By OGJ editors
HOUSTON, May 11 -- Chesapeake Energy Corp., Oklahoma City, agreed to acquire privately held Greystone Petroleum LLC of Houston in a $425 million transaction involving natural gas assets in northern Louisiana.
Greystone's has a lease covering 16,100 gross acres over the crest of Sligo field in Bossier Parish, La.
Chesapeake anticipates acquiring an internally estimated 214 bcfe of proved reserves, 51 bcfe of probable and possible reserves, and production of 45 MMcfed. The deal, expected to close in June, is subject to US regulatory approvals.
Upon closing, Chesapeake's proved oil and natural gas reserves will be 3.8 tcfe. The company plans to increase production from the Greystone properties by 50% to 65-70 MMcfed through a drilling program involving 2-4 rigs during the next 18 months.
Chesapeake has identified 70 proved undeveloped as well as 75 probable and possible locations on the acreage. After allocating $65 million of the purchase price to unevaluated leasehold and midstream gas assets, Chesapeake's cost of proved reserves will be $1.68/Mcfe.
The company estimates that its all-in acquisition cost for the 265 bcfe of estimated reserves will be $1.94/Mcfe, accounting for anticipated future drilling costs for fully developing the proved, probable, and possible reserves.
The proved reserves, having a reserves-to-production index of 13 years, are 98% gas and 93% operated.
