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Ohio Utica Shale

EV Energy Partners negotiating sale of 103,800 acres in Ohio

By Bob Downing Published: March 1, 2013

A Texas-based company expects to soon sell nearly 104,000 acres in the Utica shale in eastern Ohio.

A total of 103,800 acres in eastern Ohio are for sale because the Houston-based company decided to sell of the leased land rather than invest the money to drill natural gas-oil wells itself. Each well can cost $6 million.

That includes 40,300 acres in Stark County, 21,800 acres in Tuscarawas County, 12,300 acres in Trumbull County and 10,900 acres in Carroll County, EV Energy Partners LP said Friday in a teleconference on 2012 earnings and 2013 plans.

That includes Guerney County, 4,600 acres; Harrison County, 1,700 acres; Mahoning County, 4,400 acres; Muskingum County, 6,200 acres; Noble County, 1,000 acres; and other unidentified counties, 500 acres.

The sale or sales could be completed in the next month to the end of the year, said executive chairman John B. Walker, whose firm is the publicly traded arm of privately held EnerVest Ltd.

It is part of 335,000 acres being marketed by the EnerVest companies.

The negotiations are continuing, but the process is taking longer than had been anticipated, he said.

There is one bid for the core properties, multiple bids on part of the tract and individual bids on some counties, the company said.

Walker said negotiations have reopened with multiple parties in two northern counties. Some companies are seeking to buy all EV leases in individual counties, he said.

The company initially explored land swaps and other options, but those offers were too low and it has opted for cash-only sales, he said.

The planned sales that some said could produce $6 billion began last summer.

It holds some of the most attractive Utica lands that are already producing natural gas, oil and natural gas liquids: ethane, butane and propane.

EnerVest is a partner with Chesapeake Energy Corp. and the French energy company, Total SA, in drilling on 619,000 acres in 10 counties in eastern Ohio.

EV Energy Partners also intends to keep an additional 73,500 acres in eastern Ohio and western Pennsylvania., at least for now.

Locally, that includes 1,800 acres in Summit County, 3,600 acres in Portage County and 2,000 acres in Wayne County.

The acreage being retained totals 56,600 acres in Ohio. That includees 22,000 acres in Ashtabula County, 7,600 acres in Lawrence County, 5,100 acres in Washinjgton County, 2,500 acres in Tuscarawas County and 1,300 acres in Perry County.

It also includes 1,900 acres in Geauga County and 1,200 acres in Cuyahoga County. There are about 1,000 acres in 22 other counties, the company reported.

In Pennsylvania, the acreage being retained totals 16,900. Mercer County has 8,300 acres; Erie County, 2,800; McKean County, 2,500; Warren County, 1,600 acres; Crawford County, 1,100 acres; and other counties, 600 acres.

EV Energy Partners could opt in the future to drill on the 73,500 acres or it could decide to sell off or swap that land, company officials said.

The company said it intends to keep its shallow vertical-only wells in the Clinton sandstone and the deeper Knox wells.

Much of that acreage was acquired through smaller drilling companies that EV Energy Partners has acquired.

The company is also investing heavily for the first time in natural gas pipelines and processing facilities in eastern Ohio.

It owns 21 percent of the Utica East Ohio Midstream with processing plants in Columbiana, Carroll and Harrison counties.

The other partners are Momentum that will operate the system and Access Midstream Partners. That system is scheduled to be in operation by mid-year.

EV Energy Partners also 9 percent of Cardinal gas Services with pipelines in eastern Ohio. The other partners are Access Midstream and Total.

EV Energy Partners said it intends to invest between $335 million and $395 million over five years on the two midstream projects in Ohio.

Those projects are expected to generate between $50 million and $70 million in new income annually, company officials said.

EV Energy Partners also owns royalty interests on 880,000 acres in Ohio that are expected to produce in excess of $50 million a year within five years, officials said.

For 2012, the company reported a net loss of $16.3 million or 38 cents per limited partnership unit. In 2011, the company reported net income of $102.6 million or $2.68 per unit.

For the fourth quarter, the reported a net loss of $9.9 million or 23 cents per unit on revenue of $75.5 million. A year ago, the company had net income $9.7 million or 27 cents a unit on revenue of $66.8 million.

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