Press Release

Kirkland & Ellis Represents Seneca Resources in Marcellus Shale Drilling Joint Development Agreement

Kirkland & Ellis LLP represents Seneca Resources Corporation, a wholly owned exploration and production subsidiary of National Fuel Gas Company (NYSE: NFG), which today announced that Seneca has entered into an asset-level joint development agreement with IOG CRV - Marcellus, LLC, an affiliate of IOG Capital, LP, and funds managed by affiliates of Fortress Investment Group, LLC, to jointly develop Marcellus Shale natural gas assets in north-central Pennsylvania.

Under the terms of the agreement, Seneca and IOG will jointly participate in a program that will develop up to 80 Marcellus wells located on approximately 10,500 acres in the Clermont / Rich Valley area in Pennsylvania. IOG will hold an 80 percent working interest and is obligated to participate in the first 42 wells, and has a one-time option to participate in the remaining 38 wells that can be exercised on or before July 1, 2016. At current well costs, IOG's obligation on the first 42 wells is expected to reduce Seneca’s net capital expenditures by up to $200 million in fiscal 2016, with a further $180 million reduction spread across fiscal 2016 and fiscal 2017 if IOG elects to participate in the remaining 38 wells. As the fee-owner of the property's mineral rights, Seneca retains a 7.5 percent royalty interest and the remaining 20 percent working interest in the first 42 wells. If IOG exercises its option to participate in the 38 wells, Seneca will retain a 10 percent royalty and the remaining 20 percent working interest in those wells. Seneca's working interest will increase to 85 percent after IOG achieves a 15 percent internal rate of return.

More details on the transaction are available here.

The Kirkland & Ellis team was led by corporate partners Anthony  Speier and David Castro, and included corporate partner Cody Carper and associates Christopher Heasley, Charles Nixon, Ryan Martin and Nick Wenker, debt finance partner Will Bos, tax partner Thomas Evans and associate Polina Liberman and environmental transactions partner Paul Tanaka.