Chesapeake Energy and Sinopec have announced the execution of an agreement which provides for Sinopec to purchase a 50% undivided interest in 850,000 of Chesapeake’s net oil and natural gas leasehold acres in the Mississippi Lime play in northern Oklahoma (425,000 acres net to Sinopec). The total consideration for the transaction will be US$1.02 bn in cash.
Production from these assets (including Mississippi Lime and other formations), net to Chesapeake’s interest and prior to Sinopec’s purchase, averaged approximately 34,000 boe/d in the 2012 fourth quarter and, as of 31 December 2012, there was approximately 140 mboe of net proved reserves associated with the assets. As the operator of the project, Chesapeake will conduct all leasing, drilling, completion, operations and marketing activities for the joint venture. The transaction is anticipated to be completed in the 2013 second quarter.
Chinese companies are particularly interested in shale gas and are seeking to get the know-how of drilling in such unconventional fields.