Total (TOT) Unit Buys 25% Interest in Utica Shale from Chesapeake (CHK) in $2.32B Deal

Chesapeake Energy Corporation (NYSE: CHK) has announced the completion of a joint venture transaction with Total E&P USA, Inc., a wholly owned subsidiary of Total S.A. (NYSE: TOT), whereby Total acquired an undivided 25 percent interest in approximately 619,000 net acres in the liquids-rich area of the Utica Shale. Of the JV acreage, approximately 542,000 net acres were contributed to the JV by Chesapeake and approximately 77,000 net acres were contributed by Houston-based EnerVest, Ltd. and its affiliates. The JV area covers all or a portion of 10 counties in eastern Ohio.

The transaction, which closed on Friday, December 30, 2011, resulted in combined value of approximately $2.32 billion, of which approximately $2.03 billion was received by Chesapeake and approximately $290 million by EnerVest. Approximately $610 million was paid to Chesapeake in cash at closing and approximately $1.42 billion will be paid in the form of a drilling and completion cost carry, which Chesapeake anticipates fully receiving by year-end 2014.

Chesapeake will serve as the operator of the JV and will conduct all leasing, drilling, completing, operating and marketing activities for the project. The agreement provides that Total will acquire a 25% share of all additional acreage acquired by Chesapeake in the JV AMI. Total will also participate with Chesapeake and EnerVest in midstream infrastructure related to production generated from the assets with a 25% interest.

Jefferies & Company, Inc. acted as financial advisor to Chesapeake on the transaction.

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