Parallel Petroleum Corporation has announced that Chesapeake Energy Corporation will immediately take over the operations of Parallel's West Fork Barnett Shale gas project, which was previously operated by Dale Resources, LLC. The change of operator is the result of Chesapeake's purchase of Dale Gas Partners, L.P. et. als' approximate 61% working interest in the West Fork project located in Tarrant County east of downtown Ft. Worth, Texas. Parallel elected to retain its approximate 37% non-operated working interest in the project.
As part of the transaction between Chesapeake Energy Corporation and Dale Gas Partners, L.P., Dale Resources, LLC will retain responsibility over land services and will continue to lease on behalf of Chesapeake and Parallel. Dale Resources has increased its land staff to focus on the acquisition of additional leasehold in the Trinity River flood plain and surrounding urban areas referred to as the "halo" acreage. Surface locations that are owned and controlled by Chesapeake and Parallel provide the most effective means of developing the "halo" acreage through horizontal drilling.
West Fork Pipeline
West Fork Pipeline Company I, LP has agreed to sell certain assets to Texas Midstream Gas Services, L.L.C., an affiliate of Chesapeake Energy Corporation. Parallel, as a limited partner in West Fork Pipeline Company I, LP, has agreed to the sale and will receive approximately $16.0 million allocable to its limited partnership interest. Parallel expects to recognize an estimated $10.0 million pre-tax net gain on the sale.
Parallel and Texas Midstream Gas Services, L.L.C. have entered into a new transportation agreement, whereby Parallel has retained the right to transport its current and future gas volumes through the pipeline system upon terms substantially similar to the prior transportation agreement.
Management Comments
Larry C. Oldham, Parallel's President and CEO, commented, "Drilling activity on our Barnett Shale gas project was suspended during the marketing of Dale Resources' interest. We now look forward to resuming development on an accelerated pace. Our management team will meet with Chesapeake Energy within the next few weeks to review their detailed development plans for this project."
In a final comment, Oldham stated, "Leasing in the Trinity River flood plain and the surrounding 'halo' areas is very complex. We believe Dale Resources has established an excellent track record and reputation in regard to leasing, permitting and drilling in this area. We further believe that we will continue to benefit from Dale Resources' expertise, reputation and established relationships in acquiring additional leasehold and from Chesapeake's proven track record and industry leadership in developing the Barnett Shale."
