EV Energy Partners Markets Mahoning Valley Acreage
YOUNGSTOWN, Ohio – EV Energy Partners LP is looking to sell nearly 104,000 leasehold acres it owns in the Utica shale, including assets in Mahoning and Trumbull counties.
EV Energy, a subsidiary of Houston-based EnerVest Ltd., wants to divest itself of 4,400 acres in Mahoning County as well as 12,300 acres in Trumbull County as part of 103,800 acres its trying to sell in the Utica shale.
"We're not going to do a transaction without delivering an attractive price," said John Walker, executive chairman, during a conference call with investors March 1. Initially, EV Energy considered land exchanges for its Utica acreage from other parties, but Walker said that the valuation came in "below expectations."
Negotiations have since re-opened with multiple parties regarding EV Energy's holdings in "two northern counties," Walker reported. There might also be options for selling off the acreage county by county.
In addition to the acreage in Trumbull and Mahoning counties, EV Energy Partners is marketing 40,300 acres in Stark County; 21,800 in Tuscarawas County; 10,900 in Carroll County; 6,200 in Muskingum County; 4,600 in Guernsey County; 1,700 in Harrison County; and 1,000 acres in Noble County.
The company plans to keep 56,600 acres in Ohio and another 16,900 in western Pennsylvania, including 8,300 acres in Mercer County, Pa.
Walker said any sales could come as early as a month from now, or take until the end of the year to complete.
He noted that EV Energy holds some of the Utica play's most sought-after acreage, including positions in the "wet" gas window of the play and the volatile oil window.
EV Energy said it wants to sell the acreage instead of investing into new well development. On average, it costs between $5 million to $6 million to drill a new horizontal well.
However, the company has stepped up its investment in its joint venture with Access Midstream and M3 Midstream, called UEO Buckeye. EV Energy said it plans to invest between $335 million and $395 million into its Utica operations this year.
The $900 million project consists of building pipeline infrastructure and construction of three processing plants in the Utica, one near the town of Kensington in Hanover Township in Columbiana County, another in Harrison County near Cadiz, and another in southwestern Carroll County near Leesville.
Recently, EV Energy Partners announced it would increase its investment stake in the project from 8% to 21%.
The company also has 9% interest in Cardinal Gas Services, a project with Access Midstream and Total SA.
Walker said that these midstream operations could generate between $50 million and $70 million per year once the operations are under way.
The Kensington plant, another gas processing complex owned by Dominion in Natrium, W. Va., and another plant under development by MarkWest Energy Partners in Cadiz, Ohio, should be processing natural-gas liquids by this summer.
Walker reported that the industry has committed approximately $6 billion into developing midstream operations in the Utica.
Within five years, Walker said that its 2% royalty interests in the 880,000 acres it has interest in throughout Ohio could generate in excess of $50 million per year in five years.
"The Utica will just keep on giving," Walker said.
EV Energy Partners reported a net loss of $16.3 million for 2012, or 38 cents per limited partnership unit. For the quarter ending Dec. 31, 2012, EV Energy reported a net loss of $9.9 million, or 23 cents per unit, on revenues of $75.5 million.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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