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Ohio Utica Shale

McClendon firms spending $4.25 billion in Ohio, W. Va., Texas

By Bob Downing Published: June 9, 2014

Energy wildcatter Aubrey McClendon announced on Monday that his companies were spending $4.25 billion to enlarge drilling areas in Ohio and to add new areas in West Virginia and Texas for the first time.

Those purchases include 27,000 leased acres in Monroe County in southern Ohio’s Utica shale.

That land was acquired from Florida-based East Resources and a second unnamed private company by American Energy-Utica LLC, a subsidiary of McClendon’s Oklahoma-based American Energy Partners LP.

McClendon, the former CEP of Chesapeake Energy Corp., the No. 2 natural gas producer in the United States, formed his new company in April 2013, after being ousted by Chesapeake. His new company has quickly become a major player in the Utica shale.

Those Monroe County properties are expected to produce about 40 million cubic feet of natural gas equivalents per day, said the McClendon firms.

In a separate purchase, American Energy-Marcellus LLC, another McClendon firm, said it has signed agreements to acquire 48,000 acres five northern West Virginia counties: Doddridge, Harrison, Marion, Tyler and Wetzel.

That land was also acquired from East Resources and a second unnamed private company.

The two purchases together totaled $1.75 billion, said the McClendon firms.

Both deals are expected to close within 60 days.

The sellers are currently using two drilling rigs on the Ohio and West Virginia land, and the McClendon companies plan to increase drilling activity to four to six rigs by late 2015.

The West Virginia land is expected to produce 135 million cubic feet of equivalents per day, the company said.

The Utica acquisition marks the seventh Ohio acquisition by American Energy-Utica and boosts its acreage to about 280,000 net acres in eastern Ohio

That, the company says, makes it the largest leaseholder in the still-developing southern Utica shale.

The company says it has invested more than $3.5 billion in Ohio’s Utica shale and plans to drill 2,600 gross wells and 1,560 wells that it owns on its acreage in the years ahead.

The West Virginia purchase marks initial foray by the McClendon companies into the southern Marcellus shale.

The Marcellus shale is found in Pennsylvania and northern West Virginia and is a gas-rich rock formation with little liquid.

American Energy-Marcellus said it plans to drill 410 gross wells and 355 net wells on its West Virginia acreage.

The company expects to build a larger lease holding in that area in the coming years, it said.

A third McClendon company, American Energy-Permian Basin LLC, announced on Monday that it was spending $2.5 billion to acquire 63,000 net acres in the southern Permian Basin in Texas.

That land is mostly in Reagan and Iron counties.

The properties are expected to have a net production of about 16,000 barrels of oil equivalent per day.

The land was purchased from affiliates of Denver-based Enduring Resources LLC.

The purchase marks AEPB’s entry into the Permian Basin. Enduring has four rigs and the McClendon company said it will increase drilling to six to eight rigs by late 2015.

The company plans to drill 2,500 gross wells and 1,750 wells it will totally own on its acreage over the next decade.

In the last nine months, American Energy Partners and its affiliates have raised committed equity and debt capital of about $10 billion.

The lead equity investor is the Texas-based Energy & Minerals Group with additional equity provide by the companies’ management teams and others including First Reserve Corp.

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.