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French company receives its stakes in leases
Lisbon
Chesapeake Exploration has sold a sizable percentage of its 9,000 leases in Columbiana County to a French company it has a joint venture with for Utica Shale development.
Chesapeake Exploration, L.L.C. held a 28 percent working interest in leases in Columbiania County. When Chesapeake sold most of its ownership under the name Chesapeake Exploration, L.L.C. to Total E&P, which brought Total to a 25 percent interest in the leases consistent with the publicized terms of the deal.
Total E&P, a U.S. subsidiary of Total S.A., received ownership in the leases. Chesapeake completed an agreement with Total S.A. on Dec. 30, 2011, that provided Total with 25 percent interest in Chesapeake’s leases in 10 Ohio counties.
Chesapeake will be the operator and will conduct all leasing, drilling, completing, operating and marketing activities for the project. The agreement provides that Total will acquire a 25 percent share of all additional acreage acquired by Chesapeake.
Craig Brown, Columbiana County recorder, believes Chesapeake could be attempting to reduce its liability in Columbiana County with a smaller ownership stake.
There have been at least 12 lawsuits involving Chesapeake filed in Columbiana County, according to court records.
“In other areas Chesapeake operates, the public is used to dealing with oil and gas. Seismic testing is no big deal in Texas or North Dakota, but it is to people here,” Brown said. “I think Chesapeake was tired of being sued in Columbiana County.”
Columbiana County has experienced businesses that come to the area for a while and then leave. The coal and then steel industry both did that, which created distrust in businesses that are not local, he said.
“The people here seem to be less trusting of the oil and gas companies than in other areas,” Brown said.
Overall, with Chesapeake maintaining some ownership of the Columbiana County leases, production should move forward the same way, Brown said.
“This deal isn’t bad news for our community,” he said.
The overall terms of the deal provided Chesapeake with $2.03 billion, according to the company.
When the agreement between Chesapeake and Total was announced Aubrey K. McClendon, Chesapeake’s CEO called the venture an extension of the companies’ relationship that began in the Barnett Shale.
“We believe that the Utica Shale is a world-class asset with world-class returns, and now we have a world-class partner to help develop the play more aggressively than we could have with our own resources,” he said.
Yves-Louis Darricarrere, Total Exploration & Production’s president, stated the work in the Utica Shale would be a long-term resource for the company.
“This is consistent with our strategy to develop positions in unconventional plays with large potential and, in this case, with value predominantly linked to oil price,” he said.