Wednesday, January 4, 2012

Chesapeake and Total Close JV in Utica Shale

Yesterday, Chesapeake Energy announced that it had closed a deal with French company Total S.A. in a joint venture in the Utica Shale.  The preliminary terms of the deal were announced back in November, but the partner's name was not disclosed at the time.

The deal is like others Chesapeake has struck with the one wrinkle that CHK earlier had partnered with investor EnerVest, Ltd. on the acreage.  The Total deal was valued at $2.32 billion, with $2.03 billion going to CHK and $232 million to EnerVest.  CHK received a $610 million payment at closing and Total will fund $1.42 billion of future drilling costs.  Total received a 25% interest in the 610,000 net acres owned by Chesapeake (542,000 acres) and EnerVest (77,000 acres).

The only question is why it took so long for the loquacious Chesapeake to announce its partner and the actual closing (Dec. 30 closing, Jan. 3 announcement).  Is CHK getting shy or did EnerVest or Total put a lid on them?

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