Progress Energy to sell half its North Montney shale-gas assets to Petronas for C$1.07 bln

Canadian oil explorer Progress Energy Resources Corp has teamed up with Petronas to develop part of its North Montney shale gas assets and will sell half of its working interest in three shale-gas assets in British Columbia to the Malaysian state oil company for C$1.07 billion ($1.10 billion).

The deal, aimed to help finance the development of Progress Energy's shale-gas reserves in western Canada, would also pave the way for exporting liquefied natural gas (LNG) to Asia.

Calgary-based Progress Energy will sell 50 per cent of its working interest in its Altares, Lily and Kahta shale-gas assets in British Columbia, and both companies will set up an LNG export joint venture on the West Coast of British Columbia, with Petronas owning 80 per cent and the remaining 20 per cent by Progress.

Petronas will be the operator of the facility and the two companies would jointly market the LNG using Petronas' existing network of global LNG customers.

Under the terms of the deal, Petronas will pay 25 per cent or C$267.5 million in cash and 75 per cent or C$802.5 million of Progress' share of future capital expenditures in the North Montney Joint Venture over the next five years.

The North Montney Joint Venture comprises 149,910 working interest acres, in which Petronas will acquire a 50 per cent interest. The acreage represent approximately 20 per cent of Progress' rights in its northeast British Columbia Foothills land holdings, which total approximately 700,000 net acres.