America for S(h)ale

8/11/2019 America for S(h)ale

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America For S(h)ale

TheAmericas Natural GasAlliance (ANGA)1, an industrybacked front-group, entreats

the readers with We needreliable energy to meet ourgrowing needs. We need cleanenergy to protect our health andthe environment. And we needdomestic energy to reduce ourreliance on foreign oil and bring

jobs to our communities. TheANGA page features a buildingwith the American Flag paintedacross its side.

One ofANGAs co-founders2isAubrey McClendon, CEO ofChesapeake Energy.

ANGAs members include Chesapeake Energy, Devon, Encana, Cabot Oil & Gas, BGGroup, BHP Billiton, Talisman Energy and Range Resources to name a few. Encanaand Talisman Energy are Canadian corporations, BG Group is from the United Kingdomand BHP Billiton is from Australia.

The Marcellus Shale has been described as both the New Texas and as the Saudi

Arabia of Natural Gas. Natural Gas has been promoted as the fuel that will break theoil habit and the media ads tug at our patriotic heartstrings American Natural Gas forAmerica.

Terry Engelder, Professor of Geoscience at Penn State University and Co-Principal ofAppalachian Fracture Systems Inc., invoked the words of John F. Kennedy during apresentation in January of 20113, ask not what your countrycan do for you, ask whatyou can do for your country. From there, Engelder went on to explain why people livingin gas drilling fields are the sacrifice for the good of the country. Waving flags and amarching band playing Stars and Stripes forever were not part of his presentation andsorely missed.

In November of 2011, Reuters reported Chesapeake CEO Opposes US LNG

1America's Natural Gas Alliance, http://www.anga.us/why-natural-gas2Aubrey McClendon, Chesapeake Energy, Polluters Watch, http://www.polluterwatch.com/aubrey-mcclendon32-Engelder Cumulative Environmental Effects of Gas Drilling , Prof. Terry Engelder of Penn State, ShaleShock,Jan 14, 2011, http://www.youtube.com/watch?v=1u6aqXaI3s4


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Exports4:The head of Chesapeake Energy, one of the biggest U.S. natural gas drillers,does not want the country to ship its huge gas reserves overseas, despite agreeing tosupply fuel for a proposed export project.

Record U.S. natural gas production has sparked a debate about whether the resource

should be used more at home, potentially for wider use in transportation, or shippedabroad to fetch higher prices on the global market.

I want the right to export natural gas, but I am really hopeful that we never do,"said Chesapeake chief executive Aubrey McClendon during a panel discussion onnatural gas vehicles in New York on Wednesday.

America has no export facilities for natural gas. We do have import facilities, and morethan one proposal to convert the import facilities to export is being reviewed by U.S.Federal Energy Regulatory Commission (FERC).

April 2012: The U.S. Federal Energy Regulatory Commission approved CheniereEnergy Inc. (LNG)s proposal to build the nations largest natural-gas export terminal5inLouisiana. The export terminal is expected to be operational by 2015.

So, what happened to being hopeful that we never export natural gas? Industry giant,"Chesapeake Energy wants to export LNG6" says Mike Stice, senior vice presidentfor natural gas projects at Oklahoma City-based Chesapeake Energy, would like tocreate new markets for the natural gas that is inundating the US, due in part todramatically increased production in shale gas plays. Also, liquefying and exportingshale gas from shale plays like the Haynesville, Barnett, and Eagle Ford to globalmarkets holds major promise as the US confronts an oversupply of cheap supplies, said

analyst Rick Smead of Navigant Consulting.

OregonA proposal to build a liquefied natural gas (LNG) terminal7near the mouth ofthe Columbia River in Warrenton is reentering the regulatory running, resuscitated byburgeoning North American gas supplies after being left for dead by opponents.

