XTO strikes deals in Utica Shale and Permian Basin

02/03/2014 5:40 PM

02/03/2014 5:41 PM

Fort Worth-based XTO Energy struck a deal in Ohio’s Utica Shale with an affiliate of American Energy Partners, the new venture orgaanized by former Chesapeake Energy CEO Aubrey McClendon.

Exxon Mobil, XTO’s corporate parent, also said Monday that it will boost its activity in West Texas’ Permian Basin in a separate deal with Midland-based Endeavor Energy Resources L.P.

American Energy-Utica LLC, after what Exxon cited as competitive bidding, will fund 100 percent of XTO’s near-term development costs in a core area of about 55,000 net acres in the Utica. In return, American Energy will gain ownership in about 30,000 net acres of XTO’s holdings in three Ohio counties.

The value of the transaction was not disclosed.

The Permian deal is just the opposite, with XTO funding development costs to earn a “substantial” ownership stake in about 34,000 gross acres in the Wolfcamp shale formation in Midland and Upton counties. XTO said the deal boosts its Permian Basin holdings to just over 1.5 million net acres.

“These transactions underscore our commitment to developing high-margin liquids growth in areas such as the Permian, while also efficiently funding development of our extensive domestic natural gas resource in emerging plays such as the Utica,” XTO President Randy Cleveland said in a prepared release. He said the company’s first Utica well has peak production of about 15 million cubic feet of dry natural gas a day.

Exxon’s Appalachia region production, where it has about 645,000 acres in the Marcellus and Utica shales, grew nearly 30 percent last year. Exxon said XTO now manages about three times the holdings it had when Exxon acquired the company in 2009 in a deal valued at $41 billion.

Also Monday, American Energy confirmed that it paid Hess Corp. $974 million for 74,000 acres in the Utica and also acquired acreage from Houston-based Paloma Partners. Together with the Exxon deal, American Energy said it acquired about 130,000 acres in those transactions, doubling its holdings in the field.

American Energy raised $1.7 billion in loans and investor commitments last year and last month said it raised another $500 million for oil and gas development. McClendon formed the Oklahoma City-based company after he was forced out as Chesapeake’s CEO in April 2013.

McClendon co-founded Chesapeake in 1992. A board inquiry into his use of personal stakes in company-owned wells to obtain more than $800 million in private loans cleared him of any intentional wrongdoing in February 2013.

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