Malaysia's state oil company Petroliam Nasional Berhad (Petronas) today agreed to buy Canada's Progress Energy Resources Corp for C$4.8 billion ($4.7 billion) – including debt, the deal is valued at about C$5.5 billion ($5.4 billion).
Under the terms of the deal, Petronas Canadian subsidiary, Petronas Carigali Canada Ltd, will pay C$20.45 per share, a premium of 77 per cent to Progress Energy's yesterday closing price of C$11.55 on the Toronto Stock Exchange.
The deal comes a year after Petronas paid C$1.07 billion ($1.10 billion) for half of Progress Energy's working interest in three shale-gas assets in British Columbia. (See: Progress Energy to sell half its North Montney shale-gas assets to Petronas for C$1.07 bn)
Calgary-based Progress Energy explores and develops large unconventional natural gas resources in northeast British Columbia and northwest Alberta.
Progress holds approximately 900,000 net acres of Montney rights over its entire British Columbia and Alberta land base, making it one of the largest Montney land rights holders.
Petronas said the deal builds on an arrangement between both companies to develop some of Progress' shale gas reserves and to develop a liquefied natural gas (LNG) export facility in western Canada.
Both companies last year agreed to 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 would be the operator of the facility and the two companies would jointly market the LNG using Petronas' existing network of global LNG customers
The companies today said that they have selected Prince Rupert in British Colombia as the location of the proposed LNG terminal.
Progress Energy's CEO said that his company requires extensive funding to get into international LNG markets and believes Petronas has the necessary resources.
Petronas said that the acquisition of Progress is consistent with its strategy of strengthening its position as one of the global leaders in LNG.
''The transaction follows a joint venture established between the two companies last year to develop a portion of Progress' Montney shale assets in the Foothills of northeast British Columbia which reflected the desire by both parties to explore additional opportunities to develop LNG export capacity on the west coast of British Columbia,'' the company said in a statement.
''The proposed transaction will combine Petronas' significant global expertise and leadership in developing LNG infrastructure with Progress' extensive experience in unconventional resource development to build a strong and growing world class energy business based in Canada,'' said Datuk Anuar Ahmad, executive vice president of the gas and power business for the Malaysian oil giant.