StatoilHydro, Chesapeake to Jointly Explore Unconventional Gas Opportunities

StatoilHydro and Chesapeake Energy have signed a strategic agreement to jointly explore unconventional gas opportunities worldwide.

Under these agreements, StatoilHydro will initially acquire a 32.5% interest in Chesapeake’s Marcellus shale gas acreage covering 1.8 million net acres in the Appalachia region of the northeastern US. StatoilHydro’s share equals approximately 0.6 million net acres of this leasehold.

StatoilHydro will pay a consideration of $1.25 billion in cash and a further $2.12 billion in the form of a 75% carry on drilling and completion of wells during the period 2009 to 2012. In order to earn this carry, Chesapeake is required to maintain a significant level of drilling activity.

The agreement will cover more than 32,000 leases in the states of Pennsylvania, West Virginia, New York and Ohio. Chesapeake plans to continue acquiring leases in the Marcellus shale play. StatoilHydro has the right to a 32.5% participation in any such additional leasehold.

With this transaction StatoilHydro has acquired future, recoverable equity resources in the order of 2.5 million barrels of oil equivalent (mboe) to 3mboe.

StatoilHydro’s equity production from the Marcellus shale gas play is expected to increase to at least 50,000boe per day in 2012 and at least 200,000boe per day after 2020. In the leaseholdings, StatoilHydro will have the same 87% net revenue interest as Chesapeake. StatoilHydro expects a net positive cash flow from 2013.