Oklahoma City’s Ascent Resources, LLC announced its holdings in the Utica Shale in Ohio were expanded with the $270 million acquisition of new assets.
The company did not identify the seller but said the acquisition expands Ascent’s asset base in the Ohio Utica Shale play by ~26,800 net acres and increases net production by approximately 60 mmcfe/d.
Ascent entered into a purchase and sale agreement and intends to fund the transaction with a combination of cash on hand and borrowings under its revolving credit facility. The company has also entered into an amended and restated credit agreement with a syndicate of banks to extend the maturity of the Credit Facility to June 2027 while increasing the borrowing base and elected commitment amount to $3.0 billion and $2.0 billion, respectively. The Credit Facility will be governed by the lessor of the borrowing base and the elected commitment amount.
Ascent already holds working interests in a material portion of the acquired production and, as such, is familiar with the acquired acreage. In addition, the acquisition comes with a substantial inventory of identified drilling locations in both the Utica and Marcellus which we expect to add high margin cash flow in the future.
The acquisition requires no incremental overhead or external financing and is immediately accretive to Adjusted Free Cash Flow and corporate returns. Consistent with past practice, the Company has hedged a significant portion of the expected production from the asset to capture the strong economics and returns offered in the current market.
Jeff Fisher, Ascent’s Chairman and Chief Executive Officer, commented “We are excited to announce these strategic transactions as they highlight both our operational and financial execution. Through the acquisition we have added high quality acreage and production in the core of the Utica Shale at an attractive valuation, while also picking up prospective locations in the Marcellus. This transaction is immediately accretive to our financial metrics and returns while adding high-quality undeveloped inventory to our portfolio. The extension and increase of our credit facility provides the business with additional access to capital to execute on our long-term returns based strategy.”
Source: Ascent press release