The love fest in U.S. unconventional natural gas and oil fields rang in the new year, with a trio of hook-ups marrying Chinese, French and Japanese production companies with some of the largest domestic producers in multi-year joint ventures (JV) adding up to $5.8 billion.

Starting off 2012, a unit of China’s Sinopec Group agreed to invest $2.2 billion to acquire a one-third interest in five of Devon Energy Corp.’s frontier unconventional oil and gas fields.

Then French energy giant Total SA last week confirmed rumors, saying it was paying $2.32 billion to acquire a one-quarter stake in Chesapeake Energy Corp.’s massive Utica Shale leasehold in Ohio. It’s the second big partnership between the companies targeting unconventional energy in the United States.

Closing out the week, on just the sixth day of the new year, a unit of Japan’s giant trading house Marubeni Corp. struck a deal to acquire a 35% stake in Dallas-based Hunt Oil Co.’s 52,000 net acres in the Eagle Ford Shale in Texas.

In the first deal the area of mutual interest for Sinopec International Petroleum Exploration & Production Corp. (SIPC) is to cover a portion of Devon’s 1.2 million net acres in the Tuscaloosa Marine Shale, Niobrara, Mississippian, Ohio’s Utica Shale and the Michigan Basin. The companies recently added acreage in Ohio, increasing their joint position in the play to 235,000 net acres.

“While we are still in the early stages of derisking these plays, the tremendous response by industry to our data room process clearly underscores the attractiveness of this opportunity,” said Devon’s Dave Hager, executive vice president of exploration and production. “We believe our strong acreage positions in these plays, our reputation as a quality operator and the uniqueness of the opportunity for exposure to five different plays in a single venture make this a compelling value proposition.”

CEO John Richels had said in November that Devon wanted to secure one JV partner for the five developing plays, not a “whole bunch of JVs with different parties” (see NGI, Nov. 7, 2011a). Although Devon frequently partners in its offshore exploration ventures, it has not, unlike some of its peers, until now given up stakes in its estimable domestic onshore holdings.

“This is something that we have not typically done,” Richels said in November. “Nothing has changed [in our thinking] other than the fact that we see a lot of opportunity in these five plays and a lot of capital commitment over time. To bring somebody in at an early stage in an exploratory play to help diversify that risk just seems to make the most sense to us. These [plays] all have a lot of potential.”

SIPC is to pay Devon $900 million in cash when the transaction closes and $1.6 billion in the form of a drilling carry, which would fund 70% of Devon’s capital requirements and result in SIPC paying 80% of the overall development costs during the carry period. Based on the current work plan, Devon expects the entire $1.6 billion carry to be realized by the end of 2014. Through 2012 the companies expect to drill about 125 gross wells in the five plays.

“This arrangement improves Devon’s capital efficiency by recovering our land and drilling costs to date and by significantly reducing our future capital commitments,” said Richels. “We can accelerate the derisking and commercialization of these five plays without diverting capital from our core development projects. This transaction also provides us further flexibility to seek exposure to additional new play types with less risk.”

Like many of the biggest producers, Devon quietly acquires a big leasehold and conducts drilling tests before showing its hand. In April Richels said Devon had “thousands” of undrilled locations onshore in North America and indicated that “new play types” would be unveiled (see NGI, April 18, 2011). Less than a month later the Tuscaloosa Marine Shale leasehold was unveiled (see NGI, May 9, 2011).

By summertime Richels acknowledged that Devon was attempting to amass “at least” 150,000 net acres in several North American plays (see NGI, July 4, 2011). At the time Devon had about 110,000 net acres in Ohio’s Utica Shale and 300,000 net acres in Michigan’s portion of the Utica play. In addition, about 300,000 net acres had been acquired in Wyoming’s Niobrara Shale, 150,000 net acres in Oklahoma’s Mississippian Lime play and 65,000 net acres in the Wolfberry Shale in Texas.

Devon is to serve as the operator of the Sinopec partnership and said it would have “ultimate responsibility” to allocate capital. The company also would be responsible for marketing all production from the plays into the North American market. Subject to approvals, closing is expected before the end of March.

The second deal to be revealed actually closed on Dec. 30, giving subsidiary Total E&P USA Inc. an undivided 25% interest in about 619,000 net acres in 10 counties of eastern Ohio. About 542,000 net acres were contributed to the JV by Chesapeake and 77,000 net acres were contributed by Houston-based EnerVest Ltd. and its affiliates.

