Notable Mergers and Acquisitions of the Day 1/3: [(CHK)/(TOT) (DVN) (MMM)/(AVY)]

• 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.
  
  
• Devon Energy Corporation (NYSE: DVN) today announced it has signed an agreement with Sinopec International Petroleum Exploration & Production Corporation (SIPC) whereby SIPC will invest $2.2 billion in exchange for one-third of Devon’s interest in five new venture plays.
  
  Prior to this transaction, Devon had assembled 1.2 million net acres in the company’s previously announced positions in the Tuscaloosa Marine Shale, Niobrara, Mississippian, Ohio Utica Shale and the Michigan Basin. The companies have recently added acreage in the Ohio Utica Shale, increasing their joint position in the play to 235,000 net acres.
  
  SIPC will also reimburse Devon for drilling costs incurred prior to closing and acreage acquisition costs incurred subsequent to the effective date of the agreement. SIPC will make a $900 million cash payment upon closing and $1.6 billion paid in the form of a drilling carry. The drilling carry will fund 70 percent of Devon’s capital requirements, which results in SIPC paying 80 percent of the overall development costs during the carry period. Based on the current work plan, the company expects the entire $1.6 billion carry to be realized by year-end 2014. Through 2012, the companies expect to drill approximately 125 gross wells in the five plays.
  
  Devon will serve as the operator and will have ultimate responsibility for the allocation of capital. The company is also responsible for commercially marketing all production from these plays into the North American market. Subject to customary government and regulatory approvals, the closing is expected to occur in the first quarter of 2012.
  
  
• 3M (NYSE: MMM) announced today that it has entered into a definitive agreement to acquire the Office and Consumer Products business of Avery Dennison Corp.(NYSE: AVY) for a total purchase price of $550 million in cash, subject to post-closing adjustments.
  
  On a GAAP-reported basis, 3M estimates the acquisition will be approximately $0.06 dilutive to earnings per share in the first 12 months following closing. Excluding purchase accounting adjustments and anticipated integration expenses, 3M estimates the acquisition will be $0.03 accretive to earnings over the same period.

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• CoStar Group acquires Zonda for $800M, adding new home data
• Arena Group to rename as Paradium.AI, ticker changing to PAAI