Penn West and Mitsubishi enter into Shale Gas Venture
Penn West Energy Trust has announced an agreement with Mitsubishi Corporation to form a joint venture to accelerate the exploration and development of Penn West’s significant shale gas assets in the Cordova Embayment area of northeastern British Columbia.
Penn West stated that since 2006, it has accumulated a significant shale gas position in the Cordova Embayment. Initial drilling results in the area were promising and led to an expansion of the land held.
As part of the Agreement, Mitsubishi will commit approximately $850 million to the 50-50 Joint Venture.
Penn West will sell Mitsubishi 50% of its working interest in its Wildboy conventional gas assets, 550,000 gross acres of land including approximately 120,000 acres targeting shale gas in the Cordova Embayment, the Wildboy gas processing facility, a sales gas pipeline and associated infrastructure for approximately $250 million in consideration.
The Wildboy assets currently have production of approximately 30 million cubic feet per day of natural gas.
In addition, Mitsubishi will fund approximately $600 million of the first $800 million of exploration and development capital expenditures in the Joint Venture.
The Mitsubishi deal comes after Penn West signed a similar partnership earlier this year with China Investment Corp., which will pay $1.25-billion for a 45-per-cent stake in northern Alberta heavy oil property.
Mitsubishi joins China National Petroleum Corp. and Korea Gas Corp., which have both partnered with Encana Corp. to speed production of British Columbia’s enormous gas fields.
The mounting Asian interest in northeastern B.C. comes as EOG Resources Inc. and Apache Corp. work to build a $3-billion port that would export liquefied natural gas from the West Coast.
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