EIA Reports 64 Bcf Fill - Shedding the Light on Utica Valuation
9 pages, 10 exhibits
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Shedding the Light on Utica Value. This past week was marked with
activity that helped delineate Utica valuation. First, CNX announced a JV
with HES for a 50% working interest in CNX’s ~200k net acres in the Utica
for $593MM ($59MM at close and $534MM carry through 2016), or
~$4,500/acre (discounted). Looking at valuation from a different perspective,
60% of CNX’s Utica acreage is non-core and could be viewed as
~$2,000/acre for the 120k net acres of oil/dry gas (non-core) and ~$10,000–
12,000/acre (~$9,000/acre discounted) for the 80k net acres in the wet gas
window. HES also announced that it acquired 85k net acres in the Utica for
$750MM (~$8,800/acre), which is in-line with the second valuation method.
Finally, the Ohio Division of Mineral Management announced the first
completed Eastern Ohio Utica horizontal well (CHK’s well), which IP’d at
~6.5 MMcfe/d. This result was meaningfully below expectations (rumored to
have IP’d +20 MMcfe/d), but we note that it is still very early in the play.
Notably the well was completed in the Utica formation whereas operators
had discussed the Pt. Pleasant as being the more optimal target. |
