Paris-based Company to Help Fund Utica Shale Project
$2.3 Billion Deal to Allow Chesapeake to Expand Drilling in Ohio
 Chesapeake Energy Corp. has enlisted the help of a French energy company in a joint venture to develop its holdings in the Utica shale formation.
Total E&P USA Inc., a wholly owned subsidiary of Total S.A. based in Paris, has acquired an undivided 25 percent interest in approximately 619,000 net acres in the liquids-rich area in Ohio as part of a joint venture worth about $2.32 billion. Of the acreage included in the deal, approximately 542,000 net acres were contributed to the joint venture by Chesapeake and approximately 77,000 net acres were contributed by Houston-based EnerVest Ltd. and its affiliates. The joint venture area covers all or a portion of 10 counties in the eastern part of the state.
The transaction, which closed on Dec. 30, 2011, resulted in a combined value of approximately $2.32 billion, of which approximately $2.03 billion was received by Chesapeake and approximately $290 million by EnerVest. Approximately $610 million was paid to Chesapeake in cash at closing and approximately $1.42 billion will be paid in the form of a drilling and completion cost carry, which Chesapeake anticipates fully receiving by year-end 2014.
Chesapeake will serve as the operator of the joint venture and will conduct all leasing, drilling, completing, operating and marketing activities for the project. The agreement provides that Total will acquire a 25 percent share of all additional acreage acquired by Chesapeake in the area. Total will also participate with Chesapeake and EnerVest in midstream infrastructure related to production generated from the assets with a 25 percent interest.
“We are pleased to extend our existing relationship with Total as a … partner in the Barnett shale to now include the Utica Shale,” said Aubrey K. McClendon, Chesapeake’s CEO. “We believe that the Utica shale is a world-class asset with world-class returns and now we have a world-class partner to help develop the play more aggressively than we could have with our own resources. This Utica transaction is our seventh significant [joint venture] and in these seven [joint ventures], Chesapeake has sold approximately 1.5 million net acres for total leasehold consideration of $14.8 billion while retaining 3.6 million net acres as of the [joint venture] date with an indicated value … of $45.7 billion.”
 Chesapeake Energy is the second-largest producer of natural gas, a Top 15 producer of oil and natural gas liquids and the most active driller of new wells in the United States. Headquartered in Oklahoma City, the company’s operations are focused on discovering and developing unconventional natural gas and oil fields onshore.
“Total is delighted to be building on our technical successes with Chesapeake in the Barnett shale [joint venture] and to expand into the liquid-rich Utica shale play in Ohio,” said Yves-Louis Darricarrere, president of Total E&P. “This is consistent with our strategy to develop positions in unconventional plays with large potential and, in this case, with value predominantly linked to oil price.”
Total is one of the largest integrated oil and gas companies in the world, with activities in more than 130 countries.
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