Blue Ridge Mountain Resources Inc. (BRMR) said this week it plans to sell to an undisclosed buyer a 40% working interest in 21,000 net acres in southeast Ohio.
The undeveloped properties in Monroe and Washington counties are prospective for both the Marcellus and Utica shales, BRMR said.
BRMR, formerly Magnum Hunter Resources Corp., said when the deal is closed, the parties plan to enter a joint development agreement (JDA) for an area of mutual interest (AMI) in the two counties’ Benton, Ludlow and Grandview townships. Under the terms of the JDA, the buyer would provide $36 million in 2018 for drilling, completion and land renewal expenditures. The buyer would also have a right to 40% participation in any additional acreage that BRMR acquires in the AMI.
BRMR plans to use the proceeds to help fund its ongoing two-rig program in Appalachia and consolidate its acreage position in southeast Ohio. BRMR plans to deploy one rig to the AMI in 2Q2018.
The deal, which is expected to close in April, would not be immediately accretive to BRMR. Instead, nearly a quarter of the sale price would be placed into escrow and released as the producer renews, replaces or extends certain leases this year or brings them to their secondary term through production activities. BRMR said the buyer could participate in the JDA beyond this year, but no details were provided.
Magnum emerged from bankruptcy in May 2016 and later rebranded as BRMR, which now produces 72 MMcfe/d across 105,000 net acres. Late last year, the company sold its stake in Eureka Midstream LLC, which owns and operates a major natural gas gathering system that straddles Ohio and West Virginia.