Total reports that its subsidiary, Total E&P USA, Inc. has signed and completed on December 30, 2011 an agreement to enter into a Joint Venture with Chesapeake Exploration, L.L.C.,a subsidiary of Chesapeake Energy Corporation and affiliates of its partner EnerVest Ltd. In the agreement, Total acquires a 25% share in Chesapeake's and EnerVest's liquids-rich area of the Utica shale play located across 10 counties on the eastern side of the state of Ohio, USA.

The transaction is effective as of November 1, 2011. Total has paid Chesapeake and EnerVest about USD 700 million in cash for acquiring these assets. Total will also be committed to pay additional amounts up to USD 1.63 billion over a maximum period of 7 years in the form of a 60% carry of Chesapeake and EnerVest's future capital expenditures on drilling and completion of wells within the Joint Venture.

The Joint Venture covers approximately 619,000 net acres, of which 542,000 net acres are brought by Chesapeake and 77,000 net acres are brought by EnerVest. Total will acquire its 25% share from each of Chesapeake and EnerVest on identical terms, giving a total of 155,000 net acres. Chesapeake will operate the Joint Venture acreage.

As a result of the transaction, Total will also acquire a 25% share in any new acreage which will be acquired by Chesapeake in the liquids-rich area of the Utica shale play.

To date 13 wells have been drilled across the acreage with very promising results seen from each well in terms of productivity and liquid content. The Joint Venture plans to ramp up the drilling activities in the coming 3 years with 25 rigs planned to be mobilized by 2014 to fully appraise and develop the acreage. SEC production in Total's share is expected to reach 100,000 barrels of oil equivalent per day by the end of the decade.

Tags: Total