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McClendon's AEP-LP Tacks On More Utica Acreage

American Energy Partners LP (AEP-LP) announced Monday that one of its affiliates has signed three separate agreements to purchase approximately 130,000 net acres in the southern Utica Shale, boosting its position there to 260,000 net acres.

AEP-LP, which is led by Aubrey McClendon, said its affiliate, American Energy-Utica LLC (AEU), had signed agreements with affiliates of Hess Corp., ExxonMobil Corp. and privately held Paloma Partners LLC.

In a separate announcement Monday, ExxonMobil subsidiary XTO Energy Inc. confirmed that it had signed an agreement with AEU after a competitive bid process to earn 30,000 net acres in Ohio's Belmont, Harrison and Jefferson counties (see related). The deal will leave XTO with a core area of about 55,000 net acres in the Utica (see Shale Daily, Feb. 3).

Paloma spokesman Charlie Rexford told NGI's Shale Daily on Monday that the company had sold 26,000 net acres to AEU.

Last week, analysts had speculated that AEP-LP was the company buying dry gas acreage in the Utica from Hess (see Shale Daily, Jan. 30). Rexford said the Hess deal was for 74,000 net acres.

"AEU now maintains an impressive 260,000 net acre position in the southern core of the Utica with 90% of the acreage located in Jefferson, Belmont, eastern Guernsey, Harrison, Monroe, and Noble counties," analysts with Robert W. Baird & Co. said in a note. "We expect to hear additional operational updates over the coming months as AEU transitions from acreage capture mode to delineation drilling."

AEP-LP said the acquisitions would boost AEU's holdings in the southern Utica Shale to 260,000 net acres, with 90% located in a core area that includes Belmont, Harrison, Monroe and Noble counties, as well as eastern Guernsey and southern Jefferson counties. AEP-LP added that AEU plans to drill about 2,700 gross (1,600 net) wells in those counties over the next 10 years.

AEU's lead equity investor is The Energy & Minerals Group (EMG), which is based in Houston. Additional equity was being provided by First Reserve Corp. Last month, AEP-LP reported that it had secured up to $500 million in private equity commitments from EMG for onshore acquisitions (see Shale Daily, Jan. 29).

McClendon, a co-founder and former CEO of Chesapeake Energy Corp., formed AEP-LP last April and immediately began to cobble together a position in the Utica, buying assets from EV Energy Partners LP and Royal Dutch Shell plc (see Shale Daily, Aug. 21, 2013; April 17, 2013). AEP-LP also forged a joint venture (JV) with Red Hill Development LLC, and has midstream gathering, processing and fractionation agreements with MarkWest Utica EMG and Utica East Ohio Midstream LLC (see Shale Daily, Oct. 10, 2013; Oct. 3, 2013).

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