OKC-based Chesapeake completes Marcellus interest sale

Journal Record, The (Oklahoma City), Nov 26, 2008 by David Page

Chesapeake Energy has completed the sale of a 32.5-percent interest in its Marcellus Shale assets to StatoilHydro for $3.375 billion.

Chesapeake retained a 67.5-percent interest in the assets in the Appalachia region. The assets include 1.8 million net acres of leasehold.

In New York Stock Exchange trading Tuesday, Chesapeake closed down 2 cents at $18.24. The 52-week range is $74 and $11.99.

The purchase prices included $1.25 billion in cash. StatoilHydro also will provide financing for 75 percent of Chesapeake's 67.5- percent share of drilling and completion expenditures until the remaining $2.125 billion obligation has been funded.

Chesapeake plans to buy additional leasehold in the Marcellus Shale play. StatoilHydro has the right to a 32.5-percent participation in leasehold purchases by Chesapeake.

The Marcellus Shale covers an area extending from upstate New York across Pennsylvania into eastern Ohio and across most of West Virginia. The area could contain as much as 50 trillion cubic feet of recoverable natural gas, according to a study by researchers at Penn State University and the State University of New York at Fredonia.

Chesapeake has been selling interests in assets in recent months. Chesapeake sold a 20-percent interest in its Haynesville Shale assets to Houston-based Plains Exploration and Production Co. for $3.3 billion and sold a 25-percent interest in its Fayetteville Shale assets to BP America for $1.9 billion.

The combined sales prices for the Haynesville, Fayetteville and Marcellus Shale assets total $8.575 billion. The value of the remaining interests held by Chesapeake in the three joint ventures is estimated at $26 billion, or more than $40 per share.

Oklahoma City-based Chesapeake, the largest producer of natural gas in the U.S., and StatoilHydro, a Norwegian company, are evaluating opportunities for their strategic alliance to jointly explore unconventional natural gas opportunities internationally.

StatoilHydro was formed in October 2007 from the merger of Statoil and the oil and gas division of Norsk Hyrdo. The company has 29,500 employees in 40 countries.