AEP chief executive incorporates "American Energy – Rogersville" in order to target emerging "Rogersville Shale Play" in Kentucky and  West Virginia

By Noah Brenner Houston 11 September 2015 00:00 GMT

McClendon forms unit with eye on Rogersville shale
AEP chief executive incorporates American Energy –
Rogersville in order to target emerging play in West
Virginia and Kentucky
US oilman Aubrey McClendon has formed a new unit of American
Energy Partners (AEP) to target the emerging Rogersville shale play
and has begun approaching legacy operators to acquire the rights to
drill below their shallow conventional fields.
McClendon incorporated American Energy – Rogersville earlier this
summer in Oklahoma City, where AEP has its headquarters.
Industry sources familiar with the play said McClendon’s
representatives have already approached conventional pro ducers
with significant acreage positions in what is believed to be the most
prospective area for the Rogersville along the border between West
Virginia and Kentucky.
However, as with many deals in the industry, low oil and gas prices
are seen as a potential stumbling block to closing a trans action at present.
McClendon has a successful history of partnering with conventional producers in the
Appalachian basin to gain access to shale plays underlying their acreage, during his time as
chief executive of Chesapeake Energy and in his more recent role leading AEP.
However, competitors are also circling the legacy producers AEP is targeting.
One source familiar with the play confirmed that some otufits have already been approached
by public companies over and above those that already have positions in the play.
Among the existing players, Continental Resources last year snapped up deep rights on
acreage held by Nytis Exploration and then earlier this year picked up deep rights to acreage
held by Hay Exploration.
While such an arrangement can be more expensive than leasing individual parcels, it can be
the only way to gain access to core areas, especially in Appalachia where large blocks of
acreage are held by shallow gas production or by coal mining companies.
It can also reduce the need for the large-scale drilling programmes to hold leased acreage.
Industry sources said they had not seen evidence of American Energy – Rogersville leasing
directly from landowners. However, in the past, McClendon has used a litany of shell
companies and land management organisations to hide his lease activity.
While McClendon’s interest adds fuel to the growing interest in the Rogersville play, there is no
guarantee that it will join the ranks of the Permian, Utica, Marcellus or Woodford plays, where
AEP has established companies.
Oklahoma records show a number of companies within the AEP group set up to target plays
where McClendon has not taken a meaningful interest, including the Haynesville shale,
California and the Powder River basin in Wyoming.
The Rogersville formation is a deep Cambrian-aged dark-grey shale member of the
Conasauga group that lies at depths ranging from 9000 to more than 15,000 feet at the base
of the Rome Trough