CNOOC to Acquire Interest in Eagle Ford Shale Project

CNOOC has signed an agreement with Chesapeake Energy Corporation to acquire a 33.3% stake in Chesapeake’s 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale project in South Texas, US.

CNOOC will pay $1.08bn in cash towards the stake acquisition.

Chesapeake will be responsible for leasing, drilling, completion, operations and marketing activities of the project.

Chesapeake is using ten operated rigs to develop the leasehold and expects to increase it to 12 by the end of 2010 and to 40 rigs by the end of 2012 with CNOOC’s funding.

Chesapeake has ten wells in production and 900 wells are expected to be drilled by the end of 2012.

Initial production rates are up to 1,160 barrels of oil and 0.4mcf of natural gas per day in the oil window, with 4mcf of natural gas and 1,200 barrels of oil per day in the wet gas window.

The project will reach its peak production of 400,000-500,000 barrels of oil equivalent per day by 2020.

The current transaction is expected to be closed in the fourth quarter this year.

Chesapeake’s CEO Aubrey McClendon said the transaction brings the combined proceeds from the company’s shale development ventures to $13bn.

”The implied pre-development value of Chesapeake’s retained interest in those shale ventures is approximately $37 billion based on the valuations in the sale transactions,” said McClendon.