The Work

October 11, 2010 6:03 PM

Vinson Leads for Chesapeake on $2.2B CNOOC Deal

Posted by Tom Huddleston Jr.

Chesapeake Energy Corporation has agreed to sell a third of its oil and gas assets in the Eagle Ford shale project in South Texas to the China National Offshore Oil Corporation for $1.08 billion, both companies announced on Monday.

The deal represents the largest acquisition of U.S. energy assets by a Chinese company, according to The New York Times and Bloomberg. It calls for CNOOC, China's third-largest oil company, to cover 75 percent of Chesapeake's drilling and completion costs in Eagle Ford until an additional $1.08 billion will be paid to Chesapeake for the assets. The additional payment is expected by the end of 2012. Also, CNOOC will have the option to buy a third of any other fields Chesapeake acquires in the area, according to a Chesapeake statement.

Vinson & Elkins advised CNOOC on the Chesapeake deal, with a team led by Shanghai-based partner David Blumental and including Fielding Cochran in Houston and Jay Kolb in Shanghai. CNOOC's general counsel is Zhao Liguo.

Vinson is riding a hot streak lately, especially on energy deals. The Chesapeake acquisition comes on the heels of the firm's work for TPG Capital in the PE firm's acquisition of Marathon Oil's Minnesota oil and gas assets.

Three firms were called on to represent Chesapeake, based in Oklahoma City. Wachtell, Lipton, Rosen & Katz corporate partner David Katz led his firm's team advising the company on the sale. Wilmer Cutler Pickering Hale and Dorr was tapped as regulatory counsel, with Washington, D.C., partners Reginald Brown and Benjamin Powell handling the work for the firm. Oklahoma City firm Commercial Law Group, P.C., and M&A partner C. Ray Lees advised the company locally. Chesapeake's in-house team was led by general counsel Henry Wood.

Chesapeake is the largest independent oil producer in the United States. The sale will help the company to reduce its debt. In May, Chesapeake said it would attempt to raise $5 billion over the next two years in an effort to reduce debt and to expand its operations in Eagle Ford, increasing the number of drilling rigs from ten to 40, according to the Times. Over the next decade, Chesapeake and CNOOC expect the south Texas shale project to reach a peak production of as many as 500,000 barrels of oil-equivalent per day.

The deal, which will require regulatory approval, is expected to close in the fourth quarter of 2010.

(The Eagle Ford shale was at the heart of a separate deal announced Sunday that saw Talisman Energy Inc. and Statoil ASA agree to go in on a joint venture that will pay $1.3 billion to Enduring Resources LLC for oil shale properties, according to Bloomberg.)

Make a comment

Comments (1)
Save & Share: Facebook | Del.ic.ious | | Email |

Reprints & Permissions


Report offensive comments to The Am Law Daily.

Deals like this traitor stuff is why "We the People" are going to vote all the curent house and senate out, 2010, 2012, 2014.
Then more will know the wrath of the U.S. fighing men who have defended this nation and have been back shot for their efforts.

Vietnam 1966 to 1969
operation igloowhite

The comments to this entry are closed.

By: TwitterButtons.com

[email protected]

From the Newswire

Sign up to receive Legal Blog Watch by email
View a Sample