Utica Shale Partnership Between Consul and Hess
Consul Energy and Hess Corp have formed a joint venture to develop Consul’s 200,000 acres in the Utica shale play of Eastern Ohio. Reuters reported that that Hess will pay 593 million or approximately $6000 per acre for Utica shale leases. The companies report that wells will be drilled in the coming weeks, in areas which should contain more liquids than natural gas. In contrast, Chesapeake Energy has valued their Utica shale acreage at approximately $16,000 an acre.
Of the nearly 200,000 acres held by Consol Energy in the Utica shale, approximately 120,000 acres were acquired from Dominion Exploration and Production last year, and 80,000 acres were acquired decades ago and held by production, mostly from “stripper wells” making less than ten barrels a day.
J. Brett Harvey, CONSOL’s chairman and chief executive officer stated the following: “We are very pleased to have Hess Corporation as our partner in the Utica Shale,” “Hess Corporation is a global integrated energy company that shares CONSOL’s dedication to safety and compliance, and they bring strong technical and operational shale expertise to this joint venture. Those skill sets coupled with CONSOL’s deep footprint and history in northern Appalachia result in a powerful combination that will benefit the eastern Ohio economy, strengthen the communities in which we operate, and provide more opportunity for our employees, and our respective companies. Together we will explore and delineate what could be a significant resource in a safe, efficient, and economical manner.”
From Consul Energy’s website: CONSOL’s and Hess’ plan of jointly developing the Utica Shale assets calls for Hess to generally operate in the liquids-rich window, which contains approximately 80,000 acres in Belmont, Harrison, Guernsey and Jefferson counties, and CONSOL to generally operate elsewhere in eastern Ohio, including Portage, Tuscarawas, Mahoning counties, in the oil window, as well as in Noble County. CONSOL and Hess anticipate commencing initial drilling operations in a few weeks, and will thereafter average 2 rigs in 2012, 3.5 rigs in 2013, and eventually plateau at an average of 5 rigs in 2015