The consideration for the sale is $1.08bn in cash at closing, subject to adjustment.

In addition, CNOOC will fund 75% of Chesapeake’s share of drilling and completion costs until an additional $1.08bn has been paid, which is expected to occur by year-end 2012.

As operator of the project, Chesapeake will conduct all leasing, drilling, completion, operations and marketing activities.

Currently, Chesapeake has 10 horizontal Eagle Ford wells in production with initial production rates of up to 1,160 barrels of oil and 0.4mmcf of natural gas per day in the oil window, and 1,200 barrels of oil and 4.0mmcf of natural gas per day in the wet gas window.