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Chesapeake Settles For Less Than Expected In $1B Deal With Sinopec

February 25, 2013 | About:
Chesapeake Settles For Less Than Expected In $1B Deal With Sinopec

by Christopher Helman, Forbes staff


"In a presentation [in the middle of 2012], Chesapeake suggested that its Mississippi Lime acreage was worth $7,000 an acre.

But the Sinopec deal value is nowhere close to that. Simply dividing the $1 billion deal value by the 425,000 acres and you get just $2,400 an acre. Netting out 17,000 boepd of production from the fields, and the price per acre comes out at between $750 and $1,000 per acre, according to analysts at Tudor, Pickering & Holt."

This price for Mississippi Lime acreage could hurt SandRidge's valuation since much of SD's prospective acreage is also Mississippian Lime in the same general areas as CHK's acreage, and SD has also been claiming that their acreage is worth significantly more then the price reflected in the CHK acreage sale.

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