WHEELING, W.Va. — Marcellus and Utica shale drilling rights landowners in Wetzel, Tyler and Doddridge counties may have leased for as little as $5 per acre have now sold for $8,182 per acre, as Antero Resources will acquire the leasehold from Southwestern Energy Co.
For $450 million, Southwestern will sell 55,000 acres of drilling rights to Antero. The acreage is part of the 413,000 leasehold acres Southwestern purchased from Chesapeake Energy for $5 billion in 2014.
However, this is less than the $12,106 per acre the Houston, Texas-based firm paid for it in 2014. Southwestern President and CEO Bill Way said the proceeds from the transaction would help the company reduce the principal on a $750 million term loan due in November 2018.
He also said Southwestern did not plan to drill on any of this acreage until at least 2023.
“We are bringing forward the value of acreage that is much longer dated in our development plans, enabling us to take action and proactively reduce outstanding debt,” Way said.
“Together with the progress we are making on margin enhancement, this sale further strengthens both the company’s financial flexibility and our bridge to value-added growth for shareholders.”
Antero Chairman and CEO Paul Rady said about 41,000 of the 55,000 acres also include rights both to the Marcellus Shale and the deeper Utica Shale. Industry leaders often refer to this as a “stacked play” because they can retrieve minerals from multiple depths while operating from the same surface location.
“The transaction creates a new platform for development and consolidation in Wetzel County, with attractive rich and dry gas Marcellus locations, as well as stacked play potential for the dry Utica,” Rady said. “In addition, the acquisition adds or enhances 225 Marcellus dry gas locations and over 500 highly prospective dry Utica locations, adding dry gas optionality to our inventory. This acquisition further positions Antero for continued growth and development in the southwest Marcellus.”
Antero President and Chief Financial Officer Glen Warren said the company will add an additional working rig to its fleet to focus on the new acreage, but will keep its 2016 budget for actual drilling and fracking at $1.3 billion.
“The additional rig, which will focus primarily on Tyler County, enables Antero to accelerate production so that we believe we can generate 20 percent to 25 percent year-over-year growth,” he said.
Antero forecasts net daily production for this year to average 1.75 billion cubic feet of natural gas per day, a 17-percent increase from 2015.