Hilcorp Solidifies Position in Northern Utica

YOUNGSTOWN, Ohio – Oil and gas exploration in the northern section of the Utica shale is starting to accelerate once again, led by Houston-based Hilcorp Energy Co.

Over the past 12 months, Hilcorp has solidified its base in the northern Utica – especially Columbiana County – through new lease acquisitions, amendments to and renewals of existing leases, and the construction of new well pads, records show.

“They appear to be pretty aggressive in their drilling,” says Jeff Dick, professor of geology at Youngstown State University. Recently, the company completed three wells near where Dick lives in Columbiana County.

Since November, Hilcorp has secured 16 new permits for horizontal wells in Fairfield and Elk Run townships – most recently for the Elkrun-Scheel well pad, according to the Ohio Department of Natural Resources.

The Scheel well pad is under construction just off state Route 517 in Elk Run Township, Dick says, one of the largest footprints for a well pad he’s seen in the Utica. “They’re doing some pretty impressive stuff,” he says, “and it looks like they’re going longer laterals.”

Hilcorp is targeting the area known as the Brinker Storage Field – about 35,000 acres Chesapeake Energy Corp. secured during the early rush for land in the Utica. Chesapeake has since disengaged from new drilling in the region, but so far has held on to its producing wells in Columbiana County. About two years ago, Chesapeake assigned to Hilcorp its leases in the Brinker.

Dick makes an educated guess that most of the gas drilled in this section of the Utica is in the dry gas window, but that’s hard to discern because the state of Ohio does not require energy companies to report how much of a well’s natural gas production is wet gas or dry gas.

According to ODNR data, Columbiana County is home to 60 operating wells that collectively produced 6.572 billion cubic feet of natural gas during the first quarter of 2017, but little if any oil. Chesapeake owns all but 10 of those wells.

Hilcorp owns three in production during the first quarter, while Atlas Noble LLC operates seven producing wells in Unity and Fairfield townships.

The most productive well in the county is Chesapeake’s Paige 5H well in Franklin Township, which yielded 514.1 million cubic feet of gas. The most productive Hilcorp well, according to the latest ODNR data, is the Fairfield-Nolker 7H well in Fairfield Township. It yielded 281.6 million cubic feet of gas during the period.

Hilcorp also operates seven producing wells at the Carbon Limestone well pad in Poland Township and is part of Pennant Midstream LLC’s Hickory Bend pipeline and processing network that runs from western Pennsylvania to a processing plant in Springfield Township in Mahoning County.

As such, Hilcorp is the most aggressive in moving forward in this section of the Utica.

According to data provided through the Columbiana County recorder’s office, over the last 12 months Hilcorp has secured or amended 171 leases – most of them in Fairfield and Elk Run townships.

The terms of these leases are not disclosed – especially upfront payments to landowners – but it’s likely these payments are not as lucrative as when energy companies first started prospecting the Utica in 2010 and 2011, observes Alan Wenger, an attorney with Harrington, Hoppe & Mitchell. Wenger heads his firm’s oil and gas division.

“I’m seeing some activity, including approaches to those with unleased property, which includes inquiries outside the footprint in their big units,” Wenger says. “They’re filling up these units by nailing down some adjoining parcels. So they must be liking what they see here.”

Hilcorp’s maneuvering in Columbiana County comes when energy giants such as Chesapeake and BP America have officially released all of their leases in this section of the Utica, Wenger says.

“BP has released all of its leases in every county,” he continues, while the leases in northern Columbiana County and southern Mahoning County that Chesapeake secured were allowed to expire.

“Those no longer exist, and they’re now done,” Wenger says. “I doubt we’ll see them again.”

Hilcorp, however, is actively negotiating with landowners in northern Columbiana County to strengthen its position in this section of the Utica, Wenger says.

Moreover, the units Hilcorp is compiling are much larger than the standard footprint often seen in the Utica. “These are really mammoth units,” he says. “They’re selectively looking at properties and proactively locking things down.”

Over the past two months, ODNR has awarded four horizontal well permits to Hilcorp in Elk Run Township at the Elk Run-Scheel pad, notes Columbiana County Commissioner Tim Weigle. “We do have some activity,” he says. “It’s picking up a little.”

The last rig actively drilling was at a Hilcorp well on Elkton Road, Weigle says.

Oil and gas markets have rebounded since prices started their downward spiral in 2014, adds YSU’s Dick, and the Utica overall has seen a tempered resurgence in exploration and production.

“There’s a whole new attitude with these companies,” the geology professor says, noting an increase in their exploration and production budgets. These actions, coupled with the prospect of future demand with the construction of a $6 billion ethane cracker in Monaca, Pa., and new natural-gas powered electrical generation plants in the region, bode well for oil and gas development throughout the Utica.

“These companies see demand rising,” Dick says, “and they feel that the bottleneck is loosening up.”

Pictured: Jeffrey Dick, a geology professor at Youngstown State University, took this picture of  Hilcorp’s new well pad under construction just off state Route 517 in Elk Run Township.

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