(Reuters) -Chemical maker INEOS is entering into U.S. oil and gas production for the first time, agreeing to purchase assets in South Texas from Chesapeake Energy Corp (NYSE:CHK) for $1.4 billion, the companies said on Tuesday.
The deal would give INEOS, run by billionaire businessman Jim Ratcliffe, access to the natural gas that is key to its core business at a time of significant disruption in global gas markets caused by Russia's invasion of Ukraine.
"Over the last two decades, U.S. onshore oil and gas production has provided security of supply for the global market and competitive advantage for U.S. industry," Brian Gilvary, chairman of INEOS Energy, said in a statement.
"We believe this acquisition will help us to serve our internal and external customers today as we continue to position our business to meet the energy transition."
The transaction, involving an area of around 172,000 net acres with average net daily production of about 36,000 barrels of oil equivalent, will also grant Chesapeake Energy a complete exit from the Eagle Ford shale basin.
The Oklahoma City-based energy producer, under pressure from activist investment firm Kimmeridge Energy Management to shift toward solely producing natural gas, had already agreed to sell part of its position in January to privately owned Wildfire Energy for $1.43 billion.
Mark Viviano, managing partner of Kimmeridge's public investment team, said in a separate statement it commended the company's move and the re-focus on low-cost gas assets would "maximize value for Chesapeake stakeholders".
Chesapeake said in its own statement the company would receive $1.175 billion at closing - due in the second quarter of this year - and a further $225 million in four annual installments. Proceeds from the deal will be used to repay debt and fund its share repurchase program.