Total enters US shale gas market

Total buys Chesapeake

Europe's third largest oil producer, Total SA, has agreed to buy 25 percent of Chesapeake Energy Corp's upstream Barnett Shale assets in a deal worth $2.25 billion.

Total E&P USA will pay $800 million in cash but will provide an additional $1.45 billion by funding 60 percent of Chesapeake's share of drilling and completion expenditures until the end of 2012, Chesapeake said.

The assets include about 270,000 net acres of leasehold in the core and Tier 1 areas of the Barnett, about 700 million cubic feet of natural gas equivalent per day of current net production and about 3 trillion cubic feet of natural gas equivalent of proved reserves, according to the statement from Chesapeake.

The deal comes in addition to other similar investments by European rivals in North American shale gas after gas prices has fallen sharply over the last 18 months as a result of the global financial downturn.

Long-term resource base

"Total is pleased to be making a strategically important move by entering into the US shale gas business with Chesapeake, the world's leading shale gas operator," Total Chief Executive Officer Christophe de Margerie said in a statement.

"This joint venture will provide us with a solid position in an attractive long-term resource base under competitive terms," he said, adding that the deal provided another key support for Total to build its gas value chain position in the US, which is the world's largest and most liquid natural gas market, as told by Reuters.

Total have said they are aware of the environmental dangers involved in extracting shale gas, but made it clear that one of the things that attracted them to Chesapeake was its capacity to contain the impact of the Barnett Shale gas operations on the environment while also respecting local and federal regulations and guidelines.

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