"The $1.65 billion in cash we are receiving from Plains and the additional $1.65 billion commitment will help fund a substantial portion of Chesapeake's leasehold, and our drilling and completion costs over the next few years.”
McClendon said finding costs for his company should be less than $1 per thousand cubic feet of natural gas.
He said Chesapeake held about 550,000 net acres within the field at the end of June. The company, which intends to continue acquiring leases that Plains also will own part of, said it chose the Houston-based company as a partner in this joint venture because the two companies have a long relationship.
Jake Dollarhide, founder of Longbow Asset Management in Tulsa, said Tuesday's announcement is in line with Chesapeake's aggressive strategy.
"This is one shrewd, aggressive company that creates opportunities,” Dollarhide said. "Sometimes, when you are open-minded, good things can come, especially in very bullish markets such as this.
"Plains recognizes the potential of this particular region, and obviously, they are very motivated to be a part of it. It seems a very favorable outcome for Chesapeake, only giving up 20 percent interest for half the costs,” he said.
"(Chesapeake) is one shrewd, aggressive
company that creates
Jake Dollarhide, Longbow Asset Management