Progress Energy Closes B.C. Gas Assets Acquisition

Progress Energy Canada, a subsidiary of Malaysia’s Petronas, has closed an agreement to acquire assets in northeast British Columbia from Talisman Energy. In a second transaction, Progress Energy has also acquired Montney lands in the Julienne area of northeast British Columbia.

“These two acquisitions continue to build upon our natural gas resource base in the North Montney. With the complementary fit we have captured operational synergies as well as additional strategic assets,” said Michael Culbert, President & CEO of Progress Energy.

The acquisition from Talisman includes about 127,000 net acres of Montney lands and has current production of approximately 12,500 barrels of oil equivalent per day (BOE/d). Progress Energy will acquire Talisman’s interest in the Kobes area where Progress Energy has existing joint operations with Talisman. In addition, Progress Energy will be acquiring Talisman’s 50 percent interest in the Farrell and Cypress areas, where Talisman’s partner owns the remaining 50 percent interest.

Under the terms of the Talisman agreement, the partner pays a disproportionate share of development costs. The value of this “capital carry” was approximately $870 million at the October 1, 2013 effective date, and will be used to fund the majority of Progress Energy’s share of upstream capital investments in the joint venture area over the coming years. This capital carry offsets the total Progress Energy acquisition cost of approximately $1.5 billion.

In January, Progress Energy closed an acquisition in the Julienne area for approximately $130 million which includes 4 Montney wells that are awaiting completion and about 33,500 net acres of undeveloped Montney lands in the heart of the company’s North Montney Joint Venture British Columbia holdings.

Press Release, March 13, 2014