Nov. 05–LOUISVILLE Encino Acquisition Partners plans to drill Utica Shale wells for decades to come, with Stark County home to the company’s Ohio operations.
The Houston, Texas-based partnership closed Monday on a $2 billion deal to buy Chesapeake Energy’sUtica assets in Ohio.
Encino Acquisition Partners acquired 920 operated and non-operated wells and the drilling rights to more than 900,000 acres, along with Chesapeake’s field office in Louisville and the 109 employees who work there.
Who is Encino?
Encino Energy and the Canada Pension Plan Investment Board formed Encino Acquisition Partners in 2017. The pension board owns 98 percent of the partnership and Encino Energy, a privately held company in Houston, operates the assets.
The Chesapeake deal gives Encino Acquisition Partners more Utica wells than any other company in the state.
“The Utica is our most important asset,” said Encino Energy President and Chief Executive Hardy Murchison. “It’s by far our largest and it’s our focus for the foreseeable future. We see decades of drilling ahead of us there and we see it as being profitable across a wide range of oil and gas price outlooks. This is our focus.”
The new partnership looked at oil and natural gas basins around the country. Chesapeake held a lot of high-quality acreage in the Utica Shale, and had built a great team of workers in Ohio, all of whom joined Encino, Murchison said.
Chesapeake also was looking to sell assets to pay off debts.
Chesapeake’s acreage spanned the Utica Shale region, which has areas that produce everything from oil to natural gas to hydrocarbons like ethane that are used in making plastics and other chemicals.
Being able to drill for different products gives Encino Acquisition Partners flexibility to deal with swings in the prices of natural gas and oil.
The Utica region also has infrastructure — including new pipelines and processing plants — and end users of oil and natural gas, such as the Shell Appalachia “cracker plant” under construction near Pittsburgh.
Encino Acquisition Partners has two drilling rigs in the Utica and plans to pick up a third rig next year, and possibly a fourth rig the year after that, said Encino Energy Chief Operating Officer Ray Walker, who retired in April from Range Resources.
Murchison said Encino Acquisition Partners planned to run a long-term, sustainable drilling program and be a safe and responsible operator.
In the first year, the company will drill a lot of wells planned by Chesapeake. Beginning in 2020, Encino Acquisition Partners will start to map its own path with a combination of building new well pads and drilling wells on existing pads.
“We’ve got a lot of room to grow and what we’re really focused on is making good, steady cash flow year after year after year,” Walker said.
Murchison said he anticipated Encino Acquisition Partners buying more Utica acreage and hiring more workers in Ohio as the company uses more rigs.
With Chesapeake having closed its St. Clairsville office, Encino Acquisition Partners’ operations will be based in Louisville, where Chesapeake built a five-story office building with equipment yards.
“We expect to be in Louisville and the surrounding area for a long time and really want to make sure that we’re good citizens and good neighbors to the people in the area,” Murchison said.
Local officials have welcomed the new company.
“We’re extremely excited to have (Encino Acquisition Partners) in our community,” said Vince Marion, Louisville’s planning and development director. “We look forward to the working partnership and their involvement in the community and the surrounding area.”
Encino Acquisition Partners’ decision to stay in Louisville means keeping an anchor for the city’s Beck Industrial Commerce Center that could attract other companies, both those involved in drilling, but also users of oil and gas, such as plastics companies, Marion said.
Mayor Patricia A. Fallot said Encino would keep workers and revenue in Louisville, and attract more families to the city.
Chesapeake had a 10-year income tax abatement with the city, but that won’t transfer automatically to Encino Acquisition Partners, and would have to be re-approved by City Council, Marion said.
“That has not been requested at this point,” he said.
Along with city officials, Encino Acquisition Partners has met with the Stark Development Board.
Board President Ray Hexamer said he was impressed by how Encino Acquisition Partners reached out to Chesapeake’s local workers and the community before the deal closed. He said the Board was ready to help connect Encino Acquisition Partners with any workforce resources it would need.
“If they expand,” Hexamer said, “it’s good for all of us.”
Reach Shane at 330-580-8338 or firstname.lastname@example.org
On Twitter: @shooverREP
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