Sasol buying stake in Talisman's Montney shale gas

By OGJ editors
HOUSTON, Dec. 20--
Sasol Ltd. agreed to buy a 50% stake in Talisman Energy Inc.’s Montney shale gas play in the Farrell Creek project in northeastern British Columbia for $1.05 billion (Can.), and the two companies plan a Farrell Creek area partnership that Talisman will operate.

Talisman President and Chief Operating Officer John A. Manzoni said Sasol’s expertise will help Talisman decide whether to build a gas-to-liquids plant in western Canada. Terms of the transaction call for an economic feasibility study regarding a GTL plant.

“This could provide a strategic alternative to traditional North American pipeline or liquefied natural gas marketing,” Talisman said. Sasol uses its Fischer-Tropsch technology to transform natural gas into gasoline and diesel in South Africa and Qatar.

“The outlook for GTL could be very positive in North American natural gas prices continue to decouple from oil prices,” Talisman said.

Closing, subject to regulatory approval, is expected during the first half of 2011.

The 51.6 acre site holds an estimated 9.6 tfc, said Sasol, which agreed to pay $260 million upon closing and carry 75% of Talisman's future capital commitments in Farrell Creek up to $790 million total.

Farrell Creek production is expected to reach 40-60 MMcfed by yearend. Previously, Talisman expanded its Farrell Creek processing facilities to 120 MMcfd.

Talisman and Sasol also agreed to collaborate on certain other western Canadian natural gas opportunities.

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