Chesapeake Energy Announces $1.02B Mississippi Lime JV with Sinopec

Chesapeake Energy Corporation (NYSE: CHK) and Sinopec International PetroleumExploration and Production Corporation (Sinopec) today announced the executionof an agreement which provides for Sinopec to purchase a 50% undividedinterest in 850,000 of Chesapeake's net oil and natural gas leasehold acres inthe 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, ofwhich approximately 93% will be received upon closing. Payment of theremaining proceeds will be subject to certain customary title contingencies.Production from these assets (including Mississippi Lime and otherformations), net to Chesapeake's interest and prior to Sinopec's purchase,averaged approximately 34 thousand barrels of oil equivalent per day in the2012 fourth quarter and, as of December 31, 2012, there was approximately 140million barrels of oil equivalent of net proved reserves associated with theassets. All future exploration and development costs in the joint venture willbe shared proportionately between the parties with no drilling carriesinvolved. As the operator of the project, Chesapeake will conduct all leasing,drilling, completion, operations and marketing activities for the jointventure. The transaction is anticipated to be completed in the 2013 secondquarter.Steven C. Dixon, Chesapeake's Chief Operating Officer, said, “We are excitedto announce the execution of our Mississippi Lime joint venture with Sinopec,which moves us further along in achieving our asset sales goals and secures anexcellent partner to share the capital costs required to actively develop thisvery large, liquids-rich resource play.”