By OGJ editors
HOUSTON, Oct. 17 -- Energen Corp., Birmingham, Ala., sold to Chesapeake Energy Corp., Oklahoma City, a 50% interest in its lease position in various shale plays in Alabama for cash and a carried drilling interest.
The two companies also agreed to form an area of mutual interest to focus on the further exploration and development of the shale plays throughout Alabama.
Energen Resources received $75 million cash from Chesapeake for half interest in Energen's existing 200,000 net acre shale lease position. Chesapeake will pay the first $15 million of Energen's share of drilling costs.
The companies will partner 50-50 on new lease acquisitions, development, and operations in the AMI for at least the next 10 years.
Energen said it is Alabama's largest producer of onshore gas, has extensive knowledge of coalbed methane and other tight formations, and has extensive geological expertise in the state.
Chesapeake said the deal "accomplishes our goal of building a significant leasehold position in every major shale play east of the Rockies."
The Oklahoma City company owns 4.25 million net acres of prospective shale leasehold onshore in the US, which it believes is industry's largest shale leasehold position.
