Approximately 900 wells are expected to be drilled by year-end 2012. Chesapeake is currently utilizing 10 operated rigs to develop its Eagle Ford leasehold and with the additional capital from CNOOC Limited, anticipates increasing its drilling activity to approximately 12 operated rigs by year-end 2010, approximately 31 rigs by year-end 2011 and approximately 40 rigs by year-end 2012. Over the next several decades, the companies plan to develop net unrisked unproved resource potential up to 4 billion barrels of oil equivalent (after deducting an assumed average royalty burden of 25%).

Closing of the transaction is anticipated in the 2010 fourth quarter.Īs operator of the project, Chesapeake will conduct all leasing, drilling, completion, operations and marketing activities for the project. In addition, CNOOC Limited has agreed to fund 75% of Chesapeake’s share of drilling and completion costs until an additional $1.08 billion has been paid, which Chesapeake expects to occur by year-end 2012.

The consideration for the sale will be $1.08 billion in cash at closing, subject to adjustment.

Chesapeake Energy Corporation (“Chesapeake”, NYSE:CHK) and CNOOC Limited (NYSE:CEO SEHK:00883) today announced the execution of an agreement whereby CNOOC International Limited, a wholly-owned subsidiary of CNOOC Limited, will purchase a 33.3% undivided interest in Chesapeake’s 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale project in South Texas.

Chk investor relations