Total signs $2.25bn deal with Chesapeake

City A.M. Reporter
France’s Total signed a $2.25bn (£1.49bn) tie-up with Chesapeake Energy, becoming the latest oil firm to gain a foothold in US shale-gas fields

Total said it would take a 25 per cent stake in Chesapeake’s Barnett Shale gas fields in north Texas, paying $800m in cash and providing $1.45bn toward the fields’ development for up to six years.

Analysts said the deal made strategic sense for France’s largest company by market value and that the price was in line with recent transactions.

“The deal highlights a disciplined approach to capital allocation and that M&A focus at Total remains more toward smaller ‘bolt-on’ asset acquisitions, as opposed to larger corporate deals,” Morgan Stanley said in a research note.

The deal follows similar investments by US and European rivals in North American shale gas, which is harder and more expensive to extract than gas from traditional reservoirs.

The drilling techniques needed to produce natural gas from shale were pioneered in the Barnett Shale in the early 1980s. The Barnett Shale is the largest producing field in North America.