Chesapeake Energy Corp. said Tuesday it will sell part of its Ohio oil and gas business to a unit of French energy company Total SA.
Total will pay Chesapeake and a smaller partner $2.32 billion for access to Chesapeake's 619,000 acres in Ohio with a 25 percent ownership interest.
The land, spread across 10 Ohio counties, sits atop the oil-rich Utica shale formation. The petroleum industry recently has been clamoring to tap the Utica as oil prices rise. Doing so requires drillers to tunnel several thousand feet below the surface and employ a technique called hydraulic fracturing to unlock oil and gas trapped within.
The price for benchmark oil in the U.S. jumped 19 percent in 2011, and many analysts expect crude prices to rise further in 2012.
Chesapeake, based in Oklahoma City, has been aggressively snapping up land in the U.S. to give it more access to oil deposits. The company owns 1.5 million acres with access to Utica shale. Overall, it plans to more than double its oil production in the next two years, with production reaching 72 million to 76 million barrels in 2013.
Chesapeake, which will operate the joint venture with Total, is getting $610 million up front. It expects to receive an additional $1.42 billion by the end of 2014.
Chesapeake announced plans for the joint venture in November but did not identify its partner then. This is Total's second venture with Chesapeake. The earlier one was a $2.25 billion deal for a natural gas field in Texas.
Chesapeake shares rose by 71 cents, or 3.2 percent, to $23 and Total shares added 79 cents, or 1.6 percent, to $51.90 in premarket trading.