China National Offshore Oil Company Limited (CNOOC) on October 11 announced that CNOOC International Limited, CNOOC’s wholly-owned subsidiary, will purchase a 33.3% undivided interest in Chesapeake's 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale oil and natural gas project in South Texas. The consideration for the sale will be $1.08 billion in cash at closing, subject to adjustment. Closing of the transaction is anticipated in the 4th quarter of 2010. ?In addition, CNOOC Limited has agreed to fund 75% of Chesapeake's share of drilling and completion costs until an additional $1.08 billion has been paid, which Chesapeake expects to occur by the end of 2012. ?As an operator of the project, Chesapeake will conduct all leasing, drilling, completion, operations and marketing activities for the project. The companies plan to develop unproved resource potential of up to 4 billion barrels of oil equivalent over the next several decades.?Chesapeake has 10 horizontal wells in production currently. Estimated by Chesapeake, the project will reach its peak production of 400,000-500,000 barrels of oil equivalent per day in the next decade.?

Fu Chengyu, Chairman of CNOOC stated that CNOOC has been keeping a close watch on the development of the upstream sector across the world, among which is shale oil and natural gas development. CNOOC has the desire and ability to establish itself in this field in a suitable scale by cooperating with a leading company such as Chesapeake, which we believe will benefit both parties reflecting our win-win philosophy. Partnering with Chesapeake on this project to develop shale oil and natural gas jointly not only satisfies the spirit of Sino-U.S. cooperation in the energy sector, but also underscores CNOOC's responsible approach to climate change issues and its social responsibilities. ?Chesapeake Energy Corporation is the second-largest producer of natural gas and the most active driller of new wells in the U.S. Headquartered in Oklahoma City, the company's operations are focused on discovering and developing unconventional natural gas and oil fields onshore in the U.S. The company has also vertically integrated its operations and owns substantial midstream, compression, drilling and oilfield service assets.