By DAN POMPILI
The quest continues for companies and landowners seeking to secure the most favorable terms in natural gas property leases.
It was announced Tuesday that Total E&P USA, an American subsidiary of French gas and oil giant Total S.A., has completed a joint venture transaction with Chesapeake Energy Corp. and Chesapeake partner EnerVest Ltd. that awards Total a 25 percent interest in 619,000 acres of liquid-rich Utica Shale territory in East Ohio, including Mahoning and Trumbull counties, according to a news release.
This $2.32 billion transaction allows Chesapeake to serve as the operator of the joint venture and conduct all leasing, drilling, completing, operating and marketing ventures. On top of the existing acreage, Total also will receive a 25 percent share of all additional acreage Chesapeake acquires in the designated area.
Chesapeake provided 542,000 acres at a price of $2.03 billion, while EnerVest contributed 77,000 acres and received $290 million.
Total paid Chesapeake $610 million in cash at the closing of the deal, and will pay the remaining $1.42 billion through drilling and completion cost through 2014.
Total E&P President Yves-Louis Darricarrere said, "Total is delighted to be building on our technical success with Chesapeake ... and to expand into the liquid-rich Utica Shale play in Ohio."
Chesapeake CEO Aubrey McClendon said, "We believe that the Utica Shale is a world-class asset with world-class returns and now we have a world-class partner to help develop the play more aggressively than we could have with our own resources."
Meanwhile, the Associated Landowners of the Ohio Valley is close to inking a large deal with more than 1,600 landowners to lock in lease agreements with Chesapeake.
Jeff Bailey at ALOV said 880 Mahoning County residents signed the document in November and they expect roughly the same number of signatures to add to the deal that will be completed within the next two weeks.
"We've already given their parcel numbers to Chesapeake," Bailey said.
The deal will lock in a lease price of $5,800 per acre for oil and gas production over five years, and a 20 percent gross royalty rate on mineral rights for Mahoning County landowners.
Tri-State Energy of Butler, Pa., is seeking to broker a similar deal for Trumbull County residents, although managing partner Vince Flask said he could not reveal the identity of the purchasing company. The leasing agreement would award Trumbull landowners $3,000 per acre and 17 percent royalties on mineral rights.
The signing deadline for the first round of leases is Friday. Flask said those who have signed in other counties will not be a part of this deal.