Repsol announced Thursday it has entered into a $1 billion joint venture with Oklahoma City-based SandRidge Energy at the liquids-rich Mississippi Lime, marking the biggest deal done at the unconventional play to date. 

In a separate release, Sandridge said it would sell an approximate 25% non-operated working interest, or 250,000 net acres, in the Extension Mississippian play located in western Kansas and an approximate 16% non-operated working interest, or 113,636 net acres, in its Original Mississippian play. 

Repsol will pay $250 million in cash at closing and the remainder in the form of a drilling carry, expected to be completed in three years. The Spanish oil company expects its share of production to reach a peak of 90,000 barrels of oil equivalent per day in 2019. 

SandRidge said the JV would exclude all wells and acreage within the associated spacing units spudded prior to January 1, 2012, and all wells and acreage associated with SandRidge Mississippian Trust I. 

Thursdays announcement marked only the second joint-venture struck at the play, the first of which also involved SandRidge. The E&P firm in August entered into a $500 million agreement with Koreas Atinum Partners for a 13.2% non-operated working interest in 860,000 acres. The August deal also comprised of $250 million in cash at closing, with the remainder in the form of a drilling carry over the next three years. 

According to the agreement, Repsol anticipates drilling more than 200 horizontal wells during 2012 and exceed 1,000 wells by 2014. 

The deal is part of Repsols strategy to diversify its portfolio into OECD countries, the release stated. 

Tom Ward, SandRidges chairman and CEO, said that, we are excited to announce this joint venture with Repsol, a global energy leader, and we are pleased that they share our confidence in the development potential of this vast Mississippian oil play. We compare the scope of this play to the Bakken and believe it will be transformational for the Midcontinent region of the United States. 

As a result of the drilling carry and its lower working interest, SandRidges 2012 capex is expected to decline to $1.6 billion from a previous budget of $1.8 billion. This JV with Repsol puts us on a clear path to bridge the 2012 funding gap with non-debt capital and to execute our three year plan to triple EBITDA and double oil production while lowering our debt to EBITDA ratio. 

The deal is expected to close in the first quarter, subject to certain closing conditions.