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

CNPC, Rosneft advance Tianjin refinery project

10/13/2014 China National Petroleum Corp. (CNPC) and OAO Rosneft have signed an agreement for the extension of strategic cooperation on the Tianjin joint vent...

BlueGreen Alliance calls for strong US methane reduction strategy

10/13/2014 The BlueGreen Alliance, a coalition of 10 national labor unions and 5 environmental organizations, urged the Obama administration to adopt a strong...

Petronas purchases share in Shah Deniz for $2.2 billion

10/13/2014

Malaysia’s Petronas has purchased a 15.5% share in the Shah Deniz production-sharing agreement in Azerbaijan from Statoil ASA.

MARKET WATCH: November crude prices buck trend, end week up slightly

10/13/2014 The New York Mercantile Exchange November crude oil contract gained 5¢ on Oct. 10, closing at $85.82/bbl. The December contract, meanwhile, dropped...

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