Chesapeake to buy Midcontinent gas reserves from El Paso Corp., Vintage Petroleum

Chesapeake Energy Corp. reported it will acquire natural gas reserves in the US Midcontinent, in two separate transactions, from El Paso Corp. and Vintage Petroleum Inc. for a total of $530 million.

Feb. 27, 2003

2 min read

By OGJ editors

HOUSTON, Feb. 27 -- Chesapeake Energy Corp. reported it will acquire natural gas reserves in the US Midcontinent, in two separate transactions, from El Paso Corp. and Vintage Petroleum Inc. for a total of $530 million.

From El Paso of Houston, the Oklahoma City-based independent will acquire an estimated 328 bcfe of proved gas reserves, 70 bcfe of probable and possible gas reserves, 293,000 leasehold acres, and current production of 67 MMcfed for $500 million. The El Paso proved reserves have a reserves-to-production index of 13 years, are 96% natural gas (or natural gas liquids), and are 71% proved developed, Chesapeake reported.

From Tulsa-based Vintage Petroleum, Chesapeake will acquire an estimated 22 bcfe of proved gas reserves, 8 bcfe of probable and possible gas reserves, and current gas production of 3.5 MMcfed for $30 million. The Vintage proved reserves have a R/P index of 17 years, are 97% natural gas, and are 56% proved developed, Chesapeake said.

Both acquisitions are expected to close before the end of the first quarter and will have an effective date of Apr. 1.

Late last year, Chesapeake signed a deal to acquire gas assets in the Midcontinent from Tulsa-based Oneok Inc. for $300 million (OGJ Online, Dec. 9, 2002). The acquisition increased the company's proved reserves to nearly 2.5 tcfe of gas and its production to more than 565 MMcfed of gas.

Chesapeake said that its capital expenditures are budgeted at $475-525 million for 2003, compared with $403 million spent in 2002.