CNOOC completes purchase of Texas project

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China National Offshore Oil Company Limited (CNOOC Ltd.), China's largest offshore oil and gas producer, said Tuesday it has finalized the purchase of a 33.3 percent undivided interest in a U.S. oil and gas shale project.

CNOOC said in October that one of its wholly-owned subsidiaries, CNOOC International Ltd., had inked an agreement with U.S. based-Chesapeake Energy Corporation to buy a stake in Chesapeake's Eagle Ford Shale project in southern Texas.

The project is a 600,000-acre oil and natural-gas leasehold.

Chesapeake sold the stake to the CNOOC subsidiary for 1.08 billion U.S. dollars in cash with a 40 million U.S. dollars upward closing adjustment.

As part of the deal, CNOOC will fund 75 percent of Chesapeake's share of drilling and completion costs, up to 1.08 billion U.S. dollars, by the end of 2012.

CNOOC chairman Fu Chengyu said the transaction is consistent with the company's overseas development strategy.

With Chesapeake's expertise and experience in shale-oil and natural-gas development, the project will be profitable for both companies, he said.

Aubrey K. McClendon, Chesapeake's chief executive officer, said the project will reduce U.S. oil imports while creating thousands of high-paying jobs.

Chesapeake Energy Corporation is the second largest producer of natural gas in the United States.

Shares of CNOOC had dropped 0.82 percent to 17.02 Hong Kong dollars on the Hong Kong bourse at midday Tuesday.

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