Chesapeake Energy Corporation and CNOOC Limited announced the closing of a project cooperation agreement whereby CNOOC International Limited, a wholly owned subsidiary of CNOOC Limited, purchased a 33.3% undivided interest in Chesapeake’s 800,000 net oil and natural gas leasehold acres in the Denver-Julesburg (DJ) and Powder River Basins in northeast Colorado and southeast Wyoming.
The consideration for the transaction was $570 million in cash. In addition, CNOOC Limited has agreed to fund 66.7% of Chesapeake’s share of drilling and completion costs up to $697 million, which Chesapeake expects to occur by year-end 2014.
Aubrey K. McClendon, Chesapeake’s Chief Executive Officer, commented, “We are very pleased to once again have CNOOC Limited as our partner in one of our shale development transactions. We look forward to accelerating the development of this large domestic oil and natural gas resource, resulting in a reduction of our country’s oil imports over time, the creation of thousands of high-paying jobs in the U.S. and the payment of very significant local, state and federal taxes.”
Yang Hua, Chief Executive Officer of CNOOC Limited, stated, “Congratulations on the successful closing of the transaction, which will further enhance our presence in the shale oil and gas industry. In the future, we will closely cooperate with Chesapeake to fully explore the potential of the project and bring benefits to both parties as well as other stakeholders.”
Chesapeake’s advisor on the transaction was Jefferies & Company, Inc., and CNOOC Limited’s advisor was Tudor, Pickering, Holt & Co. Securities, Inc.
Chesapeake Energy Corporation is the second-largest producer of natural gas and the most active driller of new wells in the U.S.Headquartered in Oklahoma City, the company’s operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S.Chesapeake owns leading positions in the Barnett, Fayetteville, Haynesville, Marcellus and Bossier natural gas shale plays and in the Eagle Ford, Granite Wash, Tonkawa, Cleveland, Mississippian, Wolfcamp, Bone Spring, Avalon and Niobrara unconventional liquids plays.The company has also vertically integrated its operations and owns substantial midstream, compression, drilling and oilfield service assets.
CNOOC Limited is China’s largest producer of offshore crude oil and natural gas and one of the largest independent oil and gas exploration and production companies in the world.Headquartered in Hong Kong, CNOOC Limited mainly engages in exploration, development, production and sales of oil and natural gas and has four major production areas in offshore China, which are Bohai Bay, Western South China Sea, Eastern South China Sea and East China Sea.In addition, it is one of the largest offshore crude oil producers in Indonesia. CNOOC Limited also has upstream assets in Nigeria, Australia and other countries.
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Source: Chesapeake Energy Corporation, February 17, 2011;