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Antero Bulks Up West Virginia Leasehold

Denver-based Antero Resources, which has begun to expand its holdings in the Marcellus Shale, said Thursday it has acquired privately held Bluestone Energy Partners, an Appalachian natural gas producer.

Antero, which also is privately held, said it paid $93 million in cash and assumed $25 million of Bluestone's subordinated debt, which is due in 2013. In addition, Bluestone was issued 3.8 million units in subsidiary Antero Resources LLC, making it an equity partner.

Antero now controls nearly 168,000 net acres in the Marcellus Shale and has 80 MMcf/d of gross-operated production (56 MMcf/d net) in the southwestern part of the play. Almost all (96%) of the Bluestone leasehold is in West Virginia, with the remaining land in Pennsylvania. More than half of the leasehold (54%) is held by production.

Antero CEO Paul Rady praised Bluestone's Sam Ross and Mike Hall, and said the Bluestone team had "created quite a valuable asset in the play and we congratulate them on their success. We appreciate their confidence in Antero as exhibited by their equity position in Antero going forward. We are also excited to have the opportunity to integrate a number of Bluestone people into the Antero organization as we continue to build our operations in West Virginia."

 The purchase gives Antero a set of producing properties with 19 MMcf/d of gross operated output (13 MMcf/d net including nonoperated production) from 93 operated vertical and three operated horizontal wells. Properties also include gathering and compression assets and nearly 40,000 net acres in the Marcellus Shale.

The transaction would give Antero an additional 20 Bcfe of proved developed producing reserves. The assets also include 11 Bcf net of index fixed price natural gas hedges for production through December 2013 at a New York Mercantile Exchange-equivalent gas price of $7.21/MMBtu, the producer said.

According to Antero's website, the company has drilled and completed 16 horizontal wells and one vertical well in the Marcellus Shale and is in the process of drilling and completing 12 additional horizontal wells. It is operating three drilling rigs in the play and is building gathering and compression facilities. Antero also anchored a 15-mile lateral pipeline through the heart of its West Virginia acreage, which went into service in late September.

Antero was formed in 2002 by Rady and Glen Warren, former Pennaco Energy executives. In addition to the Marcellus Shale, Antero today operates in the Piceance Basin in Colorado and in the Arkoma and Ardmore basins in Oklahoma.

Last month the company sold its midstream assets in the Woodford Shale to Cardinal Midstream LLC for $270 million (see Shale Daily, Nov. 10). The company sold its Barnett Shale operations in April 2005 to XTO Energy Corp. for $685 million (see Daily GPI, April 5, 2005).

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