The Rising Influence of Rising Affluence

[DewDiligence]

XOM Climbs On the Utica-Shale Bandwagon

http://online.wsj.com/article/SB10001424053111903703604576587331752543282.html

›SEPTEMBER 22, 2011, 7:03 P.M. ET
By ISABEL ORDONEZ And RYAN DEZEMBER

HOUSTON—Exxon Mobil Corp. said Thursday it has acquired leases in Ohio's Utica Shale, marking its first foray into a field that is thought to hold vast amounts of crude oil.

Exxon spokesman Jeff Neu said the company is "active" in the Utica Shale. He was responding to questions about a report from a publication in Wheeling, W.Va., that said scores of landowners have signed leases with the oil giant this month.

The Wheeling News-Register in West Virginia reported Sep. 17 that leases where signed for $4,950 per acre and 19% on production royalties. Exxon Mobil, the world's largest public oil company, confirmed it has signed the leases but declined to comment on the price it is paying per acre or the percentage on production royalties. The company didn't disclose the size of its position.

Several oil and gas companies, including Anadarko Petroleum Corp., Hess Corp. [see below], Devon Energy Corp. and Chesapeake Energy Corp. have rushed to secure leases in an area that many believe is the latest big North American onshore oil discovery.

The Utica, a deeply buried rock formation, lies below parts of eight states, from Tennessee to New York, as well as parts of Canada. Oil companies, however, have concentrated their leasing and exploration efforts in eastern Ohio, which they believe will yield more valuable oil and natural gas.

This month, Hess said it spent more than $1.34 billion acquiring 185,000 acres in Ohio [#msg-66906176, #msg-66914159]. The New York-based company spent $593 million on a 50% stake in 200,000 acres held by Consol Energy Inc. and spent another $750 million acquiring closely held Marquette Exploration LLC, which had 85,000 acres in the shale.

Ohio's Utica Shale is a neighbor of Pennsylvania's Marcellus Shale, where Exxon acquired a large presence after its purchase last year of natural-gas company XTO Energy.‹