Chesapeake Energy and the Plains Exploration & Production Company have entered into a joint venture to develop Haynesville Shale acreage in north Louisiana and east Texas.
Plains Exploration & Production Company (PXP) has agreed to acquire a 20% interest in Chesapeake’s Haynesville Shale leasehold as of June 30, 2008, for $1.65 billion in cash.
In addition, PXP has agreed to fund 50% of Chesapeake’s 80% share of drilling and completion costs for future Haynesville Shale joint venture wells over a several year period until an additional $1.65 billion has been paid. Chesapeake estimates that its Haynesville leasehold as of June 30, 2008, was approximately 550,000 net acres.
As a result of the transaction, PXP will hold approximately 110,000 net acres of this leasehold and Chesapeake will hold approximately 440,000 net acres. Chesapeake plans to continue acquiring leasehold in the Haynesville Shale play and PXP will have the right to a 20% participation in any such additional leasehold.
Aubrey McClendon, CEO of Chesapeake, said: We are pleased to announce this joint venture with PXP and believe it creates substantial value for both companies. This transaction establishes a $16.5 billion valuation for our Haynesville Shale leasehold, all of which is located in the core area of this very significant discovery.