BEIJING, Jan. 31 (UPI) -- China National Offshore Oil Corp. has agreed to pay $570 million for a 33.3 percent interest in Chesapeake Energy's shale and oil gas drilling project in Colorado and Wyoming, the companies announced.
The deal also calls for CNOOC to fund 66.7 percent of Chesapeake's drilling and completion expenses, which Chesapeake expects will last through to 2014.
Under the agreement, Chesapeake is to continue as operator of the project, conducting all leasing, drilling, completion, operations and marketing activities.
The agreement follows CNOOC's $1.08 billion deal with Chesapeake for a 33 percent stake in Chesapeake's south Texas shale oil and gas field last October.
"This second transaction with Chesapeake represents another success in our overseas development as we implement a value-driven merger and acquisition strategy," said Yang Hua, vice chairman and chief executive officer of CNOOC Limited in a statement. "I am confident the project will not only strengthen our solid resource and production base in overseas but create value to the shareholders in the long term."
Aubrey K. McClendon, Chesapeake's chief executive officer, said the project would advance the efforts of both the United States and China to reduce greenhouse gas emissions as well as accelerate commercial opportunities for the development of shale gas resources in China.
The project, he said, would also further the objectives of the U.S.-China Shale Gas Resource Initiative launched in November 2009 by the Obama administration. The CNOOC-Chesapeake October deal was the first project to be announced since the White House initiative was launched.
China's soaring demand for energy was reflected in its foreign oil dependence ratio reaching a new high of 55 percent in 2010.
In its hunt for global acquisitions, CNOOC, China's largest offshore oil and gas producer, has bought stakes in oil assets in Africa, South America, the Middle East and Australia.
Earlier this month, CNOOC Chairman Fu Chengyu said the group planned to spend between $121 billion to $151 billion by 2015 in buying foreign oil groups and investing in new production, China Daily newspaper reported.
CNOOC's total profit in 2010 exceeded $14 billion, a rise of more than 70 percent on a year-on-year basis.
China, which has surpassed the United States as the world's biggest energy user, relies on coal for about 70 percent of its energy supply.
In 2009, natural gas accounted for just 3 percent of the country's energy mix, states BP's Statistical Review of Energy. China aims to double that over the next five years.