(EnergyAsia, June 29 2012, Friday) — Malaysia’s state-owned energy company Petronas has agreed to purchase Canadian gas producer Progress Energy Resources Corp for C$5.5-billion, and to build a liquefied natural gas export terminal in the coastal town of Prince Rupert. (US$1=C$1.03).
The proposed acquisition will build on the companies’ previous announcement to develop a portion of Progress’s shale assets and the LNG terminal along the British Columbia coastline. Progress produces about 50,000 b/d of oil equivalent through its assets in Deep Basin in northwestern Alberta and the Foothills zone in northeastern British Columbia.
Petronas, which will pay C$20.45 for each Progress Energy share for a 77% premium over Wednesday’s closing price, has promised to keep all its Canadian staff and will open a commercial office in Vancouver.
The proposed deal will require Ottawa’s approval after it was unanimously supported by the Progress Energy board.
The agreement was signed in Calgary in Alberta province yesterday by Petronas Executive Vice President of Gas & Power Business, Anuar Ahmad, while Progress was represented by its President and CEO, Michael Culbert.
Mr Anuar said: “The proposed transaction will combine Petronas’s significant global expertise and leadership in developing LNG infrastructure with Progress’s extensive experience in unconventional resource development to build a strong and growing world class energy business based in Canada.
“This development will generate substantial economic benefits for the provinces and local communities, as Petronas’s access to capital will help to bring Canada’s abundant and clean-burning natural gas resources to global markets, leveraging our well-established and extensive network of customers worldwide.”
“The joint venture has selected a site in Prince Rupert for our planned LNG export facility on the west coast of British Columbia. A feasibility assessment agreement has been signed with the Prince Rupert Port Authority (PRPA) giving our project the exclusive right to conduct further feasibility and investigative studies on Lelu Island.
“We have begun engagement with relevant authorities and First Nations, as well as community groups, and we look forward to working closely with them in the course of our site investigation. A key consideration in our investigation will be understanding the environmental and social impacts as well as ascertaining technical feasibility.”
Mr Culbert said: “Our asset base requires extensive capital to develop its large potential and ultimately access international LNG markets. Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today.”
Petronas President and CEO Shamsul Azhar Abbas said:
“This acquisition will provide Petronas with significant long term strategic gas resources in a geopolitically stable region. It will also strengthen our unconventional strategy whilst cementing Petronas’s position as a major global LNG player.
“This acquisition will combine our global LNG expertise and market reach with Progress’ extensive experience in unconventional resource development.