Backers of the controversial Oregon LNG terminal, which would sit just across YoungsBay from Astoria, have briefed regulators and politicians on their $6 billion plan and saythey plan to file an initial application by next week with the Federal Energy Regulatory

4Chesapeake chief opposes exporting US natural gas, Chesapeake CEO says hopes US will not export LNG,

Reuters, Nov. 16. 2011, http://uk.reuters.com/article/2011/11/16/natgas-export-chesapeake-idUKN1E7AF1L7201111165Cheniere Energy Wins U.S. Approval for Gas-Export Terminal, Bloomberg, By Brian Wingfield, Apr 16, 2012,http://www.bloomberg.com/news/2012-04-16/cheniere-energy-wins-u-s-approval-for-gas-export-terminal.html6Cheniere Energy - A Tsunami About to Happen in the Worldwide $LNG Market, Seeking Alpha, Jan 17, 2012,http://seekingalpha.com/instablog/310523-expstocktrader/161531-cheniere-energy-a-tsunami-about-to-happen-in-the-worldwide-lng-market7Oregon Liquefied Natural Gas export terminal proposed near the mouth of the Columbia River, Wednesday, April18, 2012 By Ted Sickinger, The Oregonian,http://www.oregonlive.com/business/index.ssf/2012/04/oregon_liquified_natural_gas_e.html


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Commission.

While the proposal retains its previously planned capability to offload LNG tankers fromabroad, its economic rationale is based on export ing Canadian gas throughOregon to lucrative markets in Asia.

Louisiana: Sempra Energy has signed development agreements with two Japaneseconglomerates to help build a $6 billion liquefied natural gas export terminal at itsexisting import terminal in Louisiana8, the San Diego based company announcedTuesday.

From Gulf to Canada: May 2012- Excelerate Energy, the U.S. liquefied natural gascompany founded by Oklahoma billionaire George Kaiser, plans to develop thecountry's first floating LNG export plant off the Gulf Coast9, while Royal Dutch Shell haspartnered with Asian buyers to build a plant in western Canada.

Cove Point, Maryland : April 2012- Dominion won approval from the U.S.Department of Energy to use Cove Point for exporting up to 1 billion cubic feet ofliquefied natural gas to about 20 nations10with which the United States has free-tradeagreements. The company is seeking federal permission to allow shipments to anyforeign country, except those barred because of embargoes.

Selling natural gas overseas requires turning it into a liquid by cooling it to minus-260degrees F, putting it in specially insulated Liquefied Natural Gas (LNG) ships, and thenheating and re-gasifying it once it reaches its destination. The expense of re-gasification and shipping makes it easier and cheaper to sell gas in the U.S. instead, sowhy the sudden push to export LNG? Call it over production, low demand, or an

unusually warm winter theres a glut on the market and that has driven prices toapproximately $2.80/MMBtu. Much too low to drill economically, yet the Natural GasDrillers must drill or risk losing leases on land they have already staked out. The morethey drill, the bigger the glut and the lower the price. In comparison, natural gas pricesare much higher in Japan and Europe.

Under U.S. law, the Energy Department cannot deny exports to 15 countries that havebilateral free trade agreements with the United States, a list that will soon expand whenpacts with South Korea, Colombia and Panama take effect. Exports to other countriesare reviewed on a case-by-case basis

8Sempra signs on partners for $6B natural gas export terminal, UT San Diego, By Morgan Lee, April 17, 2012,http://www.utsandiego.com/news/2012/apr/17/sempra-wins-backing-natural-gas-export-terminal/9Two more North American LNG export projects planned, Chicago Tribune, May 15, 2012, Edward McAllister andJeffrey Jones, Reuters,http://articles.chicagotribune.com/2012-05-15/news/sns-rt-us-lng-export-namericabre84e1kv-20120515_1_terminals-before-shale-gas-lng-canada-natural-gas10Dominion to move forward with Cove Point project, Proposed export facility draws opposition from Sierra Club,April 26, 2012, By Hanah Cho, The Baltimore Sun, http://articles.baltimoresun.com/2012-04-26/news/bs-bz-dominion-lng-20120426_1_cove-point-natural-gas-dominion-resources


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. Natural Gas Prices in Us, Europe and Japan Why US Natural Gas Prices Are So Low

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The International Players:Natural Gas corporations stand to make larger profits by exporting. It should be nosurprise to find many American Natural Gas corporations have deals with foreigncorporations in Europe and Asia.

