2008-12-03-2008-11-11-2008-11-25

Acquired 32.5% WI in 1.8 MM net acres in Appalachian Marcellus shale holdings in PA, WV, NY, OH, gaining potential 13,500-17,000 horizontal wells over 20 years with 560,000 BOE EUR per well.

Norwegian national oil company StatoilHydro (NYSE: STO; Oslo: STL) has acquired a 32.5% joint-venture interest in Appalachian Marcellus shale holdings from Chesapeake Energy Corp., Oklahoma City, (NYSE: CHK) for $3.375 billion. StatoilHydro paid $1.25 billion in cash and will further pay $2.125 billion from 2009 to 2012 by funding 75% of Chesapeake's 67.5% share of drilling and completion expenditures until the obligation has been funded. Chesapeake is required to maintain a "significant" level of drilling activity. Chesapeake plans to continue acquiring leasehold in the Marcellus shale play and StatoilHydro will have the right to a 32.5% participation in any additional acquisitions. The assets include approximately 1.8 million net covering more than 32,000 leases in Pennsylvania, West Virginia, New York and Ohio. StatoilHydro owns approximately 600,000 net acres and Chesapeake approximately 1.2 million net acres. The development program could support drilling 13,500 to 17,000 horizontal wells over the next 20 years with a continuous program using up to 50 rigs, StatoilHydro reports. The expected cost for each well is estimated at approximately $3.5 million with an ultimate recovery of approximately 560,000 barrels of oil equivalent per well. With this transaction StatoilHydro has acquired future recoverable equity resources of 2.5 billion to 3 billion barrels of oil equivalent, it reports. StatoilHydro expects production from the Marcellus to increase to at least 50,000 barrels of oil per day in 2012 and 200,000 barrels after 2020. Chesapeake and StatoilHydro have also agreed to enter an international strategic alliance to jointly explore unconventional natural gas opportunities worldwide. Aubrey K. McClendon, Chesapeake chief executive, says, "We are pleased to close our joint venture with StatoilHydro and look forward to creating substantial value for both companies in the years ahead. We are honored to partner with one of the leading international oil and gas companies and are excited about the opportunities to jointly export our world class unconventional natural gas technology for further long-term growth." StatoilHydro president and chief executive Helge Lund says, "Today we have made a strategically important move by joining forces with Chesapeake, which is the leading U.S. natural gas player. We are establishing a strong platform for further developing our gas value chain business and growing our position in unconventional gas worldwide. 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. This is a significant step in strengthening our U.S. gas position, building on our existing capacity rights for the Cove Point LNG (liquid natural gas) terminal, our gas trading and marketing organization and the gas-producing assets in the Gulf of Mexico." Jefferies Randall & Dewey was advisor to Chesapeake. Merrill Lynch was advisor to StatoilHydro.