OKLAHOMA CITY, Jan 26, 2010 (BUSINESS WIRE) -- Chesapeake Energy Corporation (NYSE:CHK) today announced the closing of
its $2.25 billion Barnett Shale joint venture transaction with Total E&P
USA, Inc., a wholly-owned subsidiary of Total S.A. (NYSE:TOT, FP:FP)
("Total"), whereby Total acquired a 25% interest in Chesapeake's
upstream Barnett Shale assets. The assets in the joint venture include
approximately 270,000 net acres of leasehold in the Core and Tier 1
areas of the Barnett, approximately 700 million cubic feet of natural
gas equivalent per day of current net production and approximately 3.0
trillion cubic feet of natural gas equivalent (tcfe) of proved reserves
(0.75 tcfe net to Total). In addition, Chesapeake believes that this
leasehold position will support the drilling of approximately 3,100
additional net locations (775 net to Total) with approximately 6.3 tcfe
of unrisked unproved reserves (1.6 tcfe net to Total).
Total paid Chesapeake approximately $800 million in cash at closing and
will pay a further $1.45 billion over time by funding 60% of
Chesapeake's share of drilling and completion expenditures until the
$1.45 billion obligation has been funded, which Chesapeake expects to
occur by year-end 2012.
In the framework of the joint venture, Chesapeake plans to continue
acquiring leasehold in the Barnett and Total will acquire its 25% share
of the new acreage on promoted terms until December 31, 2015. After such
date, Total's right to acquire its 25% proportionate share of
Chesapeake's leasehold will be on an unpromoted basis and Total will
also begin paying 25% of Chesapeake's support costs related to the joint
venture's corporate development activities.
Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented,
"We are pleased to close our joint venture transaction with Total and
look forward to creating substantial value for both companies in the
years ahead. We are honored to partner with one of the largest and most
respected industrial enterprises in the world to further develop the
Barnett Shale. This transaction allows Chesapeake to reduce its
financial leverage and future capital expenditures and further positions
us to deliver industry-leading finding and development costs and returns
on capital for years to come."
Chesapeake was advised on the transaction by Jefferies & Company, Inc.
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934.They include estimates of
natural gas and oil reserves andplanned drilling and lease
acquisition activity.Actual results could differ materially as a
result of a variety of risks and uncertainties.Estimates of
unproved reserves are by their nature more speculative than estimates of
proved reserves and accordingly are subject to substantially greater
risk of actually being realized by the company.While we believe
our calculations of future drillsites and estimation of unproved
reserves are reasonable, such calculations and estimates have not been
reviewed by third-party engineers or appraisers.See "Risk
Factors" in our 2008 Form 10-K and 2009 second quarter Form 10-Q filed
with the U.S. Securities and Exchange Commission on March 2, 2009 and
August 10, 2009, respectively, for a discussion of risk factors that
affect our business, including the joint venture with Total.We
caution you not to place undue reliance on our forward-looking
statements, which speak only as of the date of this press release, and
we undertake no obligation to update this information.
Chesapeake Energy Corporation is the second-largest producer of
natural gas in the U.S.Headquartered in Oklahoma City, the
company's operations are focused on the development of onshore
unconventional and conventional natural gas in the U.S. in the Barnett
Shale, Haynesville Shale, Fayetteville Shale, Marcellus Shale, Anadarko
Basin, Arkoma Basin, Appalachian Basin, Permian Basin, Delaware Basin,
South Texas, Texas Gulf Coast and East Texas regions of the United
States.Further information is available at www.chk.com.
Total is one of the world's major oil and gas groups, with activities
in more than 130 countries. Its 97,000 employees put their expertise to
work in every part of the industry - exploration and production of oil
and natural gas, refining and marketing, gas & power and trading. Total
is working to keep the world supplied with energy, both today and
tomorrow.The Group is also a first rank player in chemicals.
Further information is available at www.total.com.
SOURCE: Chesapeake Energy Corporation
Chesapeake Energy Corporation
INVESTOR CONTACT:
Jeffrey L. Mobley, CFA, 405-767-4763
Senior Vice President -
Investor Relations and Research
jeff.mobley@chk.com
or
MEDIA CONTACT:
Jim Gipson, 405-935-1310
Director - Media Relations
jim.gipson@chk.com