Chesapeake Energy Corp. announced Monday that it is selling half of its acreage in northern Oklahoma’s oil-rich Mississippi Lime play to China’s Sinopec International Petroleum Exploration and Production Corp. for more than $1 billion.
Chesapeake will sell Sinopec half of its 850,000 acres in the play for $1.02 billion, the company announced Monday.
The two companies will split future exploration and development costs for that acreage, with Chesapeake serving as operator.
“We are excited to announce the execution of our Mississippi Lime joint venture with Sinopec, which moves us further along in achieving our asset sales goals and secures an excellent partner to share the capital costs required to actively develop this very large, liquids-rich resource play,” said Steven C. Dixon, Chesapeake’s chief operating officer.
Chesapeake has been selling assets since last year to close a funding gap between its income and operating costs.
The company, which is facing life without iconic founder Aubrey McClendon, sold more than $11 billion worth of assets to avert a cash crunch last year, with plans to raise as much as $7 billion that way in 2013.
McClendon, the only chief executive Chesapeake has ever had, was not part of the company’s fourth quarter earnings call on Thursday.
The conference call with analysts was led by Steve Dixon and Nick Dell’Osso, the two executives Chesapeake chairman Archie Dunham said last month would lead the company through its transition as McClendon departs the company.
Chesapeake announced Jan. 29 that McClendon had agreed to leave the company.
McClendon has not spoken publicly about his impending departure from the company he founded in 1989 with former partner Tom Ward.
Jeff Mobley, Chesapeake’s senior vice president of investor relations and research, addressed McClendon’s looming separation from the company at the outset of Thursday’s earnings call.
“As you know, Aubrey McClendon, the company’s co-founder and CEO, will retire from the company on April 1, 2013. And after leading the company during our first 80 conference calls, he is now steeping aside for Steve and Nick to lead this call. In addition, a search is currently underway for a new CEO, and the board plans to complete this search by that time.
Aubrey has had a remarkable career founding and leading Chesapeake and has created one of the most valuable and innovative companies in the global energy industry. Two of Aubrey’s most important accomplishments are the tremendous asset base that has been amassed by the company and the talented and dedicated organization he built to develop these assets.
The culture and capabilities of the company Aubrey created and the standards of excellence he championed had been distinctive and inspiring, resulting in a company with extraordinary potential. But his legacy will ultimately be the realization of that potential through the success and value that we all helped deliver after his tenure as CEO concludes. With those thoughts in mind and in behalf of nearly 12,000 employees at Chesapeake, we want to sincerely thank Aubrey for his visionary leadership and for his 24 years of tireless service to the company, to shareholders, to employees, and to the industry.”
Chesapeake expects to have a new CEO in place before April 1, McClendon’s last day at the company.
The Oklahoma Energy Resources Board on Monday launched its latest advertising campaign to highlight how the state can help the United States achieve energy independence, a goal espoused by every president since Richard Nixon.
“Energy independence is finally possible in North America, and it is due in large part to the contributions of Oklahoma’s oil and natural gas industry,” said Pete Brown, chairman of OERB’s public education committee. “New technologies and discoveries made by Oklahoma companies have made it easier for the United States to access domestic oil and natural gas, and it is our job to share that with the public.”
The United States is now the fastest growing source of oil and natural gas supplies in the world, according to the U.S. Energy Information Agency.
Oklahoma’s oil and natural gas industry directly employs more than 83,000 jobs in the state, an increase of 17 percent from 2009, according to OERB. Another 280,000 Oklahoma jobs are indirectly supported by the industry.
Together, that’s one out of every six Oklahoma jobs, with an estimated 10 percent increase by 2015.
OERB’s new ad campaign will include television, print, radio and Internet spots with messages that focus on the many facets of North American energy independence, including the far-reaching positive impact achieving independence would have on the economy, jobs and national security.
More energy independence could mean 3.6 million new jobs, enough to cut unemployment by two percentage points, according to a Citigroup report.
