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Too Early To Write Off Mississippi Lime?
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Two developments last week cast a fresh shadow of doubt on the status of the Mississippian Lime as one of the most extensive and potentially profitable horizontal oil and liquids plays in the U.S.
Recent SetbacksOn February 25, Chesapeake Energy surprised Miss Lime watchers by announcing its long-anticipated joint venture in the play at an unexpectedly low price: Chesapeake agreed to sell to Sinopec a 50% interest in its 850,000 net acres in northern Oklahoma, including existing production, for $1.02 billion in cash (no drilling carries). Existing production averaged ~34,000 Boe/d in the 2012 fourth quarter and associated net proved reserves were ~140 MMBoe.
(Source: Chesapeake Energy February 2013 Investor Presentation)
Assuming that approximately half of the proved reserves being sold…
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