Total takes control of Barnett Shale assets

TOTAL has expanded its shale assets in the US, exercising an option to acquire 75% of the Barnett Shale operating area, after its operating partner Chesapeake pulled out of the region.

Following the purchase, Total will be the sole owner and operator of the Barnett Shale area, which is thought to hold 6trn ft³ of hydrocarbons and currently produce 65,000 boe/d. Total originally bought a 25% stake in the Barnett Shale assets from Chesapeake in 2010, paying US$800m to the US energy company and investing US$1.45bn to fund drilling activities.

Chesapeake has suffered in recent years as a result of the shale gas glut and has sold a number of assets. In August it decided to exit Barnett Shale, initially conveying the interests to Saddle Barnett Resources, part of First Reserve, a global private equity and infrastructure investment firm, before Total exercised its option to buy the assets. As part of the transaction, Chesapeake will pay US$334m to Williams Partners, a third-party company that gathers and processes 80% of the Barnett Shale gas, to terminate its agreement with the company. Total will pay an additional US$420m for a new, restructured gas gathering agreement. Total will also pay US$138m to be released from other contracts relating to the assets. No further financial details were released.

“Over the six years that we have been involved in the Barnett, we have gained an in-depth understanding of the play and the technology. With the new conditions created by the exit of Chesapeake and the associated restructuring of the midstream contracts, we believe that we can extract significant value from the substantial, well-located resource base of the play by combining focussed upstream operating efficiency, streamlined midstream contract management and marketing savvy through Total’s trading affiliate Total Gas & Power North America,” said José Ignacio Sanz, president and CEO of Total E&P USA.

The transaction is still subject to a number of closing conditions and third-party consents, but Total expects the deal to be completed by the end of the year.