An Alabama energy company has reached a $3.1 million deal to buy oil and gas wells and pipelines in Ohio that are owned by a company affiliated with a Newark-based rural electric cooperative.
Diversified Gas & Oil of Birmingham has acquired about 550 wells. Most are in Coshocton County, with the remainder in six other counties including Fairfield and Licking. These are conventional wells, which have smaller outputs that the horizontal wells used in shale formations.
The seller is NGO Development Corp., a subsidiary of the Energy Cooperative, a rural-electric cooperative utility based in Newark.
“We have deep roots in the mineral-rich communities of Appalachia, which enabled us to identify this valuable opportunity to expand our Ohio operations,” Rusty Hutson, CEO of Diversified, said in a statement. “This acquisition is consistent with our business goals and contributes to the economic well-being of the communities in which these assets are located.”
The sale closed on Nov. 30.
NGO Development is using the proceeds to pay down debt, said Todd Ware, president and CEO of the Energy Cooperative. For some perspective, the utility has about $270 million in assets.
“With the announced sale, we further executed the Energy Cooperative’s commitment to improve our future financial position, while allowing us to focus on our core assets,” he said in a statement.
The sale includes the most, but not all, of the company’s wells. It also includes pipelines used to transport gas from the wells.
The Energy Cooperative is unusual among Ohio rural electric cooperatives in the scope of its businesses, which include a gas utility serving 34,000 customers, an electricity utility serving serving 25,000 customers, and a propane company serving 4,000 customers, among others. Many of the customers are along the eastern edge of the Columbus metropolitan area.