Europe

Brigham Exploration - StatoilASA (Norway):12Statoil ASA from Norway acquired

Brigham Exploration Co. for $4.4 billion in late 2011, enabling entry into the Bakken

and Three Forks plays in the Williston basin in North Dakota and Montana. Statoil

entered the US shale gas industry in 2008 when it acquired a stake in Marcellus

shale gas acreage from Chesapeake Energy and then in the Eagle Ford in a dealwith SM Energy and Talisman. Statoil produces dry gas from the Marcellus, dry gas

and liquids from the Eagle Ford, and now liquids from the Bakken.

Chesapeake Energy Corporation - Total E&P USA13(Total SA Subsidiary):On

January 25, 2010, Chesapeake entered into a joint venture with Total E&P USA, Inc.,

a wholly owned subsidiary of Total S.A. (Total), to develop the Companys Barnett

Shale leasehold in north-central Texas.

11Why US Natural Gas Prices Are So Low - Are Changes Needed?, By Gail Tverberg, Investing.com,Commodities, Mar 25, 2012, http://www.investing.com/analysis/why-us-natural-gas-prices-are-so-low---are-changes-needed%20-11808212Big overseas investors supply momentum for North American shale growth, Oil & Finance Journal, Don Warlick,WarlickEnergy. July 5, 2012 http://www.ogfj.com/articles/2012/07/big-overseas-investors-supply-momentum-for-north-american-shale-growth.html13Chesapeake Energy Corp (CHK), Reuters,http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=CHK


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Chesapeake Energy Corporation - Total SA14(France):France's Total SA, long

established as an international oil giant, will pay $2.25 billion for a 25 percent stake

in Chesapeake's extensive lease holdings in the Barnett Shale, the companies

announced Monday.

Chesapeake Energy Corporation - StatoilHydro15(Norway):joint venture

transaction with StatoilHydro Chesapeake sold a 32.5% interest in its Marcellus

Shale assets in Appalachia for $3.375 billion of consideration and retained a 67.5%

working interest. The assets included approximately 1.8 million net acres of

leasehold, of which StatoilHydro now owns approximately 0.6 million net acres and

Chesapeake owns approximately 1.2 million net acres. Chesapeake received $1.25

billion in cash from StatoilHydro at closing and will receive a further $2.125 billion

from 2009 to 2012 through StatoilHydro funding 75% of Chesapeake's 67.5% share

of drilling and completion expenditures until the $2.125 billion obligation has been

funded. Chesapeake plans to continue acquiring leasehold in the Marcellus Shale

play and StatoilHydro has the right to a 32.5% participation in any such additionalleasehold.

East Resources - Royal Dutch Shell16(Netherlands):The acquisition of East

Resources, a Pennsylvania-based oil and gas company, on July 29, 2010, is the

foundation for Shells new operations and growth in the Appalachian Basin. Shells

current Marcellus Shale operations are focused in Tioga County.

Exco Resources Inc - BG Group (United Kingdom)17:U.K. natural gas company

BG Group said Monday that it has entered a further joint venture with ExcoResources Inc. , under which it will pay $950 million for a 50% interest in companies

that hold Exco's producing and non-producing assets in the Appalachian Basin. BG

Group said the deal will give it a 50% interest in a total of 654,000 net acres in the

Appalachian Basin and increase its estimated gas resources by 2.4 trillion standard

cubic feet.

14Big overseas investors supply momentum for North American shale growth, Oil & Finance Journal, Don Warlick,WarlickEnergy. July 5, 2012 http://www.ogfj.com/articles/2012/07/big-overseas-investors-supply-momentum-for-north-american-shale-growth.html15Chesapeake Energy Corporation Announces Closing of Marcellus Shale Joint Venture with StatoilHydro,Chesapeake Energy, November 25, 2008 http://www.chk.com/news/articles/Pages/1229883.aspx16Shell Appalachia, http://www.shell.us/aboutshell/projects-locations/appalachia.html17EXCO Resources, Inc. Announces 2010 Operating Results and 2011 Outlook, Business Wire, January 24, 2011http://www.businesswire.com/news/home/20110124005522/en/EXCO-Resources-Announces-2010-Operating-Results-2011


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Sandridge Energy - Repsol18(Spain): SandRidge Energy Inc. entered a $1 billion

deal with Spain's Repsol, who agreed to pay SandRidge $250 million and to finance

$750 million in drilling expenses over 3 years for a non-operated stake in two areas

in the Mississippian requiring horizontal drilling and multistage fracturing. The

venture involves a 25% non-operated working interest in the Extension Mississippian

play and a 16% non-operated working interest in the Original Mississippian play.

