Who’s Next in Ohio Utica M&A Deal-Making?

EOG Resources’ deal to buy Utica oil-focused Encino Energy will consolidate 61% of Ohio’s daily horizontal oil output, leaving another 43,382 bbl/d up for grabs, according to a Hart Energy analysis of Ohio state data.

Also up for grabs are 4.8 Bcf/d of gas and NGL, once EOG holds 1 Bcf/d of the state’s output upon closing the deal in the second half of 2025, the data show.

EOG put the $5.6 billion deal made May 30 behind their May 2024 words that the Utica oil play “can compete with the best plays in America,” announcing a company-rare M&A deal to buy privately held Encino, the Utica oil play’s largest producer.

Combined, the two operators produced an average of 67,436 bbl/d out of Ohio’s 110,818 horizontal bbl/d in fourth-quarter 2024, the most recent quarter the Ohio Department of Natural Resources (ONDR) has released data.

The state is expected to post first-quarter 2025 data later in June.

The data is for Ohio operators’ horizontal wells’ production only. The ONDR did not release a summary of 2024 vertical production from vintage wells yet. But a report on 2023 vertical output shows non-horizontal production from the state was 6,060 bbl/d oil and 85 MMcf/d gas and NGL that year.

Encino produced an average of 51,844 bbl/d in the fourth quarter.

EOG, the state’s No. 3 oil producer, made 15,599 bbl/d.

Of that, 15,426 bbl/d was from its new-drill wells beginning in 2022.

The balance was from wells made in the 2010s when operators first tried the Utica oil window with the frac recipes and oil-price volatility of the time.

EOG’s old-recipe wells came with leasehold it picked up in 2021 for its new play, primarily from Encino.

Tim Rezvan, an analyst for KeyBanc Capital Markets, reported May 27 after visiting with long-only clients in the U.S. Midwest that they held “continued interest in undervalued equities.”

Four of the five E&P stocks Rezvan and colleagues noted to clients are Ohio Utica operators: EOG, Expand Energy, Gulfport Energy and Infinity Natural Resources.

Ascent IPO?

Privately held Ascent Resources, Ohio’s No. 2 oil producer and No. 1 gas producer, made an average of 24,762 bbl/d in Ohio in the fourth quarter, in addition to 2.4 Bcf/d of gas and NGL.

Ascent told public debt-holders in a call in March that it is considering an IPO.

The E&P was founded by late Chesapeake Energy Corp. co-founder Aubrey McClendon, who kicked off the original Ohio Utica liquids play in the early 2010s.

Chesapeake’s property there was sold to Encino.

Infinity M&A?

Ohio’s No. 4 oil producer, which will become No. 3 when EOG closes the Encino deal, is newly public Infinity Natural Resources.

It produced 9,123 bbl/d from Ohio’s Utica in the fourth quarter, up from 5,935 bbl/d in first-quarter 2024.

Infinity’s IPO raised more than $265 million in January toward continued D&C in the play as well as in its Marcellus leasehold east of Ohio.

When asked if M&A could be upcoming in the Utica oil play, “I think it's an interesting thing to watch play out,” said Infinity President and CEO Zack Arnold at Hart Energy’s SUPER DUG Conference & Expo in Fort Worth, Texas, in May.

At the time, Encino was still in play. Others mentioned on social media that Ohio operators, in addition to Encino, that could do deals are Ascent and Gulfport Energy.

Arnold said, “There are a lot of synergies between the assets and the teams that make sense, when people think about what companies should look like when they become combined. But I think each company, each sponsor, each asset has its own story.”

Still, “it would be really interesting to see if something breaks free.”

A deal among any of them would “start driving some of the efficiencies that a larger-scale company could have in developing the play.”

Some 63% of Infinity shares are held by its former private-equity sponsors: Pearl Energy Investments and NGP.

As for Infinity stock, KeyBanc’s Rezvan reported on May 27 that the price is being weighed down by the small float.

“Concentrated [stock] ownership impacts trading liquidity and creates an overhang ahead of potential sales by the private-equity firms, which we expect to occur over the next few years.”

Gulfport M&A?

