By OGJ editors
HOUSTON, Nov. 6 -- Chesapeake Energy Corp., Oklahoma City, acquired $200 million of South Texas natural gas assets from private Laredo Energy LP, Houston, and its partners.
Chesapeake acquired an internally estimated 108 bcfe of proved and 88 bcfe of probable or possible reserves, continuing an expansion by acquisition outside its main base of operations in the Anadarko basin of Oklahoma.
After allocating $48 million of the $200 million purchase price to unevaluated leasehold for the probable and possible reserves and exploratory acreage, Chesapeake's acquisition cost of proved reserves were $1.41/Mcfe. Including future leasehold and drilling costs for fully developing the proved, probable, and possible reserves, Chesapeake estimated its all-in acquisition cost at $1.51/Mcfe.
The properties average 30 MMcfed, and the proved reserves have a reserves-to-production index of 10 years, are 100% natural gas, and are 32% proved developed. Initial lease operating expenses should average 9¢/Mcfe, compared with 52¢/Mcfe for Chesapeake in the first three quarters of 2003.
The properties are in the Zapata County portion of the South Texas Lobo Trend, where Chesapeake has built a growing operational presence the past two years. The company believes its deep drilling, 3D seismic, and tight sands expertise can provide competitive advantages and attractive returns on its invested capital.