Sinopec Buys Half of Chesapeake's Oklahoma Shale Asset

China Petroleum & Chemical Corp (Sinopec) and Chesapeake Energy Corporation have entered into an agreement where the Chinese energy giant will buy 50 percent of Chesapeake's 850,000 acres of net oil and natural gas leasehold properties in the Mississippi Lime shale field in northern Oklahoma.

The deal will cost Sinopec $1.02 billion, of which approximately 93% will be received upon closing. The transaction is anticipated to be completed in the 2013 second quarter.

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, Chesapeake said in a stetement.

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.