CNOOC to Acquire 33.3% in Eagle Ford Shale Project from Chesapeake Energy: CNOOC Plans to Expand its Business in Shale Oil and Natural Gas - Deal Analysis From GlobalData

Date: October 1, 2010
Pages: 10
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US$ 500.00
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Publisher: GlobalData
Report type: Strategic Report
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ID: C8BC3B97EAEEN
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CNOOC to Acquire 33.3% in Eagle Ford Shale Project from Chesapeake Energy: CNOOC Plans to Expand its Business in Shale Oil and Natural Gas - Deal Analysis From GlobalData
CNOOC to Acquire 33.3% in Eagle Ford Shale Project from Chesapeake Energy: CNOOC Plans to Expand its Business in Shale Oil and Natural Gas - Deal Analysis From GlobalData

Summary

CNOOC International Limited, a wholly-owned subsidiary of CNOOC Limited (CNOOC), entered into an agreement with Chesapeake Energy Corporation (Chesapeake Energy) to acquire a 33.3% undivided interest in 600,000 net oil and natural gas leasehold acres in the Eagle Ford shale project in South Texas, for a cash consideration of $1,080m at closing, subject to final adjustment. In addition, CNOOC Limited has agreed to fund 75% of Chesapeake’s share of drilling and completion costs until an additional $1,080m has been paid, which is expected to occur by year-end 2012. Chesapeake Energy, operator of the project, will conduct all leasing, drilling, completion, operations and marketing activities for the project. Chesapeake Energy 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, 31 and 40 operated rigs by year-end 2010, 2011 and 2012 respectively. Approximately 900 wells are expected to be drilled by year-end 2012. At present, Chesapeake Energy has 10 horizontal Eagle Ford wells in production with initial production rates of up to 1,160 barrels of oil and 0.4 Million Cubic Feet (MMcf) of natural gas per day in the oil window and 4 MMcf of natural gas and 1,200 barrels of oil per day in the wet gas window. The assets are located principally in the Webb, Dimmitt, LaSalle, Zavala, Frio and McMullen counties, and are located primarily in the oil window (85%) and the wet gas window (15%) of the Eagle Ford Shale and in the dry gas window of the Pearsall Shale. Following the acquisition, CNOOC will have the option to acquire a 33.3% share of any additional acreage acquired by Chesapeake Energy in the area and also the option to participate with Chesapeake Energy for a 33.3% interest in midstream infrastructure related to production established from the assets. The transaction is expected to close in the fourth quarter of 2010. Jefferies & Company, Inc. is acting as financial advisor to Chesapeake Energy and Tudor, Pickering, Holt & Co. Securities, Inc. is acting as financial advisor to CNOOC in connection with the transaction. The transaction implies a deal value of $10,810.81 per acre of land

Scope
  • CNOOC intends to gain expertise in Shale gas from Chesapeake Energy.

Reasons to buy
  • Develop a sound undestanding of the major M&A's, Partnerships, And Joint Ventures taking place in Asian Oil & Gas industry
  • Identify the most lucrative segments to leverage on the growth oppurtunities available in the Indian oil & gas market
  • Get a detailed analysis of a deal to enable you to take better decisions
1 TABLE OF CONTENTS

1.1 List of Tables
1.2 List of Figures

2 CNOOC TO ACQUIRE 33.3% IN EAGLE FORD SHALE PROJECT FROM CHESAPEAKE ENERGY

2.1 Deal Overview
2.2 Deal in Brief
2.3 CNOOC is One of the Leading Offshore Crude Oil and Natural Gas Producers in China
2.4 Chesapeake Energy and CNOOC will Jointly Develop the Eagle Ford Assets
2.5 CNOOC Intends to Gain Experience in Shale Oil and Natural Gas
2.6 Eagle Ford Asset Provides a High Rate of Return Due to Low Drilling and Completion Cost
2.7 Several Major Oil and Gas Companies are Investing in Eagle Ford
2.8 Chesapeake Energy Requires Finance to Develop its Eagle Ford Assets
2.9 CNOOC is Expanding its Business Through Acquisitions
2.10 Reliance Industries Limited (RIL) was in Talks to Buy Chesapeake Energy’s Eagle Ford Assets which could not be Completed
2.11 Chesapeake Energy has Sold its Eagle Ford Assets at a Premium
2.12 Deal Financials and Valuations

3 APPENDIX

3.1 Methodology
3.2 Contact Us
3.3 Disclaimer 10

LIST OF TABLES


Table 1: Eagle Ford Shale Play, Asset Transaction Details, 2009-2010
Table 2: CNOOC, Asset Transaction Details, 2009-2010
Table 3: Eagle Ford, Asset Transactions Detail, 2009- 2010
Table 4: Companies Involved
Table 5: Financials of the Deal
Table 6: Advisor Information
Table 7: Target Information
Table 8: Target’s Production and Reserves Information
Table 9: Target’s Production and Reserves Information
Table 10: Acquirer Information
Table 11: Vendor Information 8

LIST OF FIGURES

Figure 1: CNOOC, Operations Map, 2010
Figure 2: Chesapeake Energy, Eagle Ford, Operations Map, 2010
Figure 3: Eagle Ford Shale Play, 2010
Figure 4: Chesapeake Energy, Operations Map 5

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CNOOC to Acquire 33.3% in Eagle Ford Shale Project from Chesapeake Energy: CNOOC Plans to Expand its Business in Shale Oil and Natural Gas - Deal Analysis From GlobalData
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