2011-01-14-2010-12-20-2011-03-03

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
CA$1,050.0MM
Description

Completed JV to develop 51,000 net BC Montney shale acres in Farrell Creek area, concerning 44 Tcfe 3P.

Johannesburg, South Africa-based Sasol Ltd. (NYSE: SSL) has completed the C$1.05 billion (US$1.04 billion) acquisition of a 50% participation interest in the Montney Shale Basin in Canada from Calgary-based Talisman Energy Inc. (NYSE; Toronto: TLM). The acquisition includes the high-quality Farrell Creek assets of British Columbia.

Talisman and Sasol each own 50% of the Farrell Creek assets, with Talisman as operator of the partnership. Talisman and Sasol have also agreed to collaborate on certain other western Canadian natural gas opportunities.

This transaction allows Talisman to develop the Farrell Creek area and unlock some of the value of the estimated 44 Tcfe of net contingent resource held across its Montney shale play. Farrell Creek represents approximately 22% (9.6 Tcfe) of Talisman's resource potential in the play and about 27% (51,000 net acres) of the company's 190,000 net Tier 1 acres of land in the Montney. Sasol paid 25% of the consideration (approximately $260 million) in cash at closing and carry 75% of Talisman's future capital commitments in the Farrell Creek area to a total of approximately $790 million.

The play has been largely de-risked and production at Farrell Creek is expected to exit this year at between 40-60 MMcfe/d. Talisman's processing facilities at Farrell Creek have been expanded to 120 MMcf/d and the company has secured over 500 MMcf/d of egress capacity from the region.

As part of the agreement, the partners have agreed to conduct a feasibility study around the economic viability of a facility in western Canada to convert natural gas to liquid fuels, using Sasol's commercial Gas to Liquids (GTL) technology. This could provide a strategic alternative to traditional North American pipeline or LNG marketing. The outlook for GTL could be very positive if North American natural gas prices continue to decouple from oil prices. The GTL process produces premium, clean liquids fuels.