Gulfport Energy, which focuses on the Utica’s wet-gas phase along the eastern side of the oil window, signaled to investors last month that M&A might be in its own plans this year.

John Reinhart, president and CEO, said in an investor call that Gulfport’s deal team is looking “through the landscape in Ohio” for property and “currently assessing” what would be a fit.

Historically, Gulfport develops its land acquisitions within two years, he said.

“As we look at the landscape, we favor right now the dry-gas and the wet-gas areas” of the Utica, where Gulfport holds 193,000 net acres, which include some leasehold in the oil window.

But “I would also not rule out any kind of investment pickups in the [oil] condensate window,” he said.

The E&P produced 5,122 bbl/d of Ohio oil in the fourth quarter and 1 Bcf/d of gas and NGL, according to the ONDR data, making it the No. 2 gas producer and No. 5 oil producer.

Gulfport also operates in the Anadarko Basin in Oklahoma.

KeyBanc’s Rezvan reported he told clients the M&A signaling put a hold risk on the stock.

“Pursuing an additional acquisition introduces the risk of whether Gulfport will be able to successfully execute an accretive [deal].”

Another risk, he added, is that “many of Gulfport’s largest shareholders were debt-holders that were equitized upon emergence from bankruptcy. If these large holders were to divest their shares, this could create volatility for the company’s share price.”

Expand, Antero, EQT

Expand Energy produced 3,710 bbl/d of Ohio oil in the fourth quarter (No. 6), along with 451 MMcf/d of gas and NGL.

The output was by Southwestern Energy, which merged with Chesapeake in the fourth quarter, forming Expand. The deal put Chesapeake back in Ohio after exiting to Encino in 2018.

Expand’s management has not publicly stated any intention of exiting or adding to its Ohio Utica position.

Meanwhile, Antero Resources, which is a large Marcellus producer in the Appalachian Basin’s center, produced 578 bbl/d and 180 MMcf/d in Ohio in the fourth quarter.

EQT Corp., the No. 5 Ohio gas producer in the fourth quarter, made 365 MMcf/d there and no oil in the fourth quarter.

In the Marcellus play in western Pennsylvania, EQT recently bought fellow producer Olympus Energy.

Infinity’s Arnold was asked at SUPER DUG if it would do a combo-Utica-and-Marcellus deal with EQT.

Arnold said Infinity would be more interested in buying than selling.

“We’re really excited about what we have and we're focused right now on continuing to develop organically on that deep [list of] inventory, but also we want to be more inquisitive to buy assets as opposed to exiting,” he said.

Small, bolt-on opps

Other Ohio horizontal operators are Sound Energy (35 bbl/d; 1 MMcf/d), Northwood Energy (15 bbl/d; 1 MMcf/d), Pin Oak Energy Partners (12 bbl/d; 2 MMcf/d), GeoPetro LLC (7 bbl/d; 4 MMcf/d), CNX Resources (6 bbl/d; 44 MMcf/d), Hilcorp Energy (181 MMcf/d), Diversified Energy (97 MMcf/d) and Holbrook LLC (less than 1 MMcf/d).

The operators produced 75 bbl/d and 33 MMcf/d combined in the fourth quarter.

Focused entirely in Ohio in its far eastern gassy Utica, Hilcorp had 89 horizontals online in the state in the fourth quarter.

The well count is up from 80 in first-quarter 2024. For the full year, Hilcorp produced 55 Bcf from Ohio, no oil.

Privately negotiated

EOG chairman and CEO Ezra Yacob said May 28 at a Bernstein Research conference two days before announcing the Encino deal, “A lot of M&A is very difficult to do at the corporate level because it's coming with a significant amount of PDP. You've got a skinny bid-to-ask margin.

“And quite frankly, it's usually coming with one of two things: either limited upside in the drilling undrilled acreage or it's coming with undrilled acreage that is predominantly Tier 2 or Tier 3.”

The deal with Encino was privately negotiated, Yacob told investors in a post-announcement call May 30.

“A lot of these deals end up coming about because of our reputation, which I like to think is why they end up being privately negotiated,” he said.

“The relationship between Encino and EOG has been growing over the last couple of years since we've been involved in the basin, see a lot of similarities and alignments between the two companies.”