An affiliate of Japanese trading giant Mitsui & Co. Ltd. agreed to pay $1.4 billion to buy nearly a one-third stake (32.5%) in Anadarko Petroleum Corp.'s 700,000-plus Marcellus Shale leasehold, The Woodlands, TX-based producer said last week.

Under the joint venture (JV) agreement, Mitsui E&P USA LLC would earn about 100,000 net acres in exchange for funding 100% of Anadarko's 2010 development costs and 90% of the development costs after, with an estimated completion of the obligations by 2012, Anadarko said.

In addition, Mitsui would have the opportunity to purchase a one-third stake in existing wells and new acreage acquisitions by reimbursing a proportionate share of Anadarko's prior expenditures, currently estimated to be $100 million.

"This transaction reflects the significant value of Anadarko's fairway position in the Marcellus Shale, which has a gross unrisked resource potential of more than 30 Tcf of natural gas and spans more than 715,000 gross acres," said Anadarko CEO Jim Hackett.

Anadarko plans to drill more than 4,500 wells in the Marcellus in the coming years, Hackett said. "We have successfully partnered with Mitsui in other parts of the world and look forward to working with them and our other partners in the Marcellus..."

Most of Anadarko's Marcellus holdings are in north-central Pennsylvania and include acreage in Bradford, Sullivan, Tioga, Lycoming, Potter, Clinton and Centre counties. The JV agreement is effective Jan. 1, 2010; closing is expected by mid-March.

Houston-based Simmons & Co. said in a note to clients the pact highlights the value of Anadarko's Marcellus assets, which have "been largely overlooked and undervalued by the Street." Mitsui said it hopes that participating in U.S. shale-gas operations, which are "expected to see high growth," will help it "move into long-term and sustainable growth businesses." Mitsui expects to spend $3-4 billion over the next 10 years to develop its portion of the Marcellus assets.

Mitsui already holds a variety of stakes in several North American gas-related projects. It has an interest in several liquefied natural gas (LNG) projects, including two in Mexico (see NGI, Oct. 5, 2009), in Equatorial Guinea (see NGI, Aug. 28, 2006), and in Russia (see NGI, Sept. 15, 2008). Mitsui also holds a substantial leasehold in the Gulf of Mexico (see NGI, May 29, 2006; April 24, 2006) and is a stakeholder in some North American power plant projects (see NGI, April 10, 2006).

Mitsui & Co., headquartered in Tokyo, is a diversified trading, investment and service enterprise with a network that includes 558 subsidiaries in 66 countries. Mitsui & Co. (U.S.A.) Inc., which is the largest subsidiary, is based in New York City and has six operating divisions, including Energy & Mineral Resources.

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