Antero Resources’ Ohio Utica Shale assets may attract interest from a who’s-who list of leading Appalachia E&Ps, according to analysts.
Antero is exploring a sale of upstream and midstream assets in the Utica, Hart Energy first reported late last month.
Denver-based Antero holds approximately 82,000 net acres in the Utica, as well as long-haul takeaway and supporting midstream assets. Antero has assets and acreage in Monroe, Noble, Guernsey and Belmont counties, Ohio.
The company produced about 154 MMcf/d from more than 240 horizontal wells in the play during the second quarter, according to the most recent data from the Ohio Department of Natural Resources.
M&A activity in the Ohio Utica is accelerating as natural gas prices climb, highlighted by EOG Resources’ $5.6 billion acquisition of Encino Energy this summer.
“[Antero] has systematically reviewed the value of the Utica assets and believes the current market is conducive for a sale,” Subash Chandra, analyst for The Benchmark Co., wrote in a Sept. 2 report.
Antero hasn’t drilled much on its Utica acreage in recent years, Chandra noted. Output from the Utica has declined by 75% since its 2019 peak as Antero shifted its focus to NGL production and its vast Marcellus Shale inventory.
Proceeds from a potential Ohio sale could be used to reduce Antero’s $1.5 billion in net debt “by up to one-third,” or around $500 million, according to Benchmark.
Sources told Hart Energy that Antero’s upstream and midstream Utica package may command as much as $1 billion in a potential sale.
Antero’s Utica package could be “an intriguing bolt-on for Expand,” according to KeyBanc.
Expand—formed through the merger of Chesapeake Energy and Southwestern Energy—has 566,000 net acres in southwest Appalachia across Ohio and West Virginia.
Expand targets a leverage ratio below 1x by year-end, making an acquisition from Antero “feasible and easy for the balance sheet to absorb,” Rezvan wrote.
“In addition, there are obvious synergies, given the two operators’ acreage position is so close in Belmont and Monroe counties,” he noted.
Antero’s Utica assets span across the play’s liquids and dry gas windows. KeyBanc views Antero’s dry gas wells as slightly less productive than regional peers.
Antero’s dry gas wells produced 0.385 Bcfe/1,000 lateral ft from 2016 through 2023—about 18% below the industry average. The company’s wells trend gassier to the east and more liquids-rich to the west.
Antero’s Utica wells trend gassier to the east and more liquids-rich to the west. (Source: KeyBanc, Enverus)
Gulfport Energy
A Utica acquisition from Antero could be transformative for Gulfport Energy, according to KeyBanc.
Oklahoma City-based Gulfport has positions in Appalachia and in the Midcontinent’s SCOOP play.
Gulfport has openly signaled its interest in M&A, with options ranging from smaller bolt-ons to larger-scale transactions under consideration.
On Sept. 5, Gulfport completed a redemption of its $385 million Series A preferred stock, with just $31.3 million paid in cash and the remainder converted into 2.1 million common shares.
The move simplifies Gulfport’s capital structure, preserves balance sheet flexibility and leaves leverage essentially unchanged.
“This modest cash outlay keeps all funding options for potential M&A, such as the Antero Utica package,” Rezvan wrote Sept. 8.
Gulfport’s legacy Anadarko Basin position could be another potential funding lever, potentially generated between $500 million and $750 million through a divestiture, he said.
Infinity Natural Resources
Newly public Appalachia E&P Infinity Natural Resources could be another logical buyer of Antero’s assets.
Infinity is a top producer in the Ohio Utica’s volatile oil window. The company also has Utica and Marcellus dry gas exposure in southwestern Pennsylvania.
Infinity holds 63,000 net acres in the Utica’s volatile oil window and 61,600 net acres in the Marcellus dry gas window.
After closing an IPO earlier this year, Infinity aims to keep growing in Appalachia through M&A, CEO Zach Arnold said Aug. 27 at Hart Energy’s DUG Appalachia Conference & Expo in Pittsburgh.
KeyBanc assumes Infinity would look to use debt financing for a potential Utica acquisition given the company’s current leverage of only 0.1x.
With Infinity shares down around 38% since the January IPO, equity consideration appears a tougher path, Rezvan said.
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