Utica Wells are Productive in the Region

Antero To Acquire Marcellus Shale Acreage From Southwestern

From an Article of the Oil & Gas Financial Journal, June 10, 2016

Antero Resources Corp. has agreed to acquire approximately 55,000 net acres of undeveloped Marcellus Shale leasehold, including deep rights on approximately 41,000 net acres prospective for the underlying dry Utica, and 14 MMcfe/d of net production for $450 million from Southwestern Energy. The acquisition includes undeveloped properties located primarily in Wetzel, Tyler, and Doddridge Counties in West Virginia.

Additionally, a third party has a 30-day tag along option to sell 13K net acres with 3 MMcfe/d of associated production under the same terms, bringing the potential acquisition price close to $560 million.

Commenting on Antero’s 2016 capital budget and development plans on the acquired acreage, Glen Warren, president and CFO of Antero, said the company expects to add an additional rig, focused primarily on Tyler County, in the second half of the year while maintaining its original drilling and completion budget of $1.3 billion.

The transaction looks positive for Antero, noted Seaport Global Securities analysts in a note Friday, “as the company meaningfully high-grades its inventory at a fair price ($7.3K/acre based on $3.5K/flowing Mcfepd), increases its 2017 outlook (~20%-25% YoY growth in 2017) and de-leverages its balance sheet (2016 net debt/EBITDA ~2.9x vs. 3.1x previously).”

The same day, Antero announced an equity offering of 26.75 million shares of common stock with a 4 million share overallotment, equating to 9.6% dilution (or 11.1% with the overallotment) with estimated gross proceeds of approximately $762 million (approximately $875 million with the overallotment).

Southwestern Energy

On the other side, despite acquiring the acreage from Chesapeake Energy at a higher price roughly 18 months ago, Southwestern’s sale of a portion is not surprising, said Brian Velie at Capital One Securities, as “carving out a piece of its 443K net acre Southwest Marcellus position had been widely discussed.”

“Considering the 12-month strip price for oil and natural gas have both declined by roughly 10% since the end of 2014, a haircut to the acreage price should be expected. However, also keep in mind that SWN has created considerable value on the acreage since the acquisition with a 40% improvement to well performance and a 33% decrease in days to drill,” Velie continued.

For Southwestern, “the acreage sold was worth less to SWN than the purchase price because the locations will come off the end of a 20+ year queue of Southwest Marcellus inventory,” Velie noted, and proceeds will go toward the principal balance of SWN’s $750 million term loan due in November of 2018.

The transaction is expected to close in the third quarter of 2016, subject to customary closing conditions, with an effective date of January 1, 2016.

See also: www.FrackCheckWV.net

Judge Booker Stephens of McDowell County

Marcellus drilling suits head back to mediation

From an Article by Ken Ward Jr., Charleston Gazette Mail, February 26, 2016

While lawsuits against natural gas drillers are causing a stir among West Virginia lawmakers, the first in a series of those suits is headed back for another shot at settlement through mediation, following a hearing Friday in Charleston.

A three-judge panel hearing the cases against Antero Natural Resources and Hall Drilling said that they wanted the parties to take part in another mediation session after lawyers for the residents dropped one of their two major claims, an allegation that the natural gas companies were operating in a negligent manner.

Alan Moats, a Taylor County circuit judge who heads the panel, encouraged the companies and the residents to try to come up with a settlement that would allow natural gas production to continue, but reduce the impacts on nearby residents and communities. “If there’s anything that can be done that would lessen the impacts these people are experiencing, if we could do that, it would be more important than money,” Moats said.

The parties agreed that they would meet again with McDowell Circuit Judge Booker Stephens, who led a previous mediation session that did not produce a settlement. Moats led Friday’s surprisingly brief hearing, which had been scheduled for arguments on major motions that are pending and need to be resolved before trial. That trial, scheduled for July, is the first in a series of cases filed in at least seven counties by more than 200 people who allege Marcellus Shale operations by the gas industry are disrupting their lives.

The suits, first filed in October 2013, outline concerns regarding noise, dust, excessive traffic, bright lights and a variety of other effects of the boom in the natural gas industry in northern West Virginia. Cases are pending in Doddridge, Harrison, Kanawha, Marion, Monongalia, Pleasants and Ritchie counties. Antero and Hall Drilling, which operate as partners at many sites, are the defendants in almost all of the cases.

In November 2014, the state Supreme Court referred the cases to West Virginia’s Mass Litigation Panel, which often is used to handle complex lawsuits that involve common issues of law and fact, but also involve large numbers of plaintiffs or multiple defendants.

Lawmakers have become interested in the Marcellus cases, and earlier this week the state Senate passed a bill that supports say is aimed at putting a stop to such suits.

Attorneys for the residents, including Charleston lawyers Anthony Majestro and Jim Peterson, brought the cases as nuisance suits, alleging that the industry activity constitutes an unlawful interference with the residents’ use and enjoyment of their property. The lawyers originally claimed negligence by drilling companies, but have since dropped those claims.

In SB508, lawmakers want to narrow the ability of residents to bring nuisance suits. The measure would give defendants a “permit shield” if they have some sort of government authorization for their activities.

Antero Resources Corporation, a Denver, Colo based oil  and gas production company,  has acquired Bluestone Energy Partners, a privately held West Virginia natural gas producer.   Antero has extensive experience in the Rocky Mountains and mid-continental US.  Founded in 2003 by Paul Rady, a geologist,  and Glen Warren, an investment banker,  the company website boasts that this private company is the 2nd largest producer in the Barnett shale play.

Ellenboro, WV based Bluestone Energy Partners, a leasing and drilling company, was headed by Sam Ross, Mike Hall and Gregory Barton, who now hold an equity position in Antero as part of the buy-out deal.  The Bluestone assets include  properties with production from 93 vertical wells and 3 horizontals wells, gathering and compression assets, and approximately 40,000 net acres in the Marcellus shale play in West Virginia and Pennsylvania.   Following the close of  this acquisition on December 1, 2010,  Antero controls approximately 168,000 net acres in the Marcellus Shale play.   That’s a small number relative to the holdings of big players EQT, Range Resources  and Chesapeake Energy.  Chesapeake, for example, holds 1.3 million net acres.

Click here for full press release, including financial terms of the acquisition.