In a twist to its usual recipe for funding new resource plays, Chesapeake Energy Corp., Oklahoma City, (NYSE: CHK) is monetizing a portion of its 1.5-million-acre Utica shale position, primarily in eastern Ohio, in a deal with a mystery international partner. And it is carving out another piece to share with investors via a separate entity. Altogether, if fully funded, the shale-play giant will realize total consideration of $3.4 billion.

In the first deal, an undisclosed international company has signed on to acquire an undivided 25% interest in approximately 650,000 net acres of leasehold in the wet-gas area of the Utica shale play that Chesapeake jointly owns with Houston-based EnerVest Ltd. Of this acreage, approximately 570,000 net acres are owned by Chesapeake, and approximately 80,000 net acres are owned by EnerVest.

The area of mutual interest (AMI) for the joint venture (JV) covers 10 counties in eastern Ohio.

Chesapeake will receive approximately $2.14 billion and EnerVest approximately $300 million. Some $640 million of the consideration to Chesapeake will be paid in cash at closing, and approximately $1.5 billion will be paid as a drilling and completion cost carry, which Chesapeake anticipates fully receiving by year-end 2014. The company values the deal at $15,000 per net acre.

Chesapeake will be operator of the JV. The JV partner will have the option to acquire a 25% share of all additional acreage acquired by Chesapeake in the AMI and to participate with Chesapeake for a 25% interest in midstream infrastructure related to production generated from the assets.

The deal is expected to close by mid-December.

Aubrey K. McClendon, Chesapeake’s chief executive officer, says, “Through the industry JV, we will be able to recover more than our total leasehold investment in the entire Utica shale play while only selling approximately 142,500 net acres of our 1.5 million net acres of Utica shale leasehold.”

Additionally, Chesapeake has formed a subsidiary with 700,000 net acres in 13 counties in eastern Ohio prospective for the Utica in which it expects to sell shares of the new entity. As its first commitment, private-equity player EIG Global Energy Partners has acquired $500 million of perpetual preferred shares of the new entity, CHK Utica LLC.

Chesapeake expects to sell up to $750 million of additional CHK Utica preferred shares to other investors, including limited partners of EIG, by Nov. 30, 2011. Chesapeake has retained all the common interests in CHK Utica.

CHK Utica preferred shareholders are entitled to an initial annual distribution of 7% paid quarterly. Chesapeake retains an option until Oct. 31, 2018, to repurchase the preferred shares for cash at any time at a valuation expected to equal the greater of a 10% internal rate of return or a return on investment of 1.4x.

If $1.25 billion of CHK Utica preferred shares are purchased, investors in CHK Utica will also receive a 3% overriding royalty interest in the first 1,500 net wells drilled on CHK Utica’s leasehold, which is the equivalent of an approximate 0.45% overriding royalty interest across Chesapeake’s projected 10,000 net-well inventory. Chesapeake’s average net revenue interest on its Utica shale leasehold is approximately 83%.

Chesapeake has committed to drill a minimum of 50 net wells per year through 2016 in the CHK Utica AMI, up to a minimum total of 250 net wells.

“Through the financial transaction led by EIG, our drilling program in CHK Utica is almost entirely funded for the foreseeable future, including cash flow from anticipated production,” says McClendon.

“We have achieved very strong initial drilling results in the wet natural gas and dry natural gas areas of our Utica shale play and are beginning to accelerate our evaluation of the oil area of the play, which the EIG transaction will enable.”

Jefferies & Co. Inc. is financial advisor to Chesapeake on the JV.

Pritchard Capital Partners analysts John Abbott and Stephen Berman value the JV portion of the deal at $11,400 per acre considering the time value of money, and question the thinking behind doing two separate transactions.

“As we saw with Consol Energy’s JV with Hess Corp., E&P companies interested in the Utica primarily want to be in the wet-gas window,” they note, and “second, the JV by itself did not provide enough cash up front to cover Chesapeake’s initial investment of $1.5-to $2 billion.

“That is probably why it also did the preferred deal.”