In January 2010, France’s supermajor oil & gas company Total SA (NYSE: TOT) paid about $2.25 billion for a 25% stake in the Barnett shale leases owned by Chesapeake Energy Corp. (NYSE: CHK). The French company liked the deal so much that two years later it paid Chesapeake $2.3 billion for a similar-sized stake in the U.S. company’s Utica shale operations.
In 2010, natural gas prices were around $6 per million BTUs, compared with around $3.20 today. And that has led Total’s CEO to declare today that the French firm will make no new investments in the dry gas shale plays. Saying the investment “does not work,” website Upstream Online cited CEO Christophe de Margerie:
I see no point in investing … where there is no profitability. The fields are still there, the permits are still valid and production will restart when gas prices return to above cost levels.
Shares of Chesapeake are down more than 3.6% on the news, at $16.45 in a 52-week range of $13.32 to $26.09.