Sinopec buying 50% stake in Chesapeake’s Mississippi Lime play

25 February 2013 17:00  [Source: ICIS news]

HOUSTON (ICIS)--China's Sinopec has agreed to purchase 50% undivided interest in Chesapeake Energy’s US Mississippi Lime oil and gas play for $1.02bn (€775m), the companies announced on Monday.

The transaction for the joint venture is expected to be completed in Q2 2013, Chesapeake said in a press release.

The Mississippi Lime play is 850,000 acres of leasehold in northern Oklahoma that averaged about 34,000 bbl oil equivalent per day of production in Q4 2012, Chesapeake said. Approximately 140m barrels of oil equivalent of net proven reserves are in the play, the Oklahoma City-headquartered company said.

 “We are excited to announce the execution of our Mississippi Lime joint venture with Sinopec, which moves us further along in achieving our asset sales goals and secures an excellent partner to share the capital costs required to actively develop this very large, liquids-rich resource play,” said Steven C. Dixon, Chesapeake’s CEO.

Petrochemical companies are increasingly using shale gas as a cheap feedstock alternative for production, and Chesapeake may be a prime source for in-roads to the US shale boom for companies such as China’s Sinopec.

Chesapeake officials said earlier this month they were looking at divesting some of the company’s holdings in the Mississippi Lime formation in Oklahoma and Kansas and the Eagle Ford Shale in Texas.

By: Jeremy Pafford
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