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Brazil Espirito Santo basin gets postsalt gas find
Petrobras and Repsol Sinopec Brazil reported a postsalt gas discovery in the Espirito Santo basin off Brazil.
The Malombe discovery found gas at 8,528 ft in 3,215 ft of water 135 km east-northeast of Vitoria and southeast of the 1997 Peroa dry gas discovery.
The companies will continue work on the BM-ES-21 concession and will present an evaluation plan to Brazil's National Petroleum Agency ANP.
Petrobras operates the block with 88.1% interest and Repsol Sinopec Brazil has 11.9%. Repsol Sinopec has interests in 14 blocks, seven of which it operates, in the Santos, Campos, and Espirito Santo basins.
Drilling & Production — Quick Takes
Chesapeake to ink Ohio Utica shale joint venture
An undisclosed international major energy company will form a joint venture with Chesapeake Energy Corp. and acquire a 25% interest in 650,000 net acres in the wet natural gas area of the Utica shale play in eastern Ohio.
Chesapeake owns 570,000 net acres and will operate and conduct all activities for the joint venture. Owning the other 80,000 net acres are EnerVest Ltd., Houston, and its affiliates. The leases cover all or parts of 10 counties in eastern Ohio.
Consideration for the transaction is $2.14 billion to Chesapeake and $300 million to EnerVest. Chesapeake will receive $640 million cash at closing and $1.5 billion as a drilling and completion cost carry to be fully received by the end of 2014.
A letter of intent provides that the international partner will have the option to obtain 25% of all further acreage acquired by Chesapeake and to participate for a 25% interest in midstream infrastructure related to production generated from the assets. Closing is intended by mid-December.
Separately, as a first step in a financial transaction led by EIG Global Energy Partners, Washington, DC, Chesapeake sold EIG $500 million of perpetual preferred shares of newly formed CHK Utica LLC. Chesapeake expects to sell as much as $750 million more of CHK Utica preferred shares to investors by Nov. 30.
Chesapeake Utica owns 700,000 net leasehold acres in an area of mutual interest in the Utica shale play in 13 eastern Ohio counties. Chesapeake has retained all the common interests in CHK Utica.
Chesapeake committed to drill at least 50 net wells/year through 2016 in the AMI for the benefit of CHK Utica. Chesapeake believes it will have considerable operating and financial flexibility in fulfilling the drilling commitment because the company's planned program involves a much higher rig count than the 10-rig count needed to fulfill the CHK Utica preferred shares investment.
Chesapeake said the deals will enable it to recover more than its total leasehold investment in the entire Utica shale play while selling 142,500 net acres of its 1.5 million net acres of Utica shale leasehold.
Talisman sharpens North American shales focus
Talisman Energy Inc., Calgary, said 80% of its $629 million of capital spending in the quarter ended Sept. 30 was related to shale activities in North America.
The company continued to focus on the development of high-quality shale plays in the Eagle Ford, Marcellus, and Montney formations and on liquids-rich opportunities in its Canadian conventional portfolio.
Shale production more than doubled year on year and will account for more than half of North American production volumes at the end of 2011, the company said. Talisman is operating 30 rigs, leading to expected shale production of 490 MMcfd of gas equivalent in 2011, up 125% from 2010.
The company brought 34 net Marcellus shale wells onstream in the quarter and will continue to operate with 11 rigs for the rest of the year. Talisman expects Marcellus production to average 400 MMcfd in 2011, the upper end of the target range set at the beginning of the year.
Talisman has 11 rigs actively drilling to the Montney in the Farrell Creek area and is on track to meet its full-year production guidance of 50-60 MMcfe/d there. It expanded the Farrell Creek facility to handle 180 MMcfd during the quarter.
Talisman will increase to 10 drilling rigs in the Eagle Ford in the fourth quarter and has two full-time frac crews operating. Well results are in line with expectations, and production is expected to average 30 MMcfe/d in 2011.
The company is drilling its first horizontal pilot well in the Duvernay shale in Canada.
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