Enogex, the midstream subsidiary of OGE Energy Corp. (OGE) announced that it signed a 15-year agreement with two subsidiaries of Chesapeake Energy Corporation (CHK), including Chesapeake Energy Marketing, Inc., 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.
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.
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