CNOOC, China's top offshore oil producer, agreed on Sunday to buy one-third of Chesapeake Energy's (CHK) oil and natural gas acreage in the Eagle Ford Shale project in South Texas for $1.08 billion in cash. The transaction is expected to close in the fourth quarter.

CNOOC has also 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 will occur by year-end 2012, the companies said.

The Eagle Ford shale is believed to be rich in natural gas liquids and condensates, which command higher prices than regular natural gas and is therefore more attractive, Reuters reported. CNOOC shares hit a three-year high on news of the deal. Shale gas, which accounts for 15% to 20% of U.S. gas production, is expected to quadruple in coming years. Several large oil companies, including Exxon Mobil (XOM) and Royal Dutch Shell (RDS) have bought into U.S. shale plays in recent years.

Using CNOOC's capital, Chesapeake plans to increase its rig count in the Eagle Ford from 10 to 12 by year-end, to 31 by 2011, and to 40 by 2012. Chesapeake anticipates the project will reach its peak production of 400,000 to 500,000 barrels of oil equivalent per day in the next decade.

"We are very pleased to announce our fifth industry shale development transaction," said Chesapeake CEO Aubrey McClendon. "Chesapeake has continued to maintain a majority position in each of the five major projects subject to development arrangements ranging from 67% to 80%."

The agreement shows, Reuters reports, that the companies believe the deal will clear regulatory hurdles, even though U.S. regulators and politicians blocked CNOOC's efforts to buy U.S. oil company Unocal five years ago. This deal would mark the first major investment by a Chinese state-run company in onshore energy reserves in the U.S.

Many foreign energy companies have bought into similar American projects to learn the skills pioneered in the U.S. required to tap gas, The Wall Street Journal reported. Until now, China hasn't been able to tap its own reserves of shale gas, due to a lack of drilling know-how.

Of course, with China's fast growing economy and high and growing demand for energy, Reuters reports that more such deals are expected.

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