How do you say Fracking in Chinese
China Petrochemical Corp.’s $1.02 billion deal with Chesapeake Energy Corp. (CHK) gives the second- largest Chinese energy producer a stake in a shale oilfield for less than one-third of its estimated value.
Sinopec, as the Beijing-based explorer is known, will take a 50 percent interest in 850,000 acres Chesapeake controls in the Mississippi Lime formation, the companies said yesterday in separate statements. The price equates to $2,400 an acre, less than the $7,000 to $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, said Mark Hanson, an analyst at Morningstar Investment Services in Chicago
http://fuelfix.com/blog/2013/02/26/sinopec%e2%80%99s-u-s-shale-deal-struck-at-two-thirds%e2%80%99-discount/?utm_source=WhatCountsEmail&utm_medium=FuelFix&utm_campaign=FuelFixNewsLetter
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