Total Uses Preemption Right To Buy Rest Of Barnett Assets From Chesapeake

(RTTNews) - Total SA (TTA.L, TTFNF.PK, TOT) Friday announced that its unit Total E&P USA is exercising its preemption right to acquire Chesapeake's 75% interests in the jointly held Barnett Shale operating area located in North Texas.

Total E&P USA has owned the remaining 25% in the Barnett Assets since December 2009. With the preemption, Total E&P USA will be the 100% owner and operator of the assets.

Under the terms of the deal, Chesapeake will pay $334 million to Williams, the gatherer and processer of 80% of the gas from the Barnett Assets, to terminate its gathering agreement, projected Minimum Volume Commitment shortfall payments and fees pertaining to the Barnett Shale assets.

Total E&P USA will supplement Chesapeake's payment with $420 million to Williams for a fully restructured, competitive gas gathering agreement, free of any MVC and with a Henry Hub-based gathering rate instead of a fixed per Mcf fee.

Total E&P USA will also pay $138 million to be released from three midstream capacity reservation contracts.

The company noted that properties in the proposed transaction include approximately 215,000 net developed and undeveloped acres, wells, leases, minerals, buildings and properties. Associated 2016 net production is approximately 65 000 barrels of oil equivalent per day.

The preemption and associated transactions are subject to a number of conditions, including the receipt of third-party consents, and are expected to close in the fourth quarter of 2016.