CNOOC closes deal for stake in U.S. shale oil, gas project
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China National Offshore Oil Company Limited (CNOOC Ltd.) announced Thursday that it has closed a deal with U.S.-based Chesapeake Energy Corporation (Chesapeake) for the purchase of a 33.3 percent undivided interest in a shale oil and gas project for 570 million U.S. dollars in cash.
CNOOC International Limited, a wholly owned subsidiary of CNOOC Ltd., signed an agreement with Chesapeake in January to purchase the interest in Chesapeake's 800,000 net oil and natural gas leasehold acres in the Denver-Julesburg (DJ) and Powder River Basins in northeast Colorado and southeast Wyoming.
In addition, CNOOC Ltd has agreed to fund 66.7 percent of Chesapeake's share of drilling and completion costs, up to 697 million U.S. dollars, which Chesapeake expects to occur by the end of 2014.
Aubrey K. McClendon, Chesapeake's chief executive officer, said the completion of the deal would accelerate the development, resulting in a reduction of oil imports over time, the creation of thousands of high-paying jobs in the United States and the payment of significant local, state and federal taxes.
This is the second deal between CNOOC Ltd. and Chesapeake in shale oil and gas project. CNOOC Ltd. purchased a 33.3-percent undivided interest in Chesapeake's 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale project in south Texas for 1.08 billion U.S. dollars in cash in November last year.
In addition, CNOOC Ltd. has agreed to fund 75 percent of Chesapeake's share of drilling and completion costs until an additional 1.08 billion U.S. dollars has been paid, which Chesapeake expects to occur by the end of 2012.
Yang Hua, chief executive officer of CNOOC Ltd., said the closing of the deal would further enhance the presence of the CNOOC Ltd. in the shale oil and gas industry. Both companies would closely cooperate to fully explore the potential of the project and to benefit both parties as well as other stakeholders.
Chesapeake Energy Corporation is the second-largest producer of natural gas and an active driller of new wells in the United States. Headquartered in Oklahoma City, the company's operations focus on discovering and developing unconventional natural gas and oil fields on-shore in the United States.
Headquartered in Hong Kong, CNOOC Ltd. is China's largest producer of offshore crude oil and natural gas.
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