EV Energy Partners, part of EnerVest Ltd., is in the final stages of a deal to sell its interest in 539,000 Utica Shale acres in Ohio, according to EV founder and chairman John Walker. (See this MDN story for background on how EV amassed such a large stake in the Utica.) When the final deal is done, it may bring in as much as $6 billion for EV.
Here’s what we know about the deal and what motivated it, from an investors call with Walker on Friday:
A Texas-based energy company and its parent are working to complete the sale of a key portion of eastern Ohio holdings, but the deals on an estimated 539,000 acres at the heart of Ohio’s Utica shale are not yet finalized.
EV Energy Partners LP, the publicly traded arm of privately held EnerVest Ltd., expects to complete the sales before Dec. 31, founder and executive chairman John B. Walker said Friday in a teleconference about the company’s third-quarter earnings.
He declined to identify the buyer or buyers on the Utica shale property that could fetch as much as $6 billion for the firm, according to financial experts.
The company has several offers from would-be buyers and is "very comfortable" that the deal or deals will close by the end of the year, he said.
He termed the sale "a very large and sizable transaction" and called the deals complex, with some would-be buyers offering cash and other properties. He likened the deals to assembling a quilt in fitting the pieces together.
He declined to comment on whether the company would get as much as $15,000 an acre for natural gas liquids and even more money per acre for oil areas.
Walker declined to comment on drilling results in the Utica shale because of the pending deals.
The money derived from the sales would go into drilling investments in other areas, the company has said.
The deal is seen as the first market test after more than a year of drilling in the Utica shale.
EnerVest announced in September that it intended to sell the Utica acreage.
That decision came after executives said the firm has no desire for the risk and expense of developing the Utica shale formation where horizontal wells cost in excess of $6 million.
The Houston-based firm said it intends to keep the shallow Clinton wells and the deeper Knox wells it owns in Ohio, plus its share in Utica processing facilities and other financial interests such as royalties.
The acreage being sold by EnerVest is a net figure consisting of tracts it owns outright and properties co-owned with other companies, some of which operate wells.*
*Akron (OH) Beacon Journal (Nov 10, 2012) – Texas firm continuing to work on Ohio shale land sales
- Seeking Alpha (Nov 9, 2012) – EV Energy Partners CEO Discusses Q3 2012 Results – Earnings Call Transcript