Chesapeake Sells More of its Utica Leases to Total
Last week Chesapeake transferred 90 percent ownership of their 9,000 Utica Shale leases in Columbiana County, Ohio to their French partner Total in return for $2.03 billion. Back in December Chesapeake did an initial deal with Total for a 25 percent ownership stake in Chesapeake’s Ohio Utica Shale leases for 10 Ohio counties. This latest deal does not grant Total 90 percent in all 10 counties, so the question is, why Columbiana in particular? In two words: headache relief.
Craig Brown, Columbiana County recorder, believes Chesapeake could be attempting to reduce its liability in Columbiana County with a smaller ownership stake.
There have been at least 12 lawsuits involving Chesapeake filed in Columbiana County, according to court records.
“In other areas Chesapeake operates, the public is used to dealing with oil and gas. Seismic testing is no big deal in Texas or North Dakota, but it is to people here,” Brown said. “I think Chesapeake was tired of being sued in Columbiana County.”
Columbiana County has experienced businesses that come to the area for a while and then leave. The coal and then steel industry both did that, which created distrust in businesses that are not local, he said.
“The people here seem to be less trusting of the oil and gas companies than in other areas,” Brown said.
Overall, with Chesapeake maintaining some ownership of the Columbiana County leases, production should move forward the same way, Brown said.
“This deal isn’t bad news for our community,” he said.*
According to the deal, Chesapeake will still be the operator responsible for all leasing, drilling and operations of the wells. So did Total get a good deal?
*Youngstown (OH) Vindicator (May 19, 2012) – French company receives its stakes in leases