PETRONAS, the Malaysian national oil and gas company, and Progress Energy Resources announced that PETRONAS’ Canadian subsidiary, PETRONAS Carigali Canada, and Progress have entered into an agreement for the purchase by PETRONAS Canada of all of Progress’ outstanding common shares at a cash price of C$20.45 per share.
Including the amount to be paid for Progress’ outstanding convertible debentures, the transaction is valued at approximately C$5.5 billion. The transaction is to be completed by way of an arrangement under the Business Corporations Act (Alberta).
- Cash price of C$20.45 per Progress share
- Transaction has received the unanimous approval of Progress’ Board of Directors
- PETRONAS brings substantial investments in LNG infrastructure and access to world markets through established channels
- Canadian operations to remain based in Calgary for upstream with commercial office in Vancouver for LNG
The transaction price represents a premium of 77% over Progress’ closing share price on the Toronto Stock Exchange of C$11.55 on June 27, 2012, and 83% over Progress’ 30-trading day volume weighted average trading price of C$11.18 per share ending on June 27, 2012.
The acquisition of Progress is consistent with PETRONAS’ strategy of strengthening its position as one of the global leaders in Liquefied Natural Gas (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.
Net Benefit to Canada
“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 PETRONAS.
“This development will generate substantial economic benefits for the provinces and local communities, as PETRONAS’ access to capital will help to bring Canada’s abundant and clean-burning natural gas resources to global markets, leveraging our well-established and extensive network of customers worldwide.”
“We are pleased to announce that the joint venture has selected a site in Prince Rupert, British Columbia for our planned LNG export facility on the west coast of British Columbia. A Feasibility Assessment Agreement has been signed with the Prince Rupert Port Authority (PRPA) giving our project the exclusive right to conduct further feasibility and investigative studies on Lelu Island. We have begun engagement with relevant authorities and First Nations, as well as community groups, and we look forward to working closely with them in the course of our site investigation. A key consideration in our investigation will be understanding the environmental and social impacts as well as ascertaining technical feasibility.”
Following a successful transaction, PETRONAS plans to combine its Canadian business with that of Progress and intends to retain all the employees of Progress to capitalize on the experience and depth of the Progress team. PETRONAS plans to work in partnership with Progress’ employees in realizing the joint vision of both companies to grow the business with ongoing investment in its Canadian operations.
In addition to its desire to grow its Canadian operations, PETRONAS is committed to fostering strong community relations. PETRONAS intends to continue with and build upon Progress’ existing community and charitable commitments.
“Our relationship with PETRONAS has been very productive and they have clearly demonstrated a commitment to the local communities, both economically and environmentally,” said Michael Culbert, President and CEO of Progress Energy.
“Our asset base requires extensive capital to develop its large potential and ultimately access international LNG markets. PETRONAS offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today.”
LNG World News Staff, June 29, 2012