As Major League Baseball approaches its trade deadline, two energy companies have agreed to a deal of their own. RKI Exploration & Production LLC and Chesapeake Energy Corp. have entered into an “exchange agreement” for properties located in the Powder River Basin of eastern Wyoming.
Under the agreement RKI will receive from Chesapeake $450 million in cash plus 136,000 net acres, including ownership interests in 68 RKI operated wells, in exchange for 204,000 net acres, including ownership interests in 191 Chesapeake operated wells. Closing is expected in August 2014, subject to third-party consent.
“This is a great transaction for both companies and allows each of us to consolidate our operated positions within the Powder River Basin,” said RKI founder and CEO Ronnie Irani. “This basin is rapidly becoming one of the premier emerging oil basins in North America and RKI is currently the most active operator with four horizontal rigs running. We will continue to be one of the largest acreage holders in the basin with over 355,000 net acres.”
An Oklahoma City-based private exploration and production company, RKI was founded in 2005 with a primary focus on the Powder River Basin and the Permian Basin in Texas. The company has a substantial development program under way with 10 rigs operating across 525,000 total net acres. RKI has almost doubled its net production over the last 12 months to a current average rate of more than 24,000 barrels of oil equivalent per day (more than 70 percent oil and natural gas liquids).