QUALITY ROCKS
OKC company seeks Utica footprint expansion
A company that grew out of American Energy Partners plans to expand its footprint in Ohio’s Utica Shale field.
Ascent Resources, based in Oklahoma City, has announced it has entered into agreements to spend about $1.5 billion to acquire natural gas and oil lease and mineral rights holdings in the field from Hess Corp., CNX Resources, Utica Minerals Development, and a fourth undisclosed seller.
Officials said the acquisitions will add about 113,400 net leasehold acres and royalty interests on about 69,400 fee mineral acres, noting that those additions span all three hydrocarbon windows in the over-pressured core of the field.
The acquisitions also will add 93 operated wells that have a daily net production of about 216 million cubic feet equivalent, about 19 percent of which is liquids, to Ascent Resources’ holdings.
Plus, the deals would bring it 380 incremental horizontal well locations and an increased working interest in more than 900 horizontal well locations.
Officials said the acquisition properties have proved reserves of about 1.1 trillion cubic feet equivalent and total resources of about 5.6 trillion cubic feet equivalent.
Once the deals close
(that’s expected in the third quarter of 2018), officials said Ascent will hold proved reserves and total resources of approximately 5.9 and 16.2 trillion cubic feet equivalent, respectively, with a daily net production of about 1.5 billion cubic feet equivalent.
Ascent Resources also will hold about 310,000 net leasehold acres and royalty interests on about 70,650 mineral acres.
Boosting growth
Jeff Fisher, Ascent Resources’ chairman and CEO, said the deals are attractive for his firm because they are largely contiguous with its current footprint and will allow it to boost operational efficiencies.
He said the expansions also will allow the company to better control costs while adding premium, near-term drilling locations that have a high net revenue interest.
And Fisher said the expansions will expand Ascent Resources’ operating margins, enabling it to meet its goal to have a positive free cash flow next year.
While the Utica Shale field primarily produces natural gas, Fisher said it also includes a liquidsrich window that enables the company’s wells to produce natural gas liquids and some oil.
“With our acreage position, we have exposure to all three. That’s pretty unique in a single play,” he said.
Fisher said the firm’s holdings include some of the best quality rock in the nation.
“We think that is very important, as commodity prices across the spectrum have tightened and we have been in a lower-for-longer time period on commodity prices. You simply have to be in the best rock, and we think we have that.”
Fisher said his firm has used innovative technology to boost production and control costs, including drilling laterals as long as 17,000 feet in length.
No constraints
While Fisher said takeaway capacity for produced natural gas in the Appalachian Basin has been a significant issue the past five-plus years, he said Ascent Resources has secured pipeline transport out of the field for its production on the Rockies Express pipeline owned by Tallgrass Energy and the Rover Pipeline owned by Energy Transfer Partners.
“Between both, we are able to market our gas to the Midwest and also to the Gulf Coast and into Canada,” Fisher said.
As for produced water, he said the firm’s wells produce very little, and added what is produced is recycled by Ascent Resources to complete drilled wells.
He said the company expects to drill and complete about 135 wells in 2018, and that it has seven drilling rigs and three well-completion crews under contract.
On Thursday, Fisher said the firm has focused on developing the Utica Shale since it was founded in 2013, and that its efforts to both raise capital and to develop its resources have paid off.
“In 2017, we put that capital to work and just had a phenomenal year, drilling some of the very best wells in the entire country in the Utica Shale,” he said.
“Very quickly, we have grown to be the largest producer in that play, and the bolt-on acquisitions that we are doing now really enhance our footprint. They fit hand in glove with our existing assets.”
Fisher said Ascent Resources employs 350, with 250 of those in Oklahoma City.
“I am very proud of our team, and I want to give a big shout-out to its members for their quality, commitment and ability to execute,” he said.
“It frankly is the best team I have ever been associated with in my career.”
He also said the firm has become one of the largest privately held exploration and production companies in the U.S.
“We are proud of that, and yet we have got a lot of work to do to continue that progress.”