Paula Dittrick
OGJ Senior Staff Writer
HOUSTON, June 3 -- Malaysia’s Petronas agreed to buy a working interest in three properties in the Montey resource play in northeastern British Columbia from Progress Energy Resources Corp. for $1.07 billion (Can.).
Progress Energy of Calgary agreed to sell 50% of its working interest in its Altares, Lily, and Kahta properties to Petronas in what the companies are calling the North Montney Joint Venture. Progress and Petronas intend to jointly consider opportunities to develop LNG export capacity in British Columbia.
Michael Culbert, Progress Energy president and chief executive officer, said Petronas has global expertise regarding LNG markets. The NMJV properties include five wells with minimal production at this time, he said.
Closing is subject to execution of a definitive agreements and regulatory approvals.
Terms call for Petronas to pay $267.5 million, or 25% of the transaction value total, at closing and the rest will come in the form of a capital carry with Petronas paying for future capital expenditures in the NMJV over the next 5 years to $802.5 million total.
The transaction provides Progress with the capital required to accelerate the development of its unconventional assets and unlock the value underlying its vast Montney land holdings, Culbert said.
Petronas and Progress also will establish an LNG Export Joint Venture of which Petronas will own 80%.
That JV will launch a feasibility study to evaluate building and operating an LNG export facility on the west coast of British Columbia. If finalized, Petronas would operate the facility.
The NMJV covers 149,910 acres in which Petronas will acquire a 50% interest and Progress Energy will be the operator. Progress holds 900,000 net acres of Montney rights over its entire British Columbia and Alberta land base.
PetroChina Corp. earlier this year announced plans to acquire half of Encana Corp.'s stake in Cutbank Ridge, a Montney resource play straddling the British Columbia and Alberta boundary, for $5.4 billion (Can.) (OGJ, Feb. 28, 2011, p. 18).
Contact Paula Dittrick at [email protected].
