Flywheel adding to state shale assets

A gas drilling rig is shown near Quitman in this Feb. 5, 2007 file photo. (AP/Mike Wintroath)

Flywheel Energy, which claims it operates the largest position in the Fayetteville Shale, is expanding control in the area by purchasing more natural gas assets.

Reuters news agency reported that the Oklahoma City-based oil and gas producer has agreed to buy Fayetteville Shale assets from a division of Exon Mobil Corp. Officials with both companies did not respond to requests for comment Thursday. The value of the deal was not disclosed.

Flywheel will gain 5,000 natural gas wells, with 850 in operation and another 4,100 non-operated, along with related pipeline and processing properties covering 381,000 acres, Reuters reported.

The Exxon business unit acquired the properties in 2010 for $650 million.

Before the purchase, Flywheel had production operations in six Arkansas counties, primarily stretching across the northern tier of the state from Clarksville to Newport, according to data compiled by DrillingEdge, which monitors and analyzes the oil and gas industry.

Operations are in Cleburne, Conway, Faulkner, Pope, Van Buren and White counties, with more than 1,000 wells in both Conway and Van Buren.

As of January, Flywheel had about 3,600 producing wells and 4,000 total wells in Arkansas. The report noted Flywheel produced 23,100 cubic feet of gas through November 2021.

Flywheel entered the Arkansas market in 2018 by acquiring the Fayetteville Shale assets of Houston-based Southwestern Energy Co. for nearly $1.9 billion. Since then, the company says it has made more than $2.1 billion of acquisitions since 2017.

Drilling in the Fayetteville Shale began in 2004 when Southwestern Energy completed an $11 million leasehold purchase of assets in the region. The rock formation holds natural gas that requires hydraulic fracturing or fracking to release the gas.

Fracking is a contentious removal process, with advocates noting the effort allows access to more energy resources and is a move away from reliance on coal. Opponents cite the danger to groundwater and surface water contamination.

Energy analysts estimate that the majority of U.S. dry natural gas production is expected to come from shale and tight gas resources over the next 25 years.

Flywheel Energy is a private exploration and production company formed to acquire and operate large, producing onshore U.S. oil and gas assets. The company began as Valorem Energy in early 2017 with backing from the Kayne Anderson Private Energy Income Fund of Houston. In 2018, Kayne Anderson invested $700 million in equity to start Flywheel Energy.