France's Total Takes Control of Barnett Shale in Texas
September 09 2016 - 4:20AM
Dow Jones News
PARIS--French oil major Total SA is taking full control of the
Barnett Shale in Texas after Chesapeake Energy Corp.'s recent
decision to exit the once prolific gas field to clean up its
finances.
Total said on Friday it is exercising its preemption right to
acquire the 75% share in the Barnett Shale which it doesn't already
own to become the sole owner and operator of the field.
The move follows Chesapeake's agreement last month to pay
pipeline company Williams Partners LP $334 million in cash to get
out of its pipeline contract with the firm in the Barnett.
Total said its Total E&P USA unit will top up Chesapeake's
payment with $420 million to Williams for "a fully restructured,
competitive gas-gathering agreement" in addition to paying $138
million to be released from three other contracts.
"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," Total E&P USA
President José Ignacio Sanz said in a statement.
The Barnett Shale was once a big-producing gas field near Fort
Worth in North Texas, but in recent years drilling for new wells
has waned amid low natural gas prices. In August, there were four
rigs drilling in the Barnett, compared with 177 rigs drilling in
the Permian Basin of West Texas, according to data from Baker
Hughes Inc., an oil-field service company in Houston.
Total's move could increase its relatively small output in the
U.S.
Production from the Barnett currently stands at 65,000 barrels
of oil equivalent a day, Total said. The group's U.S. production
last year amounted to 89,000 barrels a day.
Total said its U.S. holdings include a 25% interest in the
Chesapeake-operated Utica shale joint venture in Ohio. In the Gulf
of Mexico, Total holds a 17% interest in the Tahiti field and a
33.3% interest in the Chinook field. Total and Cobalt International
Energy have tied up to explore for oil in the deep offshore Gulf of
Mexico.
--Erin Ailworth and Josh Beckerman contributed to this
article.
Write to William Horobin at William.Horobin@wsj.com
(END) Dow Jones Newswires
September 09, 2016 04:05 ET (08:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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