Sinopec to buy stake in Chesapeake's Mississippi Lime acreage

Sinopec International Petroleum Exploration & Production Corp. plans to buy a 50% stake in Chesapeake Energy Corp.’s Mississippi Lime oil and natural gas acreage in northern Oklahoma for $1.02 billion.

The joint venture involves 850,000 acres (425,000 acres net to Sinopec). Terms call for Chesapeake to receive 93% of the $1.02 billion upon closing, expected in the second quarter.

Payment of the rest will be subject to certain customary title contingencies. All future exploration and development costs in the joint JV will be shared proportionately between the parties with no drilling carries involved.

Production from these assets (including Mississippi Lime and other formations), net to Chesapeake’s interest and before Sinopec’s purchase, averaged 34,000 boe/d in the 2012 fourth quarter. About 45% of that production was oil, 46% was gas, and the rest was natural gas liquids.

As of Dec. 31, 2012, some 140 million boe of net proved reserves was associated with the assets involved in the JV.

As the operator of the project, Chesapeake will conduct all leasing, drilling, completion, operations, and marketing activities for the JV.

Chesapeake has about 2.1 million net acres of leasehold in the Mississippi Lime, which straddles northern Oklahoma and southern Kansas.

Sinopec’s JV will help Chesapeake of Oklahoma City reduce its debt, which was $12 billion as of Dec. 31, 2012. Chesapeake sold $12 billion of assets last year and has said it aims to sell another $4-7 billion this year.

Chesapeake is the second largest US gas producer, after ExxonMobil Corp., the largest. The independent continues working toward previously announced debt-reduction goals (OGJ Online, Feb. 14, 2012).

Related Articles

Judge bars Anadarko e-mails as evidence in Macondo blowout hearing

03/21/2014 A federal district judge in New Orleans refused to accept e-mails between Anadarko Petroleum Corp. and BP PLC as evidence in a hearing to determine...

Industry group welcomes most UK budget moves

03/21/2014 Oil & Gas UK voiced support for all but one of several measures affecting the offshore producing industry announced in the UK government’s annu...

MARKET WATCH: Crude oil, gas futures prices slide entering spring

03/21/2014

The first day of spring in the northern hemisphere was marked by lower crude oil and natural gas futures prices.

OMV acquires West of Shetland licenses from Hess

03/21/2014 OMV AG has reached an agreement with Hess Corp. to acquire four licenses in West of Shetland, UK, including Cambo field and the Blackrock prospect,...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected