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Wednesday, August 14, 2013

Magnum Hunter Selling Eagle Ford Shale Assets to Focus on Utica Shale

From The Motley Fool:
McClendon thought the Utica would be every bit as oily as the Eagle Ford, but that hasn't proven to be the case. Yet, some companies are finding the play to be everything McClendon said it would be, but just for different reasons. What companies are finding is that the play has a whole lot of very valuable natural gas and liquids. In fact, Magnum Hunter Resources(NYSE: MHR  ) is an example of one company that recently sold its acreage in the Eagle Ford so that it could turn its focus to the Utica.
On Magnum Hunter's recent quarterly conference call CEO Gary Evans had this to say about the company's decision to exit the Eagle Ford in favor of the Utica:
... [We've] taken that money, and we've paid down our debt. But we've also made a strategic decision to significantly enhance our existing position in the Utica ... And we've strategically been accumulating acreage in these plays for the past 3 years ... And we have derived a comfort level of the acreage that we already owned, and we have felt and our board has felt that we needed to increase that position ... So what we see with respect to this region of the Utica is extremely exciting to us.
He went on to say that the estimated ultimate recovery of each well in the Utica on a barrel of oil equivalent basis could be double (or greater) than what it was seeing in the Eagle Ford. What that means, despite the fact that the play contains a lot of natural gas, is that when looking at the overall returns, the Utica "competes very favorably with any oil well in the United States."
Read the entire article here. 

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