While it kicks off a long-term partnership with Chesapeake Energy Corp. on a drilling program in the Utica Shale of eastern Ohio, EV Energy Partners LP (EVEP) is preparing its own exploration campaign in the region.
The Houston-based company is the largest producer in Ohio and holds 780,000 net acres in the state. Chesapeake will be operating 40% of that acreage, but EVEP is moving ahead on evaluating the rest (see Shale Daily, Aug. 1).
Chesapeake is far and away the most bullish company in the Utica, holding 38 permits and running five rigs in Ohio. EnerVest Operating LLC, the operating arm of EVEP, is probably the second most bullish company, albeit a distant second. The company holds three permits in Stark and Jefferson counties, but leases significant acreage, and since EVEP produces around 25% of the oil and gas in Ohio, most of that acreage is held by production.
EnerVest also operates more than 400,000 net acres separate from but near the Chesapeake joint venture. Because of that proximity, EVEP hopes to have "meaningful cooperation" with Chesapeake on forming drilling units and contracting oil field services and midstream operations for the natural gas, oil and natural gas liquids in the play.
EnerVest is permitting 10 Utica wells and plans to drill two or three laterals late this year and early next year, CEO John Walker said during a recent quarterly earnings call. "We are awaiting more sustained test and production results from the spread of wells in various stages of drilling, completion, testing and production before we can assess the near-term value to EVEP. We expect these results to be released within 30 to 60 days." he said.
Those results will come from six wells drilled by Chesapeake through the joint venture.
EnerVest and its predecessors have drilled through and logged the Utica more than 600 times, but Walker said Chesapeake CEO Aubrey McClendon's comments about the Utica being "most analogous, but economically superior to" the Eagle Ford Shale "were based upon more data than we have, specifically producing well results, and his comparisons with other basins are based upon more experienced and factual results than we have."
But, he added, "The evaluation work that we have performed independently utilizing both internal staff and outside consultants support what's been said today. The comparisons to the Eagle Ford Shale appear to be accurate."
Walker said he believes the EVEP acreage is "within the emerging core of this play."
"We know that we and Chesapeake are the two major players in the core of this major shale play," he said. "We also know that within the core we'll have some outstanding wells and some for geological engineering reasons will be challenges. Clearly outside the core, there will be mixed results... Besides Chesapeake and ourselves, we do not believe that any other companies have these physical factual results to correctly assess the Utica at this time."
EVEP expects to spend $10 million this year on its Utica program.
The EnerVest Group could end up in additional partnerships, both on its own and alongside Chesapeake. Walker said Chesapeake set up a data room for the acreage in the hopes of bringing on additional partners.
EVEP produced 10 Bcfe during the second quarter, including 7 Bcf of natural gas.