights of the combined acquisitions include:
- Approximately 113,400 net leasehold acres and royalty interests on approximately 69,400 fee mineral acres spanning three hydrocarbon windows in the Utica’s over-pressured core
- 93 operated wells and net production of approximately 216 million cubic feet equivalent per day (Mmcfe/d) (19 percent liquids)
- More than 380 gross incremental horizontal well location and an increased working interest in more than 900 gross horizontal well locations
- Proved reserves of 11 trillion cubic feet equivalent (Tcfe) and total resources of 5.6 Tcfe
“The combination of these accretive bolt-on acquisitions is a milestone for the company and has been made possible by our outstanding operational success in the Utica Shale,” Jeff Fisher, Ascent’s chairman and CEO said in his company’s announcement. “The acquired assets, more than 60 percent of which are fee mineral acres, further establishes the company as a compelling Utica pure play and will significantly enhance the company’s growth and equity value.”
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