Marcellus / Utica / Shale Daily / E&P / NGI The Weekly Gas Market Report / Northeast / NGI All News Access

Ascent Resources Raises $787M For Utica Development, Rover Commitment

Appalachian pure-play Ascent Resources LLC has reached a deal to sell 3.5 billion common units in a private placement that would net it $787 million in proceeds, extinguishing debt and alleviating concerns about how the company would fund aggressive development plans in Ohio's Utica Shale.

When the placement closes, the company said it would contribute $175 million to finance aggressive drilling and completion in the Utica. It would also use $479 million to prepay in full the junior lien term loans under its credit agreement. Closing of the prepayment, Ascent said, is expected on Tuesday. The remaining proceeds would be used for Utica development and other corporate purposes.

The equity raise is part of a broader initiative announced by Ascent at the onset of the commodities downturn in late 2014 to shore up the company's balance sheet. The placement, announced on Thursday, brings the company's total equity raise to $1.5 billion this year. It also has reduced outstanding balance sheet debt by more than $1.9 billion in 2016.

CEO Jeffrey Fisher said those transactions resulted from strong collaboration among the company's lenders, sponsors and investors in a nod to the value of its assets in the Appalachian Basin.

Ascent had its beginnings in 2013, when former Chesapeake Energy Corp. CEO Aubrey McClendon founded American Energy Partners LP to develop affiliates across the country with basin-specific strategies. AELP created American Energy Utica LLC, which was combined with its Marcellus counterpart last year to form a standalone company that was renamed Ascent Resources (see Shale Daily, June 10, 2015). AELP announced in May that it would close after McClendon died in a car crash in March (see Shale Daily, May 20).

Ascent has 300,000 net acres in the Utica and Marcellus shales of Ohio and West Virginia. The private placement comes as Energy Transfer Partners LP awaits a Federal Energy Regulatory Commission certificate for construction of the 3.25 Bcf/d Rover Pipeline Project (see Shale Daily, July 29). Ascent is the largest firm capacity holder on Rover, with 1.1 Bcf/d committed. ETP management said this week that they anticipate Rover being in service to the Midwest Hub near Defiance, OH, by the end of June 2017, and to markets in Michigan and Canada by November 2017.

If Ascent was going to meet its obligations on the pipeline, it needed more capital to fund aggressive drilling in the Utica. Rover would run through parts of West Virginia, Pennsylvania, Ohio and Michigan to take gas from Appalachia to the Midwest and Canada.

Recent Articles by Jamison Cocklin

Comments powered by Disqus