“The positive impacts of energy independence can not be ignored,” Brown said. “It makes sense for Oklahoma to take the lead in helping the United States achieve energy security, and this campaign will help in those efforts and get the public involved in the conversation.”
Additional information about the new OERB campaign can be found at OERB.com/independence.
I wrote in Friday’s paper about how new and expanded pipeline projects over the next two years are expected to move more oil to the Gulf Coast and alleviate the backlog at Cushing.
An article in the Calgary Herald on Friday explains how another pipeline conversion project could further help move oil more freely throughout the country.
Calgary-based Enbridge Inc. and Houston-based Energy Transfer Partners plan to spend up to $3.4 billion over the next two years to convert an existing natural gas pipeline to transport crude oil from Patoka, Ill., to the St. James hub in Louisiana.
When completed, the line is expected to transport 420,000 to 660,000 barrels of oil per day.
Oklahoma City-based Continental Resources Inc. and other producers in the Bakken Shale in North Dakota and Montana could be among the biggest beneficiaries from the proposed line.
Continental transports most of its Bakken crude by train to refineries on the east and west coasts.
Debate continued over the proposed Keystone XL pipeline on Wednesday as the American Petroleum Institute renewed the industry’s push for the project’s approval and the Sierra Club staged its first act of civil disobedience in its 120-year history.
American Petroleum Institute President and CEO Jack Gerard on Wednesday renewed the industry’s push for the Obama administration to approve plans for the Keystone XL pipeline.
“Keystone XL is an excellent opportunity to achieve the president’s vision for good, well-paying jobs,” Gerard said Wednesday during a conference call with reporters. “We call on the president to work with us and approve the Keystone pipeline and put our people back to work for all Americans.”
The pipe is proposed to move oil from Canada, North Dakota and Montana to Cushing on its way to the Gulf Coast.
Also on Wednesday, API released the results of a Harris Interactive survey it commissioned that found that 69 percent of respondents support the plan to build the pipeline, while 83 percent said it would strengthen the country’s energy security and 92 percent said jobs are important when considering the project.
Sean McGarvey, president of the Building and Construction Trades Department at the AFL-CIO, said the project would create 20,000 construction jobs and would support 117,000 new American jobs associated with development of the Canadian oil sands by 2025.
“This is a tremendous opportunity for the U.S. now,” McGarvey said. “We have great faith in the president. We hope he makes this decision quickly we can get our people back to work and feeding their families.”
While the API was holding its conference call, Sierra Club President Allison Chin and others were arrested during a protest outside the White House.
“This call for climate action is important enough that, for the first time in our 120-year history, we have suspended the Sierra Club’s long-standing policy that prohibits civil disobedience,” Chin said in a statement Wednesday. “Today is a one-time event to face arrest in order to elevate discussion about a critical issue.”
The Sierra Club, 350.org and other environmental organizations are planning the Forward On Climate Rally, which they are calling “the largest climate-related rally in U.S. history” on Sunday in front of the White House.
The groups are calling for the Obama administration to deny permits required to build the pipeline and to take other steps to
“We’re asking the president to use every resource he has at his disposal — from the bully pulpit to the executive order — to take climate action now,” Chin wrote.
In more Keystone XL-related news, the group that has been trying to stall ongoing construction of the southern leg of the Keystone pipeline on Wednesday released pictures they say show poor welds that would cause the pipe to leak.
Tar Sands Blockade said its members saw light shining into the pipe in Texas in December while they barricaded themselves inside during a protest.
If you’re a fan of watching things blow up, then have I got a video for you. The Los Angeles Times has a great video of a power plant in Chula Vista, Calif., being demolished over the weekend in a controlled implosion. A Tulsa-based company, Dykon Explosive Demolition Corp., was one of two companies in charge of the demolition.
The newspaper said the plant was built by San Diego Gas & Electric Co. and came online in 1960. The 700-megawatt generating station burned fuel oil and was shut down in 2010. Developers are hoping to turn the site into a park and resort hotel. Read more from the Los Angeles Times here.