Associated Press
11 November 2008
OKLAHOMA CITY (AP) — Chesapeake Energy Corp. and Norwegian energy company Statoil Hydro announced Tuesday the formation of a strategic alliance to explore for unconventional natural gas opportunities worldwide and an agreement for a joint venture in large gas field in the eastern United States.
StatoilHydro will pay $3.375 billion for a 32.5 percent interest in Chesapeake's assets in the so-called Marcellus Shale geologic formation — about 1.8 million net acres — in the Appalachian region. Oklahoma City-based Chesapeake would retain the remaining 67.5 percent interest in the assets.
StatoilHydro will pay $1.25 billion of the amount in cash at closing and $2.125 billion from 2009 to 2012 by funding 75 percent of Chesapeake's share of drilling and completion expenditures.
The companies said the development of the area could support the drilling of between 13,500 and 17,000 horizontal wells during the next 20 years, and cover more than 32,000 leases in Pennsylvania, New York, West Virginia and Ohio. StatoilHydro said it was acquiring about 2.5 billion to 3 billion future, recoverable barrels of oil equivalent through the deal.
"We are establishing a strong platform for further developing our gas value chain business and growing our position in unconventional gas worldwide," said Helge Lund, the president and chief executive officer of StatoilHydro.
"The agreement we have entered into with Chesapeake provides us with a solid position in an attractive long-term resource base under competitive terms. Additionally, this deal adds a major building block to the gas value chain position we have established in the U.S., the world's largest and most liquid gas market."
Chesapeake is the largest producer of natural gas in the U.S., while StatoilHydro is the second-largest natural gas supplier to Europe. As part of the agreement, the two companies will form a strategic alliance. The closing on both the transaction and alliance should occur by the end of this year, officials from the two companies said.
"We are honored to establish a business relationship with StatoilHydro and are excited about the mutually beneficial nature of our transaction with them," Chesapeake CEO Aubrey McClendon said.
"We believe this transaction creates substantial value for both companies and unique opportunities for international growth with one of the leading international oil and gas companies. Jointly we can export our world class unconventional natural gas technology for further long-term growth."
In recent months, Chesapeake also sold a 20 percent working interest in its assets in the Haynesville Shale in north Louisiana and east Texas to Plains Exploration and Production Company for $3.3 billion and a 25 percent working interest in its assets in the Fayetteville Shale assets to BP America for $1.9 billion.