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Hess Sells Acreage in Utica's Dry Gas Window
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NEW YORK -- Hess Corp. has agreed to sell 74,000 acres of its dry gas acreage in the Utica Shale to an undisclosed third party for $924 million in cash and instead concentrate capital investment in its liquids-based asset portfolio.
According to various news organizations, which all quote The Wall Street Journal, the buyer is American Energy Partners LP, the company formed last year by Aubrey McClendon, the former CEO of Chesapeake Energy. McClendon’s company reportedly has declined comment.
Meanwhile, an affiliate of Oklahoma City-based American Energy Partners announced Wednesday that it has obtained another “$500 million in equity commitments to pursue a business plan focused on the acquisition of non-operated working interests in various onshore basins in the U.S.”
American Energy Partners reported in the fall that it secured $1.7 billion in equity commitments to do business in the Utica shale.
Hess Energy announced Jan. 23 that it would spend $550 million to drill approximately 35 wells primarily in the wet gas window of the Utica Shale play in Ohio.
The company has 86,000 acres in the Utica play that it is developing through a partnership with Consol Energy. These leaseholds are in the Southern Utica’s wet gas window; the acres reportedly sold to AEP are in the dry-gas window.
Hess said proceeds from the $924 million sale would be used to fund share repurchases.
“The sale of our Utica dry gas acreage is an example of our continued commitment to grow shareholder value through ongoing portfolio reshaping,” said the company’s CEO, John B. Hess, in a prepared statement. “While our wells in the dry gas portion of the Utica were highly productive, we concluded that the potential returns from such an investment, at current and projected natural gas prices, no longer justified retaining this acreage as a strategic part of our overall liquids-based asset portfolio.”
Published by The Business Journal, Youngstown, Ohio.
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