ASIA-AUSTRALIA

Anadarko Petroleum Corp - Mitsui & Co (Japan):19joint-venture agreementwith Mitsui E&P USA LLC, an affiliate of Mitsui & Co., Ltd. (NSDQ:MITSY),

18Big overseas investors supply momentum for North American shale growth, Oil & Finance Journal, Don Warlick,WarlickEnergy. July 5, 2012 http://www.ogfj.com/articles/2012/07/big-overseas-investors-supply-momentum-for-north-american-shale-growth.html19International Corporation Invests In Marcellus Shale Despite Controversy, Cornell Daily Sun, By Sun Staff,February 18, 2010 http://cornellsun.com/section/news/content/2010/02/18/international-corporation-invests-marcellus-shale-despite-controvers


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whereby Mitsui will participate with Anadarko as a 32.5-percent partner inAnadarkos Marcellus Shale assets,primarily located in north-centralPennsylvania, for approximately $1.4 billion. Mitsui will earn approximately100,000 net acres in exchange for funding 100 percent of Anadarkos share ofdevelopment costs in 2010, and 90 percent of these costs thereafter, with an

estimated completion of all obligations by 2013. In addition, Mitsui will have theopportunity to purchase a 32.5-percent share of Anadarkos existing wells andadditional acreage acquisitions by reimbursing a proportionate share of

Anadarkos prior expenditures, currently estimated to be approximately $100million.

Cabot Oil & Gas - Osaka Gas Co., Ltd.20(Japan):Cabot's joint venture withOsaka transfers a 35% non-working interest in 50,000 acres of Cabot's PearsallShale holdings to Osaka for $125 million in cash and $125 million in future drillingcosts under a carry. The Pearsall Shale underlies the Eagle Ford Shale at depthsbetween 7,000 and 12,000 feet, with a significantly thicker window than the Eagle

Ford Shale at 600 to 900 feet

Cameron LNG - Mitsubishi Corporation21(Japan):Cameron LNG, a unit ofSempra Energy , said it signed agreements with Mitsubishi Corp and Mitsui & Coto develop and construct a natural gas liquefaction export facility in Louisiana.Cameron LNG is strategically located near a major pipeline hub that servesnearly two-thirds of all U.S. natural gas markets. Cameron LNG has access to adeep ship channel close to the shoreline and is far removed from highlypopulated residential areas. The receipt terminal was developed to align withstate and local government land-use planning efforts and is fully permitted

Carrizo Oil & Gas - Sumitomo Corp

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(Japan):Oil and gas explorer Carrizo Oil& Gas Inc has agreed to sell a portion of its Barnett Shale asset to a subsidiary ofSumitomo Corp for $15.7 million. As part of the deal, Japan's Sumitomo will buya 12.5 percent stake in 16 of Carrizo's Barnett drilling units in Texas and help indrilling other wells at the site. Sumitomo will also have the right to participate inup to 56 future wells within these units.While announcing the joint venture inDecember, Sumitomo highlighted Carrizos holdings in the Marcellus andindicated its interest in expanding its shale presence in the U.S.

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Cabot Oil & Gas Corp, Bloomsburg Businessweek,http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201206220910DOWJONESENRGYSVC000949-1&params=timestamp||06/22/2012%209:10%20AM%20ET||headline||Cabot%20Oil%20%26%20Gas%20In%20%24250%20Million%20Texas%20Oil%20Venture%20Deal%20With%20Osaka%20Gas||docSource||Dow%20Jones%20and%20Company%2C%20Inc.||provider||ACQUIREMEDIA||bridgesymbol||US;COG&ticker=COG21UPDATE 1-Sempra unit signs deals for US LNG export plant, Reuters, Tue Apr 17, 2012.http://www.reuters.com/article/2012/04/17/sempraenergy-idUSL3E8FH58V2012041722UPDATE 1-Carrizo to sell part of Barnett Shale asset to Sumitomo, Reuters, Tue Dec 15, 2009,http://www.reuters.com/article/2009/12/15/carrizo-idUSSGE5BE0HD20091215


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Carrizo Oil & Gas - Reliance Industries Limited (RIL)23(India):Carrizo Oil &Gas announces new Marcellus joint venture with Reliance Industries and theparticipation in the sale of Avista Capital partners' Pennsylvania propertiesCarrizo will serve as the development operator for the joint venture and Reliancehas the option to act as a development operator in certain regions in the coming

years as part of the joint venture.

