9 March 2011
South African petrochemicals giant Sasol has signed a second agreement with Canadian-based Talisman Energy to acquire a 50% stake in one of their shale gas assets in the Montney basin of British Columbia, Canada.
As with Sasol’s Farrell Creek shale gas acquisition in December last year, the new acquisition will see Talisman Energy retain the remaining 50% interest and continue to operate the Cypress A gas asset.
Sasol will pay C$1.05-billion (about R7.45-billion) for the stake, with $260-million being in cash when the transaction is finalised, and the remainder being used to to fund 75% of Talisman’s future capital commitments in the integrated joint-venture development area.
“Talisman is a world-class shale gas operator and we are delighted to be further cementing our relationship with them,” Sasol CEO Pat Davies said in a statement this week.
Assets included in the transaction cover over 57 000 acres of land and represent an estimated contingent resource of 11.2-trillion cubic feet.
The Cypress A asset offers particularly thick productive shale formations and is located in close proximity to the recently acquired Farrell Creek asset, allowing for optimisation and synergies.
“This transaction allows Talisman and Sasol to unlock additional value in the world-class Montney shale play and potentially accelerate development of the resources in the area,” said Talisman CEO John Manzoni. “The Cypress A assets are very similar to Farrell Creek and, with our partner, we will now build an integrated long-term development plan for the area.”
Integrated GTL potential
The existing and planned pipeline infrastructure in North America also allows for gas to either be sold into the regional gas market, or to a potential integrated gas-to-liquids (GTL) facility in Canada.
“These attributes make the asset attractive both on a stand-alone basis as well as in combination with the Farrell Creek assets,” Sasol said.
As disclosed in December 2010, in the Farrell Creek announcement, Sasol and Talisman have agreed to conduct a feasibility study on the economic viability of a facility in western Canada to convert natural gas to liquid fuels using Sasol’s GTL technology.
According to Sasol, the acquisition of the Cypress A asset, together with the Farrell Creek acquisition, will allow the two companies to scale up such a GTL facility.
“Sasol’s has over 60 years’ experience in providing alternative fuels technology solutions,” said Davies. “It is our technology that differentiates us in our sector and that provides us with superior growth opportunities such as this one.
“We are optimistic regarding the outcome of the GTL feasibility study.”
The transaction is conditional upon the exchange control approvals required by the South African Reserve Bank and other regulatory approvals required. Sasol expects the transaction to be finalised within the third quarter of this year.
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