By OGJ editors
HOUSTON, July 16 -- Chesapeake Energy Corp. and Anadarko Petroleum Corp. have entered into multiple agreements, including a joint venture involving the companies' separate assets in the Deep Haley area of the Delaware basin in West Texas.
The two companies, which currently operate a total of 16 drilling rigs in the Deep Haley area, plan to conduct an aggressive drilling program for the area and could increase their drilling activity as the joint venture develops.
Under the agreements, the companies are obligated to jointly evaluate and explore more than 1 million gross acres in the Deep Haley area and share drilling, completion, production, and midstream operations on a roughly 50-50 basis.
The deal afforded Anadarko about $310 million in cash and other consideration, including reimbursement of capital expenditures previously incurred in connection with the development of its Deep Haley properties and Chesapeake's commitment to fund a portion of Anadarko's future Deep Haley area capital costs. In addition, Anadarko obtained 50% of certain Chesapeake nonproducing leasehold interests in Loving County, Tex.
Chesapeake received:
-- 25% of Anadarko's existing Deep Haley area production.
-- 25% of Anadarko's leasehold in the central and eastern portions of the Deep Haley area.
-- 50% of Anadarko's leasehold and contractual rights in the western portion of the Deep Haley area.
-- A lease from Anadarko on 2,100 net acres in the Fayetteville Shale play in Arkansas.
-- An assignment of 5,600 net acres of undeveloped leasehold in the Anadarko basin in western Oklahoma.
-- The Oklahoma City real estate assets acquired by Anadarko last year as part of its acquisition of Kerr-McGee Corp.
The Deep Haley area in West Texas has recovered more than 1.4 tcf of gas from over-pressured Pennsylvanian formations, said Anadarko. The company started work in the basin in 2003 and has accumulated the rights to over 400,000 net acres in the area.
Chesapeake, a veteran in the area, has generated during May a combined 90 MMcfd of gas equivalent of gross production from its most recent seven wells in the Deep Haley area.
