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Mystery Company Invests $2.14B in Chesapeake Utica Shale JV

The Utica Shale in eastern Ohio, and Chesapeake Energy’s discovery that it contains oil and wet gas in addition to methane, is paying off big-time for the company. Yesterday, Chesapeake announced a major cash infusion from a new joint venture with a mystery/unnamed “international major energy company” to the tune of $2.14 billion. Some $640 million of that will be paid when the deal officially closes, and the balance of $1.5 billion will be paid by the end of 2014.

A third company in the joint venture is EnerVest. The joint venture values the land leased by Chesapeake and EnerVest at $15,000 per net acre. The previous highest deal for Utica Shale leases was Hess—for $8,000 per net acre. The overall deal between Chesapeake, EnerVest and the unnamed company is a bit complicated (see the press release below), but the gist of the matter is that Chesapeake will get enough money to fully fund their Utica Shale drilling program in Ohio, and the overall value of the joint venture means Chesapeake will eventually receive $3.4 billion.

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Broome County, NY Landowners Sue Energy Companies that Try to Extend Expired Leases with “Force Majeure” Clause

force majeureMany landowners in the Broome County, NY area who signed gas leases years ago are now receiving letters from the energy companies holding those leases that the landowner is “locked in” to the terms of the lease even though the original term has now expired. Why? The legal term is “force majeure,” which roughly means “due to circumstances beyond our control—the fact that New York State continues to prevent drilling—you have to stick with us for a while longer.” Because this involves contracts and interpretation of the terms of those contracts, it’s now in the hands of lawyers, or heading in that direction.

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