Chesapeake Energy Corp. on Monday announced the closing of its $1 billion joint venture with China's Sinopec International Petroleum Exploration and Production Corp.
Sinopec acquired a 50 percent stake in Chesapeake's acreage in northern Oklahoma's Mississippi Lime play in the deal, which was announced Feb. 25.
Chesapeake received about 93 percent of the $1.02 billion Sinopec paid in the deal when it closed.
Assets associated with the joint venture produced about 9,600 barrels of liquids and 54 million cubic feet of natural gas a day in the first quarter.
The companies will share all future exploration and development costs in the joint venture.
Chesapeake, as operator of the project, will conduct all leasing, drilling, completion, operations and marketing activities for the joint venture.
“Chesapeake is pleased to have Sinopec as our partner in the Mississippi Lime play, and we look forward to efficiently developing and growing this asset for many years to come,” CEO Doug Lawler said.
Chesapeake has been selling assets for much of the past two years to pay off debt and fill a budget shortfall. The company, which hopes to bring in as much as $7 billion this year, now has raised $2.3 billion.
This is the third time Chesapeake has worked out a development deal with a Chinese company.
The Oklahoma City company previously has agreed to two deals with CNOOC International Ltd., a subsidiary of one of China's largest independent oil companies.
CNOOC paid nearly $1.8 billion for a stake in Chesapeake's operations in the Eagle Ford Shale in south Texas and the Niobrara Shale in northeast Colorado and southeast Wyoming. The Eagle Ford deal was announced in January 2011, while the Niobrara deal was announced in October 2010.
Sinopec also has business ties with another Oklahoma City oil company, Devon Energy Corp. The company struck a $2.5 billion deal with Devon in January 2012 that included acreage in the Mississippi Lime and four other resource plays.