Gulfport Energy Corp. is acquiring 35,325 net Utica Shale acres from privately held American Energy Utica LLC (AEU) for nearly $407 million in another deal that consolidates its position in the play's dry natural gas window.
The company announced several deals with AEU, which is an affiliate of American Energy Partners LP (AELP), created and run by former Chesapeake Energy Corp. CEO Aubrey McClendon (see related story).
The bulk of the AEU acquisition, expected to close this month, is in Monroe County, where Gulfport agreed to purchase 29,127 net acres for $338.4 million. The assets include 14.6 MMcf/d of production; more than 11 drilled but uncompleted wells; one recently constructed four-well pad location, and an 11-mile gas gathering system that interconnects with Texas Eastern Transmission (Tetco). Gulfport plans to add a rig to the new Monroe County acreage early next year.
Gulfport would also pick-up 287 MMcf/d of AEU's incremental firm transportation commitments as part of the transaction. The company said 85% of the Monroe County acreage is held by production.
The acquisition is Gulfport's second in Ohio this quarter. To date this year, it has added nearly 60,000 net acres and 350 drilling locations after it agreed in April to acquire private equity-backed Paloma Partners III LLC for $300 million and its 24,000 net acres in Belmont and Jefferson counties (see Shale Daily, April 16).
The AEU agreement builds on the Paloma transaction and expands Gulfport’s position in the Utica, where it has focused its operations since the commodity price slide (see Shale Daily, May 7). Gulfport had already purchased 6,198 undeveloped net acres from AEU, also in Belmont and Jefferson counties, and is planning to add a rig by the end of the year if the Paloma deal closes as expected in the third quarter.
Overall, Gulfport's acreage position in Ohio would grow to 243,000 net acres once the Paloma and AEU acquisitions are completed. While its Canadian oilsands production has been idled and operations are scaled back on legacy assets in southern Louisiana, Gulfport has built its stake in Utica, with 96% of this year's capital budget earmarked for the play.
In connection with the transaction, Gulfport on Wednesday said it would offer 10 million shares at $43.25/share to help fund the AEU acquisition. After offering expenses, Gulfport expects to raise $417.2 million. A combination of equity and debt was also issued to fund the Paloma deal.
Once the sale is completed, AEU would hold about 190,000 net acres in Ohio's Utica. A year ago, it spent $4.25 billion to enter the Permian Basin, the Marcellus Shale and expand its position in the Utica (see Shale Daily, June 9, 2014). A deal with Paloma last year for the same acreage that Gulfport acquired, however, fell through after the transaction failed to be completed (see Shale Daily, Feb. 3, 2014).
AELP said the assets being sold were “not scheduled for near-term development” and “are a better fit for Gulfport’s planned development activities.” On Tuesday AELP said the Appalachian affiliates would be renamed Ascent Resources LLC and would transition to a standalone operating company. In January, AELP combined its Utica and Marcellus operations in an all-stock transaction (see Shale Daily, Jan. 5).