Chesapeake Energy Corporation - CNOOC Ltd24(China):CNOOC paying aninitial $1.08 billion to acquire a one-third stake in Chesapeake's Eagle Ford shalegas field, plus an additional $1.08 to fund drilling and completion costs.

23Reliance Industries Limited, 2010 News Release, http://www.ril.com/downloads/pdf/PR11092010.pdf24Foreign Investors Tap Into U.S. Shale Gas Play, Investopedia, October 15, 2010,http://www.investopedia.com/stock-analysis/2010/foreign-investors-tap-into-u.s.-shale-gas-play-ceo-chk-sto-tlm-eog-pxd-sm1015.aspx#ixzz2LqKyeXmJ


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Chesapeake Energy Corporation - BHP Billiton25(Australia):In February2011, Australia's BHP Billiton Petroleum agreed to buy all of Chesapeake EnergyCorp.'s interests in the Fayetteville shale in Arkansas for $4.75 billion. BHP chiefexecutive J. Michael Yeager mentioned that the expertise gained in theFayetteville would be useful in future developments in Australia and elsewhere.

Chesapeake Energy Corporation - China Investment Corp26(China):ChinaInvestment Corp (CIC) and Singapore state investor Temasek Holdings wouldalso take stakes in Chesapeake, although the exact investment amount was notdisclosed, KIC said in a statement.

Chesapeake Energy Corporation - Hopu Investment Management Co. Ltd.27(China):said it was selling a 20 percent stake in its Appalachian operations toraise $3.5 billion to pay down debt. Its first $600 million will come from TemasekHoldings, the investment company that owns and manages money for thegovernment of Singapore, and from Hopu Investment Management Co. Ltd., a

Chinese private equity firm.

Chesapeake Energy Corporation - Korea Investment Corp28(South Korea):would invest $200 million in Chesapeake Energy Co as the US No.2 natural gascompany was set to issue $900 million worth of convertible preferred stock.

Chesapeake Energy Corporation- Temasek Holdings29(Singapore):said itwas selling a 20 percent stake in its Appalachian operations to raise $3.5 billionto pay down debt. Its first $600 million will come from Temasek Holdings, theinvestment company that owns and manages money for the government ofSingapore, and from Hopu Investment Management Co. Ltd., a Chinese private

equity firm.

Chevron - Reliance Industries Limited (RTL)30(India): Reliance Industries(RIL) today got a new partner for its Marcellus Shale gas assets in the US, as

Atlas Energy shareholders approved its merger with Chevron Corporation. WhileRIL spokesperson declined to comment, a source close to the company said RILwas keen and interested in the shale gas business. Instead of working with AtlasEnergy, it will now work with Chevron, he said. On January 10, Reliance

25Big overseas investors supply momentum for North American shale growth, Oil & Finance Journal, Don Warlick,WarlickEnergy. July 5, 2012 http://www.ogfj.com/articles/2012/07/big-overseas-investors-supply-momentum-for-

north-american-shale-growth.html26KIC, CIC, Temasek to invest in Chesapeake stake, Daily Times, June 27, 2010,http://www.dailytimes.com.pk/default.asp?page=2010\06\27\story_27-6-2010_pg5_2027ibid28Korea Investment: To Invest $200 Million In Chesapeake Energy, ADVFN,http://www.advfn.com/nyse/StockNews.asp?stocknews=CHK&article=4330168729New international investors tap into Marcellus Shale rush, Pittsburgh Business Times,http://www.bizjournals.com/pittsburgh/stories/2010/05/17/story3.html30RIL gets new partner for Marcellus, Business Standard, http://www.business-standard.com/article/companies/ril-gets-new-partner-for-marcellus-111021700097_1.html


