Chesapeake Energy said it had reached a deal with China's CNOOC to sell about a third of its interest in the Eagle Ford Shale project in South Texas for $1.08 billion.
CNOOC has agreed to fund 75% of Chesapeake's share of drilling and completion costs until an additional $1.08 billion has been paid, company officials said on Oct. 10.
Chesapeake is expected to continue managing the project, conducting all leasing, drilling, operation and marketing activities.
Over the next several decades, the companies plan to produce in the area up to four billion barrels of oil.
Chesapeake is currently operating 10 rigs in its Eagle Ford leasehold, but with the additional capital from CNOOC Limited, it anticipates increasing its drilling activity to approximately 12 operated rigs by year-end 2010 and approximately and approximately 40 rigs by the end of 2012.
About 900 wells are expected to be drilled by year-end 2012.
Chesapeake anticipates the project will reach its peak production of 400,000-500,000 barrels of oil equivalent per day in the next decade, officials said.
"This transaction will provide the capital necessary to accelerate drilling 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 in the payment of very significant local, state and federal taxes," said Chesapeake CEO Aubrey McClendon.
Copyright Agence France-Presse, 2010