Chesapeake is to receive $2.03 billion and EnerVest $290 million. About $610 million was paid to Chesapeake in cash at closing. Another $1.42 billion is to be paid by Total in the form of a drilling and completion cost carry, which is expected to be fully received by the end of 2014.

The Ohio transaction was disclosed by Chesapeake in early November (see NGI, Nov. 7, 2011b). However, Total’s participation, while rumored in energy circles for weeks, was not officially disclosed until Tuesday.

Total gained entry in the U.S. shale business in late 2009 when it paid $2.25 billion to secure a one-quarter interest in Chesapeake’s Barnett Shale properties (see NGI, Jan. 11, 2010). The transaction on the 266,000 net acres at the time gave Chesapeake needed cash to fund development activities. The latest deal is expected to do the same.

“Total is delighted to be building on our technical successes with Chesapeake in the Barnett Shale JV and to expand into the liquid-rich Utica Shale play in Ohio,” said Total E&P President Yves-Louis Darricarrere. “This is consistent with our strategy to develop positions in unconventional plays with large potential and, in this case, with value predominantly linked to oil price. This JV will provide us with a material position in a valuable long-term resource base under attractive terms and with a top-class operator.”

The transaction, as well as the $865 million pipeline sale late last month to publicly traded subsidiary Chesapeake Midstream Partners LP, gives Chesapeake about $1.2 billion in cash to reduce debt in its 2011 year-end results (see related story).

Analysts with Tudor, Pickering, Holt & Co. said the Total announcement was “the logical conclusion” to rumor of which company had partnered with Chesapeake in the liquids-rich Utica. The transaction details imply that the Utica is worth about $12,000/acre discounted, “above what we assume for average Bakken acreage and 75% of our average Eagle Ford value, by comparison.”

“We believe that the Utica Shale is a world-class asset with world-class returns and now we have a world-class partner to help develop the play more aggressively than we could have with our own resources,” said Chesapeake CEO Aubrey K. McClendon. “This Utica transaction is our seventh significant JV and in these seven JVs, Chesapeake has sold approximately 1.5 million net acres for total leasehold consideration of $14.8 billion while retaining 3.6 million net acres as of the JV date with an indicated value by the JV partners of $45.7 billion.”

Chesapeake is to be the JV operator and would conduct all leasing, drilling, completing, operating and marketing activities for the project. The agreement provides that Total would acquire a one-quarter share of all additional acreage acquired by Chesapeake in the JV area of mutual interest. Total also would participate in midstream infrastructure related to production generated from the assets with a 25% interest.

“Total is conscious of the environmental aspects linked to developing shale acreage and is confident in Chesapeake’s capacity to manage the Utica Shale operations in a responsible manner, utilizing the highest industry standards in this respect,” said Darricarrere.

In the third foreign-related transaction, unveiled on Friday, a unit of Japan’s giant trading house Marubeni Corp. struck a deal to acquire a 35% stake in Dallas-based Hunt Oil Co.’s 52,000 net acres in the Eagle Ford Shale in Texas. It’s the second unconventional acreage deal by Marubeni, which last year acquired a chunk of Marathon Oil Corp.’s acreage in the Denver-Julesburg Basin (see NGI, April 11, 2011).

Marubeni’s Eagle Ford LP plans to participate in several hundred wells that are to be sequentially drilled for five to 10 years, with total development costs (including acquisition costs on Marubeni’s share basis) of $1.3 billion, Marubeni said. More acreage acquisitions also are planned.

“We believe that this project, including future expansion and the potential new businesses associated with it, will become a solid base for Marubeni providing a strong cash flow and profit on the mid- to long-term basis,” Marubeni said. “Our acreage position in the Eagle Ford is believed to be prospective, and Hunt, the operator of this project, has extensive experience and expertise in the development and operation of a number of oil and gas shale plays including the Bakken [Shale] located in North Dakota in the United States.”

The Hunt transaction gives Marubeni about 72,000 net acres in the unconventional oil and gas path, which makes it the largest acreage holder among Japanese firms, the company said.

“We will continue to expand our business by acquiring quality shale oil and gas assets in the U.S. as well as other countries leveraging our experience and know-how gained through the Niobrara shale oil project and the Eagle Ford project,” Marubeni said. “We strongly believe that the shale oil and gas play will be spreading all over the world.”

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