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Chesapeake Energy Corporation
and Sinopec International Petroleum
Exploration and Production Corporation (Sinopec) today 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 $1.02 billion in cash, of
which approximately 93% will be received upon closing. Payment of the
remaining proceeds will be subject to certain customary title contingencies.
Production from these assets (including Mississippi Lime and other
formations), net to Chesapeake's interest and prior to Sinopec's purchase,
averaged approximately 34 thousand barrels of oil equivalent per day in the
2012 fourth quarter and, as of December 31, 2012, there was approximately 140
million barrels of oil equivalent of net proved reserves associated with the
assets. All future exploration and development costs in the joint venture will
be shared proportionately between the parties with no drilling carries
involved. 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.
Steven C. Dixon, Chesapeake's Chief Operating Officer, 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.”
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