Total in $2.3 billion U.S. shale gas deal
By James Regan and Caroline Jacobs
PARIS (Reuters) - French oil group Total SA (TOTF.PA: Quote) is ploughing $2.3 billion into the development of U.S. shale gas reserves in Ohio in the latest example of global energy companies piling into new energy sources made economic by the high price of crude.
In a deal with Chesapeake Energy Corp (CHK.N: Quote), which the U.S. group announced in November without identifying its partners, Total will take a 25 percent stake in a joint venture covering the Utica Shale area of eastern Ohio.
North America has seen a boom in investment in energy resources such as shale gas in recent years, raising the prospect of the United States reducing its dependence on imported energy.
Under the terms of the deal, Total paid $610 million to Chesapeake and $290 million to a U.S.-based group called EnerVest, the other partner in the venture. Chesapeake will receive another $1.42 billion contribution to drilling and well-completion costs, expected by the end of 2014, it said.
"This is consistent with our strategy to develop positions in unconventional plays with large potential and, in this case, with value predominantly linked to (the) oil price," said Total exploration and production president Yves-Louis Darricarrere.
Total, already in a joint venture with Chesapeake in the Barnett Shale area in Texas, has said it is looking to boost its position in U.S. shale basins that have crude oil or natural gas with a high liquids content, making them more valuable than dry gas.
Contents of the latest joint venture were disclosed in November, but at the time Chesapeake, the second-biggest U.S. producer of natural gas, did not reveal the identity of its partners.
Oil and natural gas can now be extracted from shale by drilling miles-deep wells and injecting thousands of gallons of water and using chemicals to flush out natural gas deposits trapped between layers of rock. Continued...