Utica Oil Player Ascent Resources ‘Considering’ an IPO

Privately held Utica Shale oil producer Ascent Resources is considering an IPO or an M&A exit, it told investors and analysts in a call March 7.

But going the IPO or M&A-exit route versus continuing as-is would require the public market—or a buyer—to throw more cash to the 2.2 Bcfe/d operator’s existing investors than they’re already earning in distributions and buybacks, executives said.

Of its fourth-quarter output, 14% was liquids, all from eastern Ohio: 51,554 bbl/d, from its 918 operated Utica wells, consisting of 14,011 bbl/d of oil and 37,543 bbl/d of NGL.

“We certainly spend a lot of time—both among ourselves and with our board—discussing the IPO markets … and the M&A markets” as well as on continuing as-is, CFO Brooks Shughart said on the call.

“We have a significant amount of dialogue across all three of those potential options. And I'd say we are considering how we may or may not play a part in all those.”

Jeff Fisher, chairman and CEO, said that, among Ascent’s shareholders, “with the free-cash-flow generation that the business is now throwing off … everybody's very pleased, happy.”

And there’s more to come, he added.

“We've got an opportunity in front of us to increase that substantially this year. That's … really our focus and we sit in a very, very good position,” he said.

But “it’s great to have options.”

Ascent’s plan is to “continue to run the business and optimize the business as best we can on a go-it-alone basis for at least for a little bit,” Shughart said in the call.

‘Well-kept secret’

Ascent is a Top 5 producer in Ohio’s Utica oil fairway, along with newly public Infinity Natural Resources, privately held Encino Energy, publicly held EOG Resources and Expand Energy, which picked up its Ohio position in an Oct. 1 merger with Southwestern Energy.

Infinity’s IPO on Jan. 31 valued its leasehold, including in the Utica oil window and in the Marcellus Shale’s gas window, at $52,700 per flowing boe/d.

Fisher said, “It's good to see the markets returning. We've had a lot of interest [in Ascent] obviously.

“But we're being pretty measured in how we approach that going forward from a position of strength.”

Attention was drawn to the Utica’s oil fairway when EOG announced in 2022 that it had accumulated a position, which now totals 460,000 net acres.

The majority was picked up from Encino, which had bought most of its position from Chesapeake Energy, which is now known as Expand.

Fisher said, “The volatile oil window sure has gotten a lot of attention and rightfully so. It's been kind of a well-kept secret for a long time and we remain very excited about it, and we'll continue to focus on it.”

As for whether Ascent would be on the buyside of an M&A deal—and of property outside the Utica too—"we obviously look with interest across the U.S. at various opportunities,” Fisher said.

“But our dollars are best spent on where we can maximize margins and basically riff off of the great franchise that we built here in the Utica.”

Shughart said there are deals out there. “There are smaller land deals [of] 10s to 20s of millions of dollars all the way up to multi-billion-dollar opportunities.”

But, he said, “we are focused on the cash flow.”

Founding sponsors

The 12-year-old Oklahoma City-based E&P operates fully in the Utica in southeastern Ohio.

Formed in 2013 by the late Chesapeake co-founder Aubrey McClendon, it is majority-backed by The Energy & Minerals Group and First Reserve Corp.

Shughart added, “We've had a pretty decent-sized non-sponsors ownership group for a variety of reasons, and they have been in for a while.”

Ascent bought back some of its outstanding shares in 2024.

“We were willing to provide [shareholders] an opportunity for liquidity at valuations that we felt were accretive to the company and remaining shareholders.

“We consider that as one of the many strategic alternatives to increase existing shareholder value.

“So we may consider doing that again in the future.”

In 2022, Ascent bought Exxon Mobil’s XTO Energy subsidiary out of Ohio’s Utica for $270 million. The deal followed others totaling $1.5 billion from Hess Corp., CNX Resources Corp., Utica Minerals Development and an undisclosed seller.

Ascent’s leasehold totals 375,600 net acres in the Utica’s volatile oil, wet gas and dry gas windows, including 76,600 mineral acres.

It also holds some sections of acreage in the mostly undeveloped Utica black oil fairway, in which EOG is looking at 3D seismic now.

‘The best rock’

EOG picked up another 15,000 acres in Ascent’s neighborhood recently in the volatile oil window.

Fisher said, “We are looking to add to our inventory all the time. …We're essentially replacing our inventory each year as we go.”

In the oil window, a position in Guernsey County was part of its founding leasehold.

“It's really the best rock, so that's really our focus,” Fisher said.

But leasehold acquisitions are done when Ascent sees it will develop the property in the near-term and “not get too far out ahead of ourselves.”

Ascent’s four-well Lodge development in Guernsey County, Washington township, came online on Oct. 19 and produced 488,678 bbl of oil combined in its first 74 days, according to Ohio Department of Natural Resources data.

Associated gas and NGLs totaled 1.3 Bcfe. Lateral lengths were not disclosed.

Into 2025, the Lodge pad’s first-90-day output averaged more than 6,500 bbl of oil/d and 2,600 bbl/d of NGL, totaling more than 9,100 bbl/d of liquids, Keith Yankowsky, Ascent COO, said on the call.

‘Sweet spot’

While privately held, Ascent reports quarterly on its finances and operations while having $2.5 billion in public debt outstanding. It takes this further by also issuing a quarterly press release and holding a publicly accessible investor call.

Ascent’s debt totaled $2.3 billion at year-end, including $600 million of senior unsecured notes issued in October at 6.625% to retire $597 million of notes due 2026.

Liquidity was $1.4 billion, including in its $3 billion bank borrowing capacity.

Its 14% fourth-quarter 2024 liquids content of 51,554 bbl/d was up from a full-year average of 44,000 bbl/d, or 12% of Ascent’s 2024 average of 2.2 Bcfe/d.

Year-end proved reserves were 9 Tcfe with about a third of these PUD.

2025 plans are for roughly $785 million in capex—$650 million in drilling and completion (D&C) and $135 million in land costs—and production of some 2.1 Bcfe/d, about 15% liquids.

The company plans to spud roughly 53 new wells with an average lateral length of 16,750 ft.

Fisher said laterals of between 16,000 ft and 17,000 ft “seem to be a good average sweet spot.”

“We've done wells up to almost 25,000 [feet] and it carries a little bit more risk. But we did those wells very successfully and saw very good productivity with no real diminishing return.

“But the 16,000 to 17,000 [average] seems to be a sweet spot for now.”

15 liquids-rich

In the fourth quarter, Ascent spud 12 wells, completed eight and put 15 wells into sales—all of the 15 landed in the liquids-rich window.

Lateral lengths averaged 20,649 ft, up from a full-year average of 15,093 ft.

Full-year D&C was 60 wells spud, 58 wells completed and 57 wells put into sales.

As of Dec. 31, 2024, it held interest in 1,369 gross (854 net) wells, including 1,145 gross (854 net) with working interest and 224 gross with an overriding or royalty interest.

Among those with working interest, 1,053 gross (807 net) are gas wells and 92 gross (47 net) oil wells.

It operated approximately 98% of its net production in 2024.