Shale deal yields Chesapeake $3.3B
Plains Production buys 20% in Haynesville leases

By Jack Money Modified: July 2, 2008 at 12:50 am •  Published: July 2, 2008
Advertisement
;
Chesapeake Energy Corp. announced Tuesday a joint venture in the Haynesville Shale natural gas field that will make the Oklahoma City-company more than $3 billion.

Houston-based Plains Exploration & Production Co. will pay Chesapeake $1.65 billion for a 20 percent interest in Chesapeake's leases within the field, which covers parts of north Louisiana and east Texas.

Additionally, Plains agreed to pay half of Chesapeake's drilling and completion costs on Haynesville wells for the next several years — an amount up to another $1.65 billion, officials said Tuesday.

It's a deal that validates Chesapeake's holdings in the field, which its chief executive has said was perhaps the most significant natural gas find the company has ever made.

James C. Flores, Plains' chairman, president and chief executive, said Tuesday on Chesapeake owns the core of the field, while his company has the money to invest. "We believe that Chesapeake's unrivaled experience in drilling and completing shale wells throughout the U.S., its large rig fleet and aggressive Haynesville Shale development program will provide Plains with attractive operational costs,” he said.

Flores estimated those costs would be about $1.83 per thousand cubic feet of natural gas.

Why McClendon agreed to it
Aubrey McClendon, Chesapeake's chief executive, said Tuesday the deal creates substantial value for both companies, adding it also establishes a $16.5 billion value for its Haynesville Shale leases.


"(Chesapeake) is one shrewd, aggressive company that creates opportunities.”
Jake Dollarhide, Longbow Asset Management

Trending Now


AROUND THE WEB

  1. 1
    Angels' Garrett Richards suffers patellar injury
  2. 2
    Former OU football star De'Mond Parker released on bond in gang case
  3. 3
    Report: Under Armour offers Kevin Durant rich deal
  4. 4
    SeaWorld pulls staff from water in killer whale shows
  5. 5
    Troubling Report Finds Children Are Getting Killed Once They're Deported From U.S.
+ show more