Chesapeake, Statoil Form Gas Venture

OKLAHOMA CITY (AP) -- Chesapeake Energy (CHK Quote) and Norwegian energy company StatoilHydro (STO Quote) announced Tuesday the formation of a strategic alliance to explore for unconventional natural gas opportunities worldwide and an agreement for a joint venture in large gas field in the eastern U.S.

StatoilHydro will pay $3.375 billion for a 32.5% interest in Chesapeake's assets in the so-called Marcellus Shale geologic formation -- about 1.8 million net acres -- in the Appalachian region. Oklahoma City-based Chesapeake would retain the remaining 67.5% interest in the assets.

StatoilHydro will pay $1.25 billion of the amount in cash at closing and $2.125 billion from 2009 to 2012 by funding 75% of Chesapeake's share of drilling and completion expenditures.

The companies said the development of the area could support the drilling of between 13,500 and 17,000 horizontal wells during the next 20 years, and cover more than 32,000 leases in Pennsylvania, New York, West Virginia and Ohio. StatoilHydro said it was acquiring about 2.5 billion to 3 billion future, recoverable barrels of oil equivalent through the deal.

"We are establishing a strong platform for further developing our gas value chain business and growing our position in unconventional gas worldwide," said Helge Lund, president and CEO of StatoilHydro.

"The agreement we have entered into with Chesapeake provides us with a solid position in an attractive long-term resource base under competitive terms. Additionally, this deal adds a major building block to the gas value chain position we have established in the U.S., the world's largest and most liquid gas market."