Published on December 24th, 2012 | by Ted Liu0
Chevron Canada pays $1.3 billion for 50% in Kitimat LNG, PTP, Horn River & Liard Basins assets
Chevron Canada Limited will acquire 60% interest (30% each) currently owned by EOG Resources Canada Inc., Canadian subsidiary of EOG Resources, Inc. (NYSE: EOG), and Encana Corporation (TSX/NYSE: ECA) in the proposed Kitimat LNG Project and PTP.
Chevron Canada Limited will then equalize interests with Apache Canada Ltd., Canadian subsidiary of Apache Corporation (NYSE/NASDAQ: APA), resulting in Chevron Canada Limited and Apache Canada each holding a 50 percent interest in both the Kitimat LNG Project and PTP. Operatorship of both facilities will transfer to Chevron Canada.
Kitimat LNG, at Bish Cove on the northern British Columbia coast approximately 400 miles (650 km) north of Vancouver, is currently completing front-end engineering and design, and early site work is under way. Current plans call for two liquefaction trains, each with expected capacity of 5 million tons of LNG per annum (about 750 million cubic feet of gas per day). Kitimat has received all significant environmental approvals and a 20-year export license from the Canadian federal government.
The 290-mile (463-km) Pacific Trail Pipeline will provide a direct connection between the Spectra Energy Transmission pipeline system and the Kitimat LNG terminal. The project has strong support from many of the First Nations along the route.
Chevron Canada has also agreed to acquire approximately 110,000 net acres in the established Horn River Basin from Encana, EOG Canada and Apache Canada, and approximately 212,000 net acres in the Liard Basin from Apache. Chevron Canada Limited and Apache will each hold a 50 percent interest and Apache will operate these two natural gas resource developments.
RBC Capital Markets provided financial advice to Encana, EOG and Apache in regards to the Horn River acreage aspect of this transaction.
Financial terms of the transactions were not disclosed. Chevron is estimated to pay approximately $1.3 billion for the stakes.
Apache will sell to Chevron a 50% interest in its 100% owned undeveloped Liard and Horn River acreage for $550 million. Apache will pay Chevron to equalize interests in other Horn River acreage owned by Apache, Encana and EOG. Apache also will pay Chevron to increase Apache’s ownership of the LNG plant and pipeline projects to 50 percent.
Apache’s net proceeds are expected to be approximately $400 million.
Photo courtesy of Kitimat LNG
About the Author
Ted Liu Ted is the editor of CanadianPrivateEquity.com and Research Director for CVCA - Canada's Venture Capital and Private Equity Association. Ted has been following Canadian venture capital and private equity industry since 1993.