Chesapeake, RKI E&P agree on Powder River acreage exchange

Chesapeake Energy Corp. and RKI Exploration & Production LLC (RKI), both of Oklahoma City, have agreed to exchange nonoperated interests in 440,000 gross acres in the Powder River basin in southeastern Wyoming.

The transaction, expected to close in August, calls for Chesapeake to convey to RKI 137,000 net acres and its interest in 67 gross wells, with an average working interest of 22% in the RKI-operated northern portion of the basin. Chesapeake will also pay RKI $450 million in cash.

RKI will convey to Chesapeake 203,000 net acres and its interest in 186 gross wells, with an average working interest of 48% in the Chesapeake-operated southern portion of the basin.

The deal consolidates Chesapeake’s Powder River acreage in the southern area, which the company says contains multiple stacked oil pay zones with potentially recoverable gross resource estimated to be more than 2 billion boe.

Chesapeake will operate almost 100% of its 388,000 net acres in the basin, and will hold 79% average working interest. The company currently holds 322,000 net acres with 38% average working interest.

The company in May agreed to divest a portion of its noncore Powder River acreage (OGJ Online May 16, 2014).

Powder River activity

Chesapeake recently drilled a 9,600-ft lateral well in the Niobrara play in 32 days at a cost of $5 million compared with 2013 vintage Niobrara wells with an average lateral length of 5,300 ft and average cost of $6.6 million.

The Sussex I test well, placed online in January, has produced 232,000 boe in 150 production days and continues to produce more than 1,500 boe/d.

The Sussex III, Chesapeake’s recent delineation well that lies 20 miles north of Sussex I, produced at an initial 24-hr average rate of more than 1,000 boe/d, 85% of which is oil, substantially derisking the northern end of the Sussex field estimated at 20 miles long by 5 miles wide.

The company estimates the Sussex formation consists of more than 75% oil with API 40-48° gravity.

“Excellent results to date from the Niobrara and Sussex formations, coupled with additional stacked pay potential in other Upper Cretaceous sands as well as the Frontier and Mowry formations, demonstrate the potential of the Powder River basin to be a major oil growth engine for the company,” commented Doug Lawler, Chesapeake chief executive officer.

Related Articles

Market watch: Energy futures prices rose slightly Friday

05/06/2002 Crude oil futures prices rose slightly Friday amid lingering uncertainty about a possible disruption of Middle East supplies, although tensions in ...

Gulf of Mexico oil service sector showing signs of an upturn

05/06/2002 The Gulf of Mexico oil service sector is experiencing the signs of an upturn, analysts with Simmons & Co. International, UBS Warburg LLC, and RBC D...

OTC: Industry, national agencies need to work together to make FPSOs work in the gulf

05/06/2002 Over the coming years, the oil and gas industry will have to keep an open line of communication with national agencies such as the US Coast Guard a...

Market watch: Energy futures prices fall as Iraq lifts embargo

05/07/2002 Crude oil futures prices fell Monday after Iraq announced plans to lift a self-imposed export embargo with exports expected to resume by Wednesday.

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