U.S. second largest gas producer to sell assets to China's Sinopec

Chesapeake Energy, the U.S. second-largest gas producer after Exxon Mobil, announced Monday it will sell a 50 percent stake in oil and natural gas-rich land in Oklahoma to Chinese oil company Sinopec for 1.02 billion U.S. dollars.

The two companies on Monday "announced the execution of an agreement which provides for Sinopec to purchase a 50 percent undivided interest in 850,000 of Chesapeake's net oil and natural gas leasehold acres in the Mississippi Lime play in northern Oklahoma," Chesapeake, headquartered in Oklahoma City, said in a news release.

Chesapeake has sold off billions in assets to pay off debt as it, hurt by low natural gas prices, rushed to buy land and other assets and increasingly focused on more lucrative oil and gas liquids.

"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.

The joint venture between Sinopec and Chesapeake produced about 34,000 barrels of oil equivalent per day in the 2012 fourth quarter and, as of Dec. 31, 2012, there was approximately 140 million barrels of oil equivalent of net proved reserves associated with the assets, Chesapeake said.