China Petrochemical Corp.(Sinopec) has closed a US$1.02 billion deal with Chesapeake Energy Corp. With this, the second- largest Chinese energy producer has acquired a stake in a shale
oilfield for less than one-third of its estimated value. Sinopec will take a 50% interest in 850,000 acres Chesapeake controls in the Mississippi Lime formation. The price equates to US$2,400 an acre, less than the US$7,000- 8,000 at which Oklahoma City-based Chesapeake valued the asset in a July presentation.
The deal involves drilling rights across an area twice the size of New York City with wells that Chesapeake said were pumping the equivalent of 34,000 barrels of crude a day in the final three months of 2012. Sinopec will exercise more control over drilling decisions and costs than Chesapeake partners have on similar ventures because the Chinese company isn’t handing over a lump sum to cover future drilling costs.