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Holdings USA, an arm of RIL, had written to the Atlas Energy management,questioning why RIL was not informed of the Chevron deal. RIL was miffedabout being kept in dark and displeased with the fact that the valuation ofMarcellus shale gas asset for Chevron deal was half of what Reliance paid for its40 per cent stake. RIL has a 40 per cent stake in the joint venture with Atlas

Energy, which it had formed last April. It had agreed to pay $1.7 billion for thesaid working interest in the underlying shale asset, Marcellus Shale. Thisincluded $340-million upfront cash payment and $1.36-billion drilling carry.

Devon Energy Corporation - Sinopec International Petroleum Explorationand Production Co31(China):China Petrochemical Corp., the second-largestChinese oil company, agreed to buy a one-third stake in five Devon Energy Corp.exploratory oil projects in the U.S. for $900 million to expand holdings of reservestrapped in shale. The company, known as Sinopec Group, will pay $900 million incash and as much as $1.6 billion in Devons future drilling costs, funding 125wells in the coming year, according to a statement from Devon today.

Gastar Exploration Ltd - Atinum E&P, Inc. (South Korea):32 $70 millionMarcellus shale joint venture agreement with an affiliate of Seoul, South Korea-based investment firm Atinum Partners Co. Ltd. as part of the growing trend ofinternational player involvement in unconventional resources in North America.

Atinum Marcellus I LLC, will initially acquire a 21.43% interest in all of Gastar'sexisting Marcellus Shale assets in West Virginia and Pennsylvania,approximately 34,200 net acres, and certain producing shallow conventionalwells.

Hunt Oil Co. - Marubeni Corp33(Japan):Japan's Marubeni Corp. subsidiary

Marubeni Eagle Ford Ltd. agreed to buy a 35% stake in Hunt Oil Co.'s holdings inSouth Texas. Marubeni will pay drilling expenses for several hundred wells infuture years. Marubeni and Hunt plan to jointly acquire additional Eagle Fordacreage beyond the currently held 52,000 acres.

Petrohawk Energy Corp - BHP Billiton 34(Australia):BHP Billiton announcedan agreement in July 2011 to acquire Petrohawk Energy Corp. for $12.1 billion,giving BHP operated positions in the Eagle Ford and Haynesville shale resourceplays, and also in the Permian Basin

31Sinopec Group to Buy Stakes in Devon Energy Oil Projects, Bloomsberg Businessweek,http://www.businessweek.com/news/2012-01-04/sinopec-group-to-buy-stakes-in-devon-energy-oil-projects.html32Gastar Exploration enters $70M Marcellus JV with Atinum, Oil&Gas Financial Journal,http://www.ogfj.com/articles/2010/09/gastar-exploration.html33Big overseas investors supply momentum for North American shale growth, Oil&Gas Financial Journal,http://www.ogfj.com/articles/2012/07/big-overseas-investors-supply-momentum-for-north-american-shale-growth.html34Ibid


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Pioneer Natural Resources - Reliance Industries Limited (RIL)35(India):Reliance Industries buys 45 percent of Pioneer Natural Resources shale gasventure for $1.3 billion Eagle Ford Shale

Rex Energy Corporation - Sumitomo Corp (Japan)36:Rex Energy, an

independent oil and gas company, has entered into a joint venture agreementwith Summit Discovery Resources,(subsidiary of Sumitomo Corp) a trading andinvestment firm in Japan. Pursuant to the agreement, Rex Energy will sell andtransfer interests in its Marcellus Shale assets located in Pennsylvania, including12,900 net acres, certain producing Marcellus Shale wells and associated mid-stream assets, in a transaction valued at approximately $140.4 million.

Samson Investment Co - Itochu Corp (Japan)37:Japan's Itochu Corp. was partof an investor group led by KKR that acquired Tulsa-based Samson InvestmentCo. for $7.2 billion in November, 2011. Samson operates in the Bakken, Bossier,Cana Woodford, Cotton Valley, Granite Wash, Green River, Haynesville, Powder

River and Green River areas. Itochu previously purchased a 25% stake in theNiobrara shale oil play in Wyoming from MDU Resources Group.

