Hilcorp acquires 1,500 wells in southwest Wyoming
EVANSTON — Hilcorp Energy, the company that purchased all of Chevron’s Wyoming assets a year ago, has now purchased nearly 1,500 wells in southwest Wyoming. Many of the wells are located in the Moxa Arch, which runs through eastern Uinta County and part of Sweetwater County then up through Lincoln County and into Sublette.
“Obviously we’re going to develop up there,” Hilcorp Corporate Manager of External Affairs Silver Vasquez told the Herald last week. “The Anadarko deal is kind of winding down … in terms of the original acquisition; we’re very excited about it.”
Whether “develop” means drilling new wells or ramping up production on current wells is unclear.
According to county records, 1,379 of the 1,491 wells recently acquired — along with a similar number of oil and gas leases — were purchased from Anadarko on Dec. 4. In the past several weeks, Hilcorp acquired another 112 wells and leases from QEP Energy.
But what could that mean for Uinta County, which has been hamstrung — just like other Wyoming counties and the state itself — by the oil and gas industry’s boom/bust cycle?
“I can only assume they may be considering more drilling or fracking with existing wells,” Uinta County Economic Development Director Gary Welling said. “The county economic development commission will be very supportive of growth in Hilcorp and will offer any help that our economic group can.”
Chevron regional operations manager Dave Matthews said it’s possible that Hilcorp’s increased activity could help the local economy.
“It’s really hard to say,” Matthews said, “but initially, at first blush, you’ve got to believe that it will be a stimulation to the economy. We’ll see some increased activity … as a result of that, hopefully increased production.”
Vasquez said the energy company is looking forward to having a larger presence in southwest Wyoming.
“Hilcorp is proud to be working in the state of Wyoming,” Vasquez said. “We began operating in the southwestern area of Wyoming in early 2017, and [we] see lots of opportunities for growth in this part of the state. In total, we have roughly 225,000 net acres with interest in almost 3,000 wells in Wyoming.”
Hilcorp has breathed life into old wells in the past, and Vazquez said the recent acquisitions aren’t a gamble but, rather, investments in the area and belief in the history and experience with similar projects.
“These acquisitions are not a bet on natural gas,” he said, “but are aligned with our belief that the Moxa Arch and surrounding areas have a long production history and a bright future. In fact, Hilcorp has a strong track record of acquiring conventional assets like these and extending the productive life of these assets through hard work, safe operations, additional investment and innovation.”
Vasquez wouldn’t comment on how the acquisitions could affect employment in the area, but he did say Hilcorp anticipates more growth and long-term success in southwest Wyoming.
“As we continue to invest and grow in the region,” he said, “we are hopeful all of our new employees that joined Hilcorp are as excited and committed as we are to bring new energy into these assets, benefiting both our company and the community for years to come.”
Welling said he’s excited about the future.
“That is a great statement from Hilcorp!” Welling said in an email to the Herald. “It shows their commitment to this area and we are thrilled with their expansion into southwest Wyoming. We will continue to provide any support for Hilcorp and any company willing to invest in the people of Uinta County. We are encouraged with the recent upturn in oil and gas activity throughout the state and feel that southwest Wyoming, specifically Uinta County, will once again be an asset for companies to invest in and expand to.”
Bruce McGovern of Alliance Drilling Tools said, however, that the large acquisitions might not be very significant for the county or for companies that service the oil and gas industry — at least not in the immediate future. He said drilling new wells would be far more exciting for the industry and surrounding communities.
“Most of it’s been drilled up already,” McGovern said, “so they’re buying it on an investment on the production — and they might do a little production to get some better results. Hilcorp bought up Chevron and they’ve yet to drill a well, and they’ve had it for a year.”
McGovern did acknowledge that Hilcorp might be able to turn profits from wells that don’t produce enough for larger companies like Chevron.
Real estate developer Mike Pexton, who said he follows the industry closely, said the same thing.
“It’s very typical, and I’ve been watching this for 35 years. The big company’s return on investment gets very marginal because of their overhead. They’ve got to have huge, huge volumes because they’ve got so many mouths to feed.”
At some point, he said, these projects become uneconomical — but not for smaller, privately held companies like Hilcorp.
Pexton said the recent acquisitions are significant for the area, even if it’s not an immediate economic boost.
“If the one purchase (Anadarko) was $350 million,” he said, “you know that the Carter Creek was … a couple hundred million, and QEP was probably $100 million — someone’s investing well over a half-billion dollars in southwestern Wyoming, and it would sure be nice to know why.”