CNOOC to pay $1.08bn for stake in Chesapeake shale project

11 October 2010 08:56  [Source: ICIS news]

SHANGHAI (ICIS)--CNOOC, China's largest offshore oil and gas producer, will pay $1.08bn(€767m) for a 33.3% stake in Chesapeake Energy Corp’s shale oil and gas acreage in Texas, USA, CNOOC said on Monday.

The two firms expected to finalise the agreement for the 600,000-acre Eagle Ford shale assets in the fourth quarter of 2010, CNOOC said in a press release on its website.

The deal required CNOOC to fund 75% of Chesapeake’s share of drilling and completion costs until an additional $1.08bn has been paid, which would occur by late 2012, the release added.

As project operator, Chesapeake would conduct all leasing, drilling and completion operations and marketing activities for the project, CNOOC said.

The project was expected to reach its peak production of 400,000-500,000 barrels of oil equivalent per day in the next decade, it added.

“We see this as a win-win deal. Chesapeake has a weak balance sheet which has hindered its ability to fully monetize the firm’s vast natural gas resources, while CNOOC’s supernormal production growth has outpaced its reserves increase in recent years,” Gordon Kwan, Head of Regional Energy Research from Mirae Asset Securities said in a note.

($1 = €0.71)

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