On the heels of a mega Marcellus Shale partnership agreement in August, CONSOL Energy Inc. on Wednesday announced that Hess Corp. would become its partner on half of its nearly 200,000 acres in the prospective Utica Shale in eastern Ohio.

Hess agreed to acquire a 50% interest in CONSOL’s eastern Ohio leasehold for aggregate payments of $593 million. Last month CONSOL sold Noble Energy Inc. half of its leasehold in a portion of Pennsylvania and West Virginia’s Marcellus Shale in a deal valued at $3.4 billion (see Shale Daily, Aug. 19).

Gaining entry to the Utica “enables us to build a strategic acreage position in an emerging unconventional play in the United States,” said CEO John Hess. “We believe that this acquisition offers significant potential for future growth in reserves and production with most of the land either owned in fee or held by production with high net revenue interests.”

Hess agreed to pay CONSOL $59 million at closing, which is expected in October, and $534 million in the form of a 50% drilling carry of some of CONSOL’s working interest obligations over a five-year period. Hess would operate mostly in the liquids-rich window in Belmont, Harrison, Guernsey and Jefferson counties, and CONSOL would operate elsewhere in the oily land of eastern Ohio, including Portage, Tuscarawas, Mahoning counties, as well as in Noble County.

The partners expect to ramp up initial drilling operations in a few weeks and would average two rigs in 2012, 3.5 rigs in 2013 and eventually plateau at an average of five rigs in 2015. The carry is expected to be fully utilized by year-end 2016.

The “skill sets” of Hess, “coupled with CONSOL’s deep footprint and history in northern Appalachia, result in a powerful combination that will benefit the eastern Ohio economy, strengthen the communities in which we operate and provide more opportunity for our employees and our respective companies,” said CONSOL CEO J. Brett Harvey.

According to Harvey, CONSOL acquired around 80,000 acres in Ohio decades ago; the remaining 120,000 acres in the Utica Shale were part of its $3.475 billion land acquisition last year from Dominion (see Daily GPI, March 16, 2010).

“With this joint venture, CONSOL Energy will be able to explore and delineate its Ohio Utica Shale acreage for 25 cents on the dollar, while still retaining a 50% interest. It’s a very low-risk form of exploration,” he said.

CONSOL reaffirmed its 2015 production target of 350 Bcf net and said “any success in the Utica Shale will be additive.”