Total E&P USA, a unit of French oil company Total, has completed a $2.32bn deal to enter into a joint venture with Chesapeake Exploration and affiliates of EnerVest in the Utica shale, US.
Under the deal, Total has acquired a 25% stake in about 619,000 net acres in the liquids-rich area of the Utica shale play located across ten counties in eastern Ohio.
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Of the 619,000 net acres, approximately 542,000 were contributed by Chesapeake and 77,000 were contributed by EnerVest to the joint venture.
Total said it has acquired its 25% stake from each of Chesapeake and EnerVest on identical terms.
The company has paid about $610m to Chesapeake in cash at closing and EnerVest is receiving about $290m.
Chesapeake will also get a further $1.42bn in the form of a drilling and completion cost carry, which is anticipated by the year-end 2014.
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By GlobalDataChesapeake will operate the joint venture and conduct all leasing, drilling, completing, operating and marketing activities for this project.
Under the agreement, Total will also acquire a 25% stake in any additional acreage acquired by Chesapeake in the liquids-rich area of the Utica shale play.
In addition, the company has entered into an agreement with Chesapeake and EnerVest to jointly develop midstream facilities to export the production from this acreage.
Total Exploration & Production president Yves-Louis Darricarrere said the move was consistent with Total’s strategy to develop positions in unconventional plays with large potential and, in this case, with value mainly linked to oil price.
"This joint venture will provide us with a material position in a valuable long-term resource base under attractive terms and with a top-class operator," he said.
