The deal creates a joint venture out of about 270,000 acres of leased land with reserves of approximately 700 million cubic feet of natural gas.
The deal includes a cash payment of $800 million at closing with $1.45 billion paid later through Total taking on 60 percent of Chesapeake's share of the drilling costs until the obligation has been completed, the company said.
Total's Chief Executive Officer Christophe de Margerie said, the joint venture, which opens U.S. shale gas business to the French company, would "allow Total to develop its expertise in unconventional hydrocarbons," which refers to oil or gas reserves that cannot be extracted by drilling standard wells.
In a statement, Chesapeake CEO Aubrey McClendon said the deal has been in discussion for seven months.
"This transaction will allow Chesapeake to reduce its financial leverage and future capital expenditures," McClendon said.
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