Monday, October 11, 2010

Chesapeake (NYSE:CHK) Gets $2.16 Billion Investment from CNOOC (NYSE:CEO)

The leading offshore oil production company in China, CNOOC Ltd. (NYSE:CEO), has made a deal with Chesapeake Energy Corp. (NYSE:CHK) to buy stake in the oil and gas Eagle Ford Shale project of the company for $2.16 billion.

Vice Chairman and Chief Executive Officer of CNOOC, Yang Hua, said, "The cooperation with Chesapeake in shale oil and natural gas is consistent with our value-driven overseas development strategy. The execution of this project will benefit CNOOC Limited's long term production and reserves growth and should produce considerable returns for our shareholders."

Chesapeake’s Chief Executive Officer Aubrey K. McClendon responded, "This transaction will provide the capital necessary to accelerate drilling of this large domestic oil and natural gas resource, resulting in a reduction of our country’s oil imports over time, the creation of thousands of high-paying jobs in the U.S. and in the payment of very significant local, state and federal taxes."

Concerning Eagle Ford Shale, CNOOC will acquire a 33.3 percent undivided interest in the 600,000 leashold acres for oil and gas in Texas for $1.08 billion.

The other 1.08 billion will be used to fund 75 percent of the drilling and completion costs of Chesapeake in the project.

Shares of both companies moved up on the news, with Chesapeake reaching $23.62, gaining $0.57, or 2.47 percent at 11:31 AM EDT. CNOOC surged to their highest level in three years, surging to $214.86, increasing $5.25, or 2.50 percent.

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