Utica Shale acreage values trending higher

By Mikaila Adams
Oil & Gas Financial Journal

Recent Utica Shale activity is trending upward and it appears valuations in the area are on the rise as well.

Yesterday, Rex Energy Corp. announced a signed agreement to acquire 40,000 net acres in Carroll County, Ohio targeting the Utica Shale. With a total consideration of $40 million, the State College, PA-based company paid roughly $3,600/acre.

Based on the timing of the Rex Energy announcement, said analysts at Baird Equity Research, “we presume that the acquisition was negotiated prior to the Chesapeake announcement that its 1.25 million acres in Ohio are worth $15 to $20 billion, or $12,000 to $16,000/acre.”

As part of its 2Q11 financial report and citing successful results from horizontal and vertical wells drilled in the holdings coupled with proprietary geoscientific, petrophysical and engineering research, Chesapeake Energy said its “industry-leading 1.25 million net leasehold acres in the Utica Shale play could be worth $15 - $20 billion in increased value to the company.”

While the dollar figure for Chesapeake’s acreage is up for debate, the price per acre valuation in regards to the Rex Energy transaction is higher than a previous benchmark set by Gulfport Energy Corp. (Nasdaq: GPOR).

On July 11, the Oklahoma City-based independent paid approximately $2,300/acre for Utica Shale assets in Ohio.

"Based on the prior transaction milestone from Gulfport/Wexford Capital at $2,300/acre, we think investors should view the REXX transaction as a rising floor level valuation for Utica acreage," said Baird analysts in a note to investors August 3.

The transaction saw Gulfport add leasehold interests in nearly 35,000 gross (17,500 net) acres in Utica Shale of Eastern Ohio, while the company reports additional commitments could bring its position in the Utica Shale to approximately 110,000 gross (55,000 net) leasehold acres if all such committed acreage is acquired.

According to the company’s website, Gulfport is currently evaluating additional Utica Shale acquisitions that could increase its commitments to roughly 130,000 gross (65,000 net) leasehold acres in the coming months. Gulfport will serve as operator of its acreage in the Utica Shale and currently plans to bring a rig into the play in early 2012 to begin drilling its acreage.

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