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(Corrects company name in first paragraph.)
June 2 (Bloomberg) -- Petroliam Nasional Bhd, Malaysia’s state-owned oil company, agreed to pay as much as C$1.07 billion ($1.1 billion) for a stake in Progress Energy Resources Corp.’s British Columbia natural-gas fields. The companies will also form a joint venture to explore exporting the fuel.
Petronas will pay C$267.5 million for a 50 percent share in the Altares, Lily and Kahta fields in the Montney Shale region, Calgary-based Progress said in a statement today. The Malaysian company also will fund 75 percent of development costs for the fields during the next five years, up to $C802.5 million.
“The Montney is a very good asset and this looks like a strategic move to build up a large export facility,” said Kim Page, an analyst at Wellington West Capital Markets Inc. in Toronto who has a “buy” rating on Progress and owns shares. “The price seems a little richer than recent deals, but these assets also have a higher liquid content.”
Petronas, based in Kuala Lumpur, will own 80 percent of a joint venture that will study the feasibility of building a terminal in British Columbia to export gas by tanker, Progress said. Shipping the fuel by tanker would allow exports to Asia and other markets not accessible by Canadian pipelines. Apache Corp., the Houston-based owner of gas fields in the province’s Horn River basin, has proposed a similar terminal near Kitimat, British Columbia.
Progress rose to a 52-week high, gaining as much as 12 percent, the most in 20 months. The shares rose 91 cents, or 6.5 percent, to C$14.89 at 10:37 a.m. on the Toronto Stock Exchange.
“This is a breakthrough for Progress,” Chief Executive Officer Michael R. Culbert said in the statement. “Canada is poised to take a larger role on the world’s energy stage. Developing export options for Canadian natural-gas producers is a logical step.”
The Montney Shale, which lies beneath British Columbia and Alberta, holds an estimated 49 trillion cubic feet of gas, according to an April 5 report by the U.S. Energy Information Administration. Producers inject water, sand and chemicals into shale, a dense rock formation, to extract gas.
(Progress will discuss the transaction in a conference call at 11 a.m. New York time today, accessible at EVTS <GO>.)
For more news and information: Progress reserves: PRQ CN <Equity> CH7 <GO> Petronas reserves: PET MK <Equity> CH7 <GO> News on Progress: PRQ CN <Equity> CN BN <GO> Petronas news: PET MK <Equity> CN BN <GO> Top energy news: ETOP <GO>
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