Devon Energy Puts 240K Acres of Utica Shale Leases Up for Sale

for sale sign On Wednesday Devon Energy Corp. confirmed it’s selling off all of its holdings in both the Ohio Utica and Louisiana Tuscaloosa Marine Shale. Between the two shale plays, the company is hoping to raise about $3 billion. Devon’s Utica Shale holdings include 244,000 gross acres (195,000 net) in eastern Ohio in the liquids-rich portion of the play. Devon has hired Scotiabank’s Scotia Waterous (USA) Inc. M&A division to handle the sale. A map of Devon’s eastern Ohio Utica property is embedded below.

Devon’s Utica Shale acreage is “mostly” held by production, and is part of a $2.5 billion investment deal Devon signed with China’s Sinopec in 2012. Selling the Utica and Tuscaloosa Marine should not affect the larger Sinopec deal.

Following is the official listing from Scotia Waterous. It’s the second time we’ve come across that interesting term “prospectivity”—in just one week! See BP in OH Utica Shale: The Prospectivity of Producibility for the first time we noticed it.


Scotia Waterous (USA) Inc. (“Scotia Waterous”) has been retained as exclusive advisor by Devon Energy Corporation (“Devon” or the “Company”) to advise and assist in the sale of the Company’s Utica Shale / Point Pleasant assets in Eastern Ohio (the “Offering”). The Utica / Point Pleasant play is currently in the early stages of appraisal and development. Regional well results are promising and there is growing confidence in the prospectivity of the play given very significant leasing and drilling activity.


Location Map

Note: Hydrocarbon windows are courtesy of the Ohio Department of Natural Resources (ODNR)



BACKGROUND TO SALE

Devon is a leading independent oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma. Devon’s operations are focused onshore in the United States and Canada. The Offering represents a complete sale of Devon’s position in the Utica Shale / Point Pleasant play, including all acreage associated with the previously announced joint venture with China Petrochemical Corporation (“Sinopec”).



OFFERING OVERVIEW

This Offering provides an opportunity to acquire a material leasehold position within the prolific Utica / Point Pleasant play. The Offering consists of approximately 244,000 gross acres (195,000 net) in eastern Ohio across in the liquids-prone portion of the play. The acreage is largely held by existing production (existing production is not included in this offering) with significant upside development potential in the Guernsey County area. Please see the Introductory Map for more details.



INVESTMENT HIGHLIGHTS

  • Opportunity to acquire substantial leasehold within the emerging Utica / Point Pleasant play of eastern Ohio with attractive lease terms
    • Largely operated acreage offers control position in one of the hottest shale plays in North America
    • Approximately 244,000 gross acres (195,000 net with average W.I. of 79.7% and average royalty plus minor additional burdens of 13.2%)
  • Active leasing, well permitting, and drilling with encouraging results in the region
    • Approximately 270 horizontal well permits have been issued in eastern Ohio as of December 2012
    • Operators have been actively acquiring acreage surrounding Devon’s position with recent transactions in Guernsey, Noble and Tuscarawas Counties
    • Regionally, initial horizontal well results from nearby positions are encouraging:
      • Devon Chumney Family Trust 1H: 448 bbl/day + 1,203 Mcf/day (Guernsey County)
      • Gulfport Groh 12H: 1,816 bbl/day + 2,800 Mcf/day (Guernsey County)
      • Anadarko Spencer 5H: 415 bbl/day + 406 Mcf/day (Guernsey County)
      • Anadarko Brookfield 3H: 598 bbl/day + 785 Mcf/day (Noble County)
      • CNX Troyer 3H: 400 bbl/day (Tuscarawas County)
  • Existing and planned infrastructure as well as differentials will enhance ability of buyer to develop the asset base
    • 40 to 50° API oil currently receives up to $4.00 premium to WTI due to demand from local refineries
    • Major highways adjacent to the acreage and existing on-lease road infrastructure
    • Potential future oil/liquids pipeline infrastructure development
    • Tennessee Gas, Columbia Gas, and Dominion have major gas lines throughout Devon’s leasehold

*Scotia Waterous (accessed Jan 31, 2013) – Devon: 2013 Utica Shale Offering

See also:

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.

Web Statistics