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BP to Buy Oklahoma Land for Natural Gas

BP to Buy Oklahoma Land for Natural Gas

Published: July 18, 2008

BP said on Thursday it had agreed to buy 90,000 acres of natural gas properties in Oklahoma from the Chesapeake Energy Corporation for $1.75 billion.

The properties, which are in the Arkoma Basin region’s Woodford Shale, are producing about 50 million cubic feet of natural gas equivalent a day.

BP said the purchase had the potential to double its existing production from its Arkoma operations, which already produce more than 200 million cubic feet of natural gas equivalent a day.

Energy companies are spending heavily to lock up acreage in plays for hot shale, where oil and natural gas are trapped in layers of rock. Record energy prices and technology like horizontal drilling have made retrieving hydrocarbons from shale profitable.

Shell Canada agreed this week to spend about $5.9 billion to buy Canada’s Duvernay Oil Corporation to increase its production from difficult-to-extract deposits.

Stock in BP, which is based in London, rose 10.25 pence, to £5.19 a share, and stock in Chesapeake, which is based in Oklahoma City, Okla., rose $1.93, to $54.74 a share.

Meagher Oil & Gas properties advised Chesapeake on the deal, which is expected to close on Aug. 8.

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