Chesapeake, Plains Exploration enter into venture

Associated Press

OKLAHOMA CITY (AP) - Two energy companies have agreed to cooperate on a venture in the Haynesville Shale natural gas field in north Louisiana and east Texas.

Under the agreement announced today, Houston-based Plains Exploration and Production Company will pay $1.65 billion to acquire a 20% interest in Oklahoma City-based Chesapeake Energy Corporation's current leasehold in the field of about 550,000 net acres.

Plains Exploration also will fund 50% of Chesapeake's 80% share of drilling and completion costs for future wells in the joint venture until an additional $1.65 billion has been paid.

Officials from the companies estimate their current leaseholds could hold net unrisked, unproved reserve potential of 23 trillion to 44 trillion cubic feet of natural gas equivalent.

Chesapeake now utilizes five rigs in the Haynesville Shale, and company officials said that number likely will rise to 12 by the end of this year, to 30 by the end of next year and to 60 by the end of 2010.