The acquisition will include 127,000 net acres of Montney lands and 11,000 b/d of oil equivalent production as of Oct. 1. Output is expected to increase in this year’s fourth quarter.
Progress Energy said, “These natural gas interests are an attractive complement to our existing North Montney asset base in northeastern British Columbia and are among the largest remaining North Montney lands not dedicated to a potential [LNG] project.
“The location, resource potential, and operational synergies of these assets make this an ideal fit that expands our British Columbia resource base and increases our land position to 1.2 million acres,” the company added.
The acquisition will include wells, pipelines, and gas processing plants in the Greater Farrell and Great Cypress areas. Progress Energy will acquire Talisman’s 50% interest in Greater Farrell, where Talisman’s partner owns the remaining 50% interest.
Under the terms of the Talisman partnership, the partner pays a disproportionate share of development costs. The value of this “capital carry” is $870 million at the Oct. 1 effective date and will be used to fund a portion of Progress Energy’s share of capital investments in Greater Farrell area over the coming years.
The capital carry offsets the total Progress Energy acquisition cost of $1.5 billion. In addition, Progress Energy will acquire Talisman’s partnership interest in the Greater Cypress area where Progress Energy has joint operations with Talisman. The acquisition is subject to customary closing conditions and adjustments, including the approval of Industry Canada.