China’s Largest Oil/Gas Producer Purchases Shale Project Interest

January 2011 Vol. 238 No. 1

Chesapeake Energy Corporation and CNOOC Limited’s wholly owned subsidiary, CNOOC International Ltd., have finalized a project cooperation agreement allowing the purchase of a 33.3% undivided interest in Chesapeake’s 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale project in South Texas.

The consideration for the transaction was $1.08 billion in cash, plus an additional $40 million payment adjustment at closing. In addition, CNOOC Limited has agreed to fund 75% of Chesapeake’s share of drilling and completion costs up to $1.08 billion, which Chesapeake expects to occur by year-end 2012.

Aubrey K. McClendon, Chesapeake’s CEO, said, “We are very pleased to have partnered with CNOOC Limited in completing our fifth industry shale development transaction.”

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