Utica Shale

Carrizo Oil and Gas Enters Utica Shale Joint Venture

Carrizo Oil and Gas (CRZO) formed a joint venture with Avista Capital Partners to purchase and develop leasehold that is prospective for the Utica Shale.  The venture is primarily looking for leasehold in the liquids portion of the play and recently closed on the acquisition of 15,000 net acres in Ohio and Pennsylvania at an average cost of $1,500 per acre.

Carrizo Oil and Gas will own an initial 10% interest in the joint venture but holds two purchase options to increase its interest to 50% over the next eighteen months. Carrizo Oil and Gas will also be the operator of the joint venture.

Hess Corporation Buys Additional Utica Shale Leasehold

Hess Corporation (HES) reported the purchase of Marquette Exploration LLC, a private oil and gas company, as well as several other lease purchases in the Utica Shale.  The company spent $750 million to increase its leasehold position by 85,000 net acres. This was the company’s second deal involving the Utica Shale in less than a week.

Hess Corporation said that the leasehold is primarily located in Jefferson, Harrison and Belmont counties.  The company expects to begin appraisal activities in the fourth quarter of 2011.

PDC Energy Enters Utica Shale Play

PDC Energy (PETD) announced the acquisition of leasehold in Ohio that is prospective for the Utica Shale. The acreage is in the wet gas or liquids portion of the play.

PDC Energy is paying $50 million for 30,000 net acres located mostly in Noble, Monroe, Washington, Morgan and Guernsey counties.  The company said that 75% of the acreage is held by production from shallower wells.

PDC Energy plans to drill a vertical test well in the fourth quarter of 2011, followed by two horizontal wells into the Utica Shale in 2012.  The company has an option to drill two additional vertical wells in 2012.

PDC Energy will pay $10 million in 2011 and the balance in 2012 upon title confirmation.  The company will fund the purchase with its credit facility. The company is looking for additional opportunities and plans to increase its Utica Shale leasehold to between 80,000 and 100,000 net acres by the end of 2012.

PDC Energy is also looking for a joint venture partner to share the risk and cost of developing the Utica Shale leasehold.