Summary
Expand Energy Corp (EXE) announced a significant strategic partnership on January 30, 2011, with CNOOC International Limited, a subsidiary of CNOOC Limited. This agreement involves CNOOC acquiring a 33.3% stake in approximately 800,000 net acres in the Niobrara-focused Denver-Julesburg and Powder River Basins. The transaction is valued at $570 million in cash, with an additional commitment from CNOOC to fund 66.7% of Expand Energy's drilling and completion costs, up to $697 million, expected by the end of 2014. This deal provides Expand Energy with substantial upfront capital and ongoing operational funding, significantly de-risking its exploration and development activities in these key unconventional resource plays. The partnership with a major international energy company like CNOOC signals confidence in the geological potential of Expand Energy's acreage and its operational capabilities. Investors should note the closing is anticipated in the first quarter of 2011, subject to regulatory approvals.
Key Highlights
- 1Chesapeake Energy Corporation (acting as the Company) entered into a cooperation agreement with CNOOC International Limited focused on Niobrara shale assets.
- 2CNOOC International Limited will acquire a 33.3% undivided interest in 800,000 net acres in the Denver-Julesburg and Powder River Basins.
- 3The transaction includes an upfront cash payment of $570 million from CNOOC.
- 4CNOOC has committed to fund 66.7% of the Company's share of drilling and completion costs, up to an additional $697 million.
- 5The additional funding is expected to be paid by year-end 2014.
- 6The closing of the transaction is anticipated in the first quarter of 2011.
- 7The deal is subject to customary closing conditions, including a filing with the Committee on Foreign Investment in the United States (CFIUS).