Sandridge Energy - Atinum E&P, Inc. (South Korea)38: Atinum PartnersCo. Ltd. acquired a non-operated working interest in SandRidge's Mississippianfields for $500 million, agreeing to a drilling carry obligation to pay 13.2% ofSandRidge's share of drilling and completion cost for wells up to $250 millionduring a 3-year period.

SM Energy - Mitsui & Co39(Japan):In mid-2011 a subsidiary of Mitsui & Co.Ltd. acquired a 12.5% working interest in Denver-based SM Energy Co.'s non-

operated Eagle Ford shale position. Mitsui agreed to carry 90% of SM Energy'sdrilling and completion costs up to a $680 million cap.

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Reliance Industries and Pioneer Natural Resources announce Eagle Ford shale joint venture, E&P Mag,http://www.epmag.com/Exploration/Reliance-Industries-Pioneer-Natural-Resources-announce-Eagle-Ford-shale-joint-venture_6219036Rex Energy Corporation Announces Marcellus Shale Joint Venture, Updated Guidance and Borrowing BaseIncrease, NBC News, http://www.nbcnews.com/id/38937927/#.UZIDJUpvCaQ37Big overseas investors supply momentum for North American shale growth, Oil&Gas Financial Journal,http://www.ogfj.com/articles/2012/07/big-overseas-investors-supply-momentum-for-north-american-shale-growth.html38ibid39ibid


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Sinopec and Chesapeake EnergyUnder increasing financial pressures, Chesapeake Energy is trying to bring things undercontrol and raise some serious cash. It sold CHK-Midstream to Global InfrastructurePartners (GIP) For $2.0 Billion, 40and will need to sell more assets quickly.

In May of 2012, Chesapeakes largest investor, Southeast Asset Management (SAM),was reported as saying: We urge the board to be open to any of fers to acquire thewhole company,41 Southeastern Asset Management Inc. Chairman and ChiefExecutive Officer O. Mason Hawkins wrote in a letter to Chesapeake today. While theshares have declined, we dont want to use this large price-to-market gap as an excuseto refuse discussions with potential acquirers who would be willing to pay a price todaythat recognizes the longer term value of the company.

The Financial Times, on June 20, 2012, reported Sinopec, the Chinese oil and gasgroup42, is considering bidding for billions of dollars worth of assets owned byChesapeake Energy, the U.S. gas producer.

The prize asset in Chesapeakes disposal program for this year is its leases on 1.5million acres (600,000 hectares) of land in the Permian Basin region of west Texas andNew Mexico, one of the most coveted areas of the U.S. for oil development.

Analysts suggested last month that the land could fetch $6 billion or more, although thefall in the price of oil and the possibility of further falls to come are expected to havecurbed buyers willingness and ability to pay higher prices. The company hopes toagree a deal by the end of September at the latest, possibly sooner

Sinopec, if serious, is proceeding cautiously and learned the lessons from CNOOC

and Unocal.

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Whether its Sinopec or CNOOC or Total SA, foreign corporations have invested billionsin US gas and oil drilling. These are not just joint ventures, they are also the sale ofcorporations and/or leases. US Natural Gas corporations and their supporters may tryto downplay the foreign corporation participation, but sooner or later somebody with aquestion about their gas lease will make a phone call and discover their lease has beensold to Peggy.

40Chesapeake Energy Corporation, Reuters, http://www.reuters.com/finance/stocks/CHK/key-developments41Chesapeake Should Consider Selling, Shareholder Says, Bloomberg, http://www.bloomberg.com/news/2012-05-07/chesapeake-should-be-open-to-any-offers-southeastern-says-1-.html42Sinopec eyes move for Chesapeake, Financial Times assetshttp://www.ft.com/cms/s/0/0e8ac61a-bac5-11e1-81e0-00144feabdc0.html#axzz2TG2tMyrn43Chinese Drop Takeover Bid for Unocal assets, LA Times, http://www.ft.com/cms/s/0/0e8ac61a-bac5-11e1-81e0-00144feabdc0.html#axzz2TG2tMyrn

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America for S(h)ale