Calgary’s Talisman Energy Inc. (TSX:TLM) has announced it is deepening its strategic relationship with South African energy and chemicals giant Sasol Limited in B.C.’s Montney basin, to include the sale of a 50% interest in its Cypress A assets.
It’s the second deal between the two companies in the past three months.
In December 2010, Talisman and Sasol announced a similar transaction for the acquisition of a 50% interest in Talisman’s Farrell Creek properties in the Montney shale play, with Sasol acquiring an estimated 4.8 trillion cubic feet (tcfe) of natural gas equivalent.
“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 John Manzoni, president and CEO of Talisman. “The Cypress A assets are similar to Farrell Creek and, with our partner, we will now build an integrated long-term development plan for the area.”
Talisman will operate and manage the Cypress A and Farrell Creek areas as an integrated development project.
The Cypress A transaction represents the sale of approximately 14% (5.6 tcfe) of Talisman’s remaining estimated 39 tcfe of net contingent resource in the project and approximately 17% (28,600 acres) of the company’s Tier 1 land.
Sasol will pay 25% of the consideration (approximately $260 million) in cash at closing. Sasol will also provide an additional $790 million to fund 75% of Talisman’s future capital commitments in the integrated joint-venture development area.
Sasol CEO Pat Davies said, “This additional acquisition of another high-quality natural gas asset will accelerate our upstream growth while also potentially advancing Sasol’s already strong GTL value proposition utilizing our proprietary technology.”
The Cypress A transaction is subject to regulatory approvals and is expected to close by the end of 2011’s third quarter.