Total E&P USA Inc. signed a joint venture agreement with Chesapeake Exploration LLC and affiliates of EnterVest Ltd. in which Total acquires a stake in the Utica shale in Ohio.
Terms call for Total to obtain a 25% share in the transaction signed Dec. 30 and effective as of Nov. 1, 2011. Total paid Chesapeake and EnerVest $700 million in cash.
In addition, Total agreed to pay up to $1.63 billion during 7 years in the form of a 60% carry of Chesapeake and EnerVest’s future drilling and completion expenditures.
The Utica JV covers 619,000 net acres, of which 542,000 net acres are brought by Chesapeake and 77,000 net acres are brought by EnerVest. Total will acquire its 25% share from each of Chesapeake and EnerVest on identical terms, giving a total of 155,000 net acres.
Chesapeake will operate the acreage. Total also will acquire a 25% share in any new acreage that Chesapeake acquires in the Utica play.
As of yearend 2011, 13 wells had been drilled across the acreage. The joint venture plans to ramp up the drilling activities in the coming 3 years with 25 rigs planned by 2014.
Additionally, Total, Chesapeake, and EnerVest have agreed to jointly develop the construction of the necessary midstream assets to transport the production.
Total and Chesapeake already have a joint venture in the Barnett shale play.
Paula Dittrick | Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.
