OGE's Enogex, Chesapeake ink long-term acreage dedication
Deal includes sale of approximately 200 miles of gathering assets
OKLAHOMA CITY, Aug. 2, 2012 /PRNewswire/ -- Enogex, the midstream subsidiary of OGE Energy Corp. (NYSE: OGE) today announced that it signed a 15-year agreement with two subsidiaries of Chesapeake Energy Corporation (NYSE: CHK), including Chesapeake Energy Marketing, Inc. ("CEMI"), for the rights to gather and process natural gas production from nearly 500,000 net acres in the Cleveland Sands, Granite Wash, Tonkawa and Marmaton plays of northwestern Oklahoma and the Texas Panhandle.
The dedicated area includes portions of Roger Mills, Ellis, Dewey and Custer counties in Oklahoma and Hemphill and Lipscomb counties in Texas.
"This project further enhances our expanding presence in what is consistently among the top five economic plays in the country," said Enogex President Keith Mitchell. "With this dedication, we now have more than 600,000 net acres of long-term commitments in the region and more than two million net acres overall, primarily located in the Granite Wash, Cleveland Sands, Tonkawa and Cana Woodford plays. It's a nice fit with our strategy and will be accretive to 2012 earnings."
In a related transaction, Enogex will acquire approximately 200 miles of natural gas gathering assets in the dedicated area from Chesapeake for approximately $70 million, plus reimbursement of construction costs incurred subsequent to June 1, 2012. All transactions are subject to customary closing conditions, including notification and waiting periods pursuant to the Hart Scott Rodino Act. Closing is expected in early September.
Enogex also announced plans to invest another $255 million of midstream infrastructure in the region through 2013.
"We look forward to expanding our long standing relationship with Enogex," said CEMI President Jim Johnson. "The leverage created by Enogex's existing assets and extensive processing investment in the area will make Enogex an excellent partner in the continued development of a significant portion of our Cleveland Tonkawa leasehold producing crude oil and high NGL content natural gas".
Enogex will complete the first phase of a new processing plant in Wheeler County, Texas, this summer. A second processing plant is under construction in Custer County, Okla., and is expected to be in service by the end of 2013.
Enogex currently owns and operates more than 8,000 miles of pipe, eight processing plants and 24 billion cubic feet of natural gas storage capacity in Oklahoma and Texas. Enogex is a subsidiary of OGE Energy Corp. with minority interests held by affiliates of ArcLight Capital Partners. More information about Enogex can be found at www.enogex.com.
Except for the historical statements contained herein, the matters discussed in this Report are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate", "believe", "estimate", "expect", "intend", "objective", "plan", "possible", "potential", "project" and similar expressions. Actual results may vary materially from those expressed in forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to:
- general economic conditions, including the availability of credit, access to existing lines of credit, actions of rating agencies and their impact on capital expenditures;
- the ability of Enogex, Enogex Holdings and OGE Energy to access the capital markets and obtain financing on favorable terms;
- prices and availability of natural gas and NGLs, each on a stand-alone basis and in relation to each other as well as the processing contract mix between percent-of-liquids, percent-of-proceeds, keep-whole and fixed-fee;
- business conditions in the energy and natural gas midstream industries;
- competitive factors including the extent and timing of the entry of additional competition in the markets served by Enogex;
- unusual weather;
- availability and prices of raw materials for current and future construction projects;
- Federal or state legislation and regulatory decisions and initiatives that affect the energy and natural gas midstream industries;
- environmental laws and regulations that may impact Enogex's operations;
- changes in accounting standards, rules or guidelines;
- the cost of protecting assets against, or damage due to, terrorism or cyber attacks or other catastrophic events;
- advances in technology; and
- creditworthiness of suppliers, customers and other contractual parties.
Enogex undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE OGE Energy Corp.
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