Chesapeake enters into Haynesville Shale venture

Chesapeake said Plains Exploration agreed to buy a 20 percent interest in its leasehold as of June 30 for $1.65 billion in cash. Chesapeake owned about 550,000 acres of the shale, in northwest Louisiana, as of that date. As a result of the joint venture, Plains Exploration will own 110,00 acres and Chesapeake will own the rest.

Chesapeake said it plans to keep acquiring leasehold and Plains Exploration will have the right to a 20 percent participation.

Under the joint venture, Plains Exploration has also agreed to fund 50 percent of Chesapeake's 80 percent share of drilling and completion costs for future wells over a period of several years until another $1.65 billion has been paid.

Chesapeake said the companies' current leasehold could hold unrisked unproved reserve potential of 23 trillion to 44 trillion cubic feet of natural gas equivalent.

The company added it expects to drill at least 600 wells over the next three years.

Chesapeake shares rose $1.39 to $68.75 in after-hours trading. During regular trading, shares rose $1.40 to close at $67.36.

Plains Exploration shares fell 9 cents to $73.15 in after-hours trading. The stock rose 27 cents to close at $73.24 in regular trading.