Total enters US shale gas market

The French oil giant Total has entered the US non-conventional gas market by signing a joint-venture with Oklahoma-based Chesapeake Energy Corp.  The deal will see Paris-based Total acquire 25 percent of Chesapeake's Barnett shale gas portfolio in Texas for $800 million. Total has also committed to pay a further maximum of $1.4 billion to fund 60 percent of Chesapeake's future capital expenditures on drilling and completion of wells until the end of 2012. The two companies have said they will also jointly study certain North American shale-gas opportunities together. The assets included in the joint venture include around 270,000 net acres of leasehold in the Core and Tier 1 areas of the Barnett and approximately 700 million cubic feet of natural gas equivalent per day of current net production. It also includes around three trillion cubic feet of natural gas equivalent of proved reserves. Commenting on the announcement, Christophe de Margerie, CEO of Total, said: ÔÇ£This joint venture will provide us with a solid position in an attractive long-term resource base under competitive terms. It will allow Total to develop its expertise in the unconventional hydrocarbons in order to expand its unconventional business worldwide. ÔÇ£Furthermore, this transaction provides yet another key support for Total to build the gas value chain position the Group has established in the US, the worldÔÇÖs largest and most liquid natural gas market, with our existing capacity rights in the Sabine Pass LNG terminal and our gas trading and marketing organization.ÔÇØ Aubrey K. McClendon, Chesapeake's CEO, added: "We are very pleased to announce our fourth joint venture transaction in the Big 4 shales and we are honored to partner with Total to further develop the Barnett Shale.ÔÇØ He went on to say: "This transaction will allow Chesapeake to reduce its financial leverage and future capital expenditures and further position us to deliver industry-leading finding and development costs and returns on capital for years to come.ÔÇØ The deal follows similar investments by European firms in North American shale gas after the sharp fall in gas prices over the past 18 months. Chesapeake has made similar tie-ups with UK-based BP and NorwayÔÇÖs Statoil. Total has said it is conscious of the environmental impact of producing shale gas and has confidence in Chesapeake's capacity to minimize the impact of the Barnett Shale gas operations on the environment and to respect local and federal regulations and guidelines.  *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *