VANCOUVER, BC (June 2, 2011) Dominion Lending Centres Clearlease Reports Progress Energy Resources Corp. (TSX:PRQ) has struck a binding deal worth nearly $1.1 billion to form a strategic partnership with the Malaysian national oil company to develop the Canadian company’s B.C. natural gas assets.
The deal with Petronas, announced Thursday June 2, 2011, will help develop a portion of the Calgary company’s Montney shale assets in the foothills of northeast British Columbia.
In the agreement, Progress will sell 50 per cent of its working interest in its Altares, Lily and Kahta properties to Petronas for C$1.07 billion.
The agreement also gives both companies the option to develop liquefied natural gas export capacity in British Columbia.
Michael Culbert, president and CEO of Progress, called the deal “a breakthrough transaction” for the company.
“The partnership we are launching will enable us to accelerate our growth strategy,” Culbert said in a release before stock markets opened Thursday.
“We are very pleased to form this long-term partnership with Petronas. They share our belief that our North Montney shale assets are a world-class resource that deserves significant investment. We look forward to benefiting from Petronas’s significant global expertise including their leadership in developing infrastructure and accessing LNG markets.”
Under the terms of the framework deal, Petronas will pay 25 per cent of the pricetag — about $267.5 million — in cash and 75 per cent by assuming Progress’s share of future capital spending on the North Montney joint venture over the next five years to a total of $802.5 million.
The transaction provides Progress with the capital required to accelerate the development of its unconventional assets in the company’s large Montney land holdings.
In addition, Petronas and Progress will establish an LNG export joint venture that will be 80 per cent owned by the Malaysian company.
The LNG venture will study and evaluate building and operating a new LNG export terminal on the B.C. west coast that would be run by Petronas.
“Canada is poised to take a larger role on the world’s energy stage,” added Culbert.
“Developing new export options for Canadian natural gas producers is a logical step in connecting our vast resources with growing Asian demand for environmentally responsible energy sources like natural gas.”
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