By OGJ editors
HOUSTON, July 9 -- Chesapeake Energy Corp., Oklahoma City, paid $220 million to acquire Midcontinent gas assets, including those of Oxley Petroleum Co., a private company in Tulsa.
Chesapeake estimated the acquired proved reserves in the several transactions at 135 bcf of gas equivalent, 75% proved developed. The properties produced 35 MMcfed, 99% gas.
Oxley Petroleum's main focus was the Arkoma basin, where Chesapeake already owned 250 bcfe of proved reserves and had 50 MMcfed of production.
The majority of the other acquired assets are in the Greater Mayfield area of Beckham County in the Anadarko basin.
Chesapeake is drilling seven deep wells to Pennsylvanian Springer sands at an average 20,000 ft. Greater Mayfield is Chesapeake's most important exploratory area. The company expects to spend 10% of its $600 million 2003 capital budget there.
Chesapeake acquired Midcontinent properties the past 5 years from AnSon, Hugoton, DLB, Enervest, OXY, Barrett, Apache, Gothic, Staghorn, Questar, Sapient, Ram, Canaan, Focus, EnCana, Priam, Williams, OG&E, Oneok, Vintage, El Paso, and Oxley. Through these and other acquisitions since 1998, Chesapeake has acquired 2.5 tcf of gas equivalent proved reserves (tcfe) at an average cost of $1.14 per mcfe.
Chesapeake is operator of or participant in about half of the 125 wells being drilled in Oklahoma in late June and has become the state's largest gas producer with estimated 2003 output of 16%. It estimated second quarter 2003 production at more than 710 MMcfed