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Total Intercepts Saddle Barnett Resources’ Purchase of CHK Assets

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Total acquires Chesapeake Energy’s Barnett assets

On September 9, 2016, French energy giant, Total SA (TOT) announced that it’s exercising its pre-emptive right to acquire 75% interest owned by Chesapeake Energy (CHK) in its Barnett operations joint venture.

Total acquired 25% interest in Chesapeake’s Barnett shale assets in January 2010 for $2.25 billion.

By exercising its pre-emptive right, Total will be the sole owner of these assets which include around 215,000 net developed and undeveloped acres. It also includes leases, wells, minerals, and other properties.

This move comes behind Chesapeake’s recent decision to exit the Barnett shale.

Chesapeake planned to sell its interest in the Barnett Shale to Saddle Barnett Resources, which is backed by First Reserve—a private equity company.

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Chesapeake has been aggressively focusing on asset sales to boost its balance sheet. In May 2016, the company agreed to sell 42,000 net acres in the Anadarko Basin Stack play to Newfield Exploration (NFX). Chesapeake and Newfield Exploration make up ~2.4% of the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).

Supplementing Chesapeake’s $334 million payment to Williams Partners (WPZ), which gathers and processes 80% of the gas from the joint venture, Total will pay $420 million to Williams Partners for a “fully restructured and competitive agreement.” Also, Total intends to pay another $138 million to be released from three other midstream contracts.

Subject to third-party consents, Total expects to complete the deal in 4Q16.

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