Joint venture in Utica Shale 'a boost' to Tusc economy
A joint venture involving Red Hill Development of Dover and American Energy-Utica to explore Utica Shale deposits in Guernsey and Harrison counties is expected to produce a significant boost to the economy of the Tuscarawas Valley region.
The joint venture was announced Tuesday by Red Hill Development, which was founded in 1975 by the Kimble family of Dover. American Energy-Utica is an affiliate of American Energy Partners, which is a private company formed by former Chesapeake Energy CEO Aubrey McClendon.
“This should be a big addition to the economy, with quite a bit of drilling activity, production, royalties paid to land owners, and jobs,” said Keith B. Kimble, manager of RHDK Oil & Gas, doing business as Red Hill Development.
“We also use the natural gas we produce from wells drilled in Ohio for fueling equipment in our family’s waste-hauling business — it’s a nice little closed-loop system.”
Kimble said Tuesday that it’s too soon to be specific about the number of jobs that will be created for area residents by the joint venture, but “we hope to be able to add another 50 jobs in the next couple of years” in Guernsey, Harrison and Tuscarawas counties.
“This will be an ongoing business venture that’s going to be operating for many years to come,” Kimble said.
Red Hill has about 30 full-time employees. The family business operates more than 600 shallow and deep wells on its leased property in Tuscarawas, Coshocton, Harrison and Guernsey counties.
The Kimble companies have more than 500 employees, as well as the ripple effect through contractors and affiliated companies.
Kimble said that financial terms of the agreement are confidential. The deal has been discussed for about 30 days before reaching the agreement.
“After all of our due diligence, the best fit for rapid, safe and productive development was a joint venture relationship,” Kimble said. “Aubrey’s ability to raise money for development, and his experience in horizontal drilling in general and the Utica Shale in particular, were a perfect fit for Red Hill Development.”
Red Hill spent the last few years working with banks and private equity groups to finance drilling operations, and negotiating with midstream companies for transportation and processing options, he said.
Kimble said that the joint venture only involves a portion of Red Hill’s acreage. The joint venture plans to begin immediately applying for Utica well permits. Construction at well sites will start as early as this month, with drilling of the first well to begin by year’s end.
He said this should result in drilling several hundred wells in Guernsey and Harrison counties, and that the first well will be in Harrison County. He said no permits have been approved yet.