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Pin Oak Seals Another Small Deal for Seneca NatGas Assets

Akron, OH-based Pin Oak Energy Partners LLC continued a buying spree on Wednesday, announcing that it had completed a transaction to acquire 4,300 gross acres in northwest Pennsylvania from Seneca Resources Corp.

Privately owned Pin Oak was established in 2015 by executives that had long worked in the Appalachian Basin. Since then, it has pursued a growth strategy aimed at acquiring both conventional and unconventional oil and natural gas assets.

The deal with Seneca caps a particularly busy third quarter for Pin Oak in which it marked three transactions that primarily expanded its unconventional footprint in Ohio and Pennsylvania. The company has not disclosed the purchase price for any of its acquisitions.

Seneca sold the assets in its Western Development Area, where it was operating more than 700,000 acres. Pin Oak acquired 14 producing Marcellus Shale wells and two producing Utica Shale wells across eight pads. The assets are currently producing 6 MMcfe/d.

The company acquired another 7,700 acres in August in Ohio’s Trumbull, Tuscarawas and Mahoning counties and in Pennsylvania’s Mercer, Crawford and Venango counties. That deal included 10 producing Utica wells and 22 miles of gathering lines, among other things. In July, Pin Oak also purchased 9,300 net acres and eight Utica wells from EQT Corp. in Ohio’s Muskingum and Columbiana counties.

That deal could be a preview of what’s to come at EQT, which is set to acquire more acreage in Ohio if its deal to buy Rice Energy Inc. is completed. EQT suspended its deep Utica test program in West Virginia and Pennsylvania over the summer to focus on the Marcellus. It remains unclear what EQT intends to do with Rice’s acreage in Belmont County, OH, since most of the acquisition synergies are focused on Pennsylvania. EQT abandoned its other Ohio Utica acreage in 2014 and hasn’t looked back since.

Pin Oak’s third quarter deals come on the heels of an active 2016, when it closed on multiple acquisitions and began to add to its position. There’s still plenty of room for growth, however, Pin Oak currently operates 379 wells that were producing 12 MMcfe/d, of which 16% is liquids, across more than 36,300 acres. It also operates midstream assets through affiliate companies.

The company is led by CEO Christopher Halvorson, who founded it with Mark H. Van Tyne, chief business development officer. Halvorson previously worked as CFO for the now defunct AB Resources LLC, also focused on the Appalachian Basin, and he also worked with an Exco Resources Inc. Appalachian subsidiary. Van Tyne previously worked as vice president of land for AB Resources.

At a time when the equity markets have retreated from smaller producers in Appalachia in favor of hotter plays in the Permian Basin, for example, Kansas City-based CrossFirst Bank reaffirmed Pin Oak’s borrowing base last month. The corporate banker also increased the company’s credit facility to $150 million. 

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