New York-based Hess Corp. on Wednesday announced it is selling 74,000 acres of leased Utica shale land in eastern Ohio with dry natural gas but no liquids.
Hess has agreed to sell the leases to an undisclosed third party for $924 million, the company said.
Hess concluded that the Utica wells, although productive for natural gas, would not produce enough financial return.
Chief Executive Officer John B. Hess said in a statement: “The sale of our Utica dry gas acreage is an example of our continued commitment to grow shareholder value through ongoing portfolio reshaping. While our wells in the dry gas portion of the Utica were highly productive, we concluded that the potential returns from such an investment, at current and projected natural gas prices, no longer justified retaining this acreage as a strategic part of our overall liquids-based asset portfolio.”
Approximately two-thirds of the $924 million amount is expected at the end of the first quarter of this year, with the balance to be received in the third quarter, the company said. Proceeds will be used for additional share repurchases.
The company had 12 Utica wells that were in production in 2013 and 34 other Utica wells that were being developed. The wells were in Harrison, Belmont, Guernsey and Jefferson counties. The company also has six Marcellus shale permits in Ohio: two are producing, a third is drilled and the three others are permitted only.
The company is also a partner in an Ohio joint venture with Pennsylvania-based Consol Energy.
Earlier this month, Hess said it plans to spend $550 million in 2014 to drill 35 wells in the Utica shale’s wet gas window in eastern Ohio.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org.