(EnergyAsia, June 7 2011, Tuesday) — Malaysia’s state oil and gas firm Petronas said it has agreed to pay a total of C$1.07 billion for a 50% stake in three shale gas assets in northeastern British Columbia province in Canada. (US$1=C$0.98).
Wholly-owned subsidiary Petronas International Corporation Ltd (PICL) will acquire the stake from Canada’s Progress Energy Resources Corporation who will be the operator in their joint development of the Altares, Lily and Kahta shale gas assets. The assets included in the transaction cover approximately 150,000 gross working-interest acres of land with an estimated contingent gas resource of more than 15 trillion cubic feet.

Petronas will pay C$267.5 million for its share in the three fields and fund 75%, or up to $C802.5 million, of field development costs for the next five years, said Calgary-based Progress.

Marking Petronas’s entry into Canada, the proposed acquisition will boost the company’s upstream assets and boost its liquefied natural gas (LNG) export prospects.

Petronas said it and Progress have agreed to conduct a feasibility study on the viability of launching an integrated LNG export facility in Western Canada. This could provide a strategic alternative to the traditional North American pipeline gas market.

“The feasibility study team will determine the size of the LNG plant and port location,” said Anuar Ahmad, Petronas’s executive vice president for gas and power.

The partners have also agreed to collaborate on other potential natural gas opportunities in western Canada.

The transaction is conditional upon relevant regulatory approvals. Petronas expects the transaction to close in the third quarter of 2011.

Bank of America Merrill Lynch is the exclusive financial advisor to Petronas on this transaction.