Petronas Agrees to Buy Canada
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Petronas Agrees to Buy Canada’s Progress Energy
By Jim Polson Jun 29, 2012 7:27 AM GMT+0800Petroliam Nasional Bhd, Malaysia’s state-owned oil and natural-gas company, agreed to buyProgress Energy Resources Corp. (PRQ) for C$4.8 billion ($4.6 billion), in its biggest deal as it moves to export Canadian gas to Asia.
Petronas, as the Kuala Lumpur-based company is known, offered C$20.45-a-share for Progress Energy, 77 percent more than its close before the deal. Including convertible debentures, the deal is valued at about C$5.5 billion, Calgary- based Progress Energy said in a statement yesterday.
Buying the company gives Petronas Chief Executive Officer Shamsul Azhar Abbas ownership of the largest holder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields it bought a stake in last year as it explores development of a liquefied natural gas export terminal. Asian buyers have been lured to North America by gas prices that are about 88 percent cheaper.“The proposed transaction will combine Petronas’s significant global expertise and leadership in developing LNG infrastructure with Progress’s extensive experience in unconventional resource development,” Datuk Anuar Ahmad, executive vice president of Petronas’s gas and power business, said in the statement.
Asian InvestmentProgress Energy rose 74 percent to C$20.05 at the close yesterday in Toronto. It’s a record gain for the company, which had dropped 13 percent this year.
Petronas joins Asian peers including PetroChina Co., Mitsubishi Corp. and Cnooc Ltd. in seeking production in North America. Alberta gas futures prices were $1.93 per million British thermal units on June
27. Japan, the largest LNG importer, paid $16.78 per million Btu including freight costsas of April 30.Including debt, Petronas is paying 23 times earnings before interest, taxes, depreciation and amortization. That’s 66 percent more than the average of 10 comparable deals announced since 2003, according to data compiled by Bloomberg.The purchase is more than double the company’s biggest deal, the $2 billion acquisition of a 40 percent stake in Santos Ltd.’s Gladstone LNG project in Australia in 2008.
Progress Energy has 1.9 trillion cubic feet of proved and probable gas reserves and has 820,000 acres in the Montney shale-gas area. Petronas’s Shamsul said March 30 he was studying making an acquisition of more than $5 billion as he wants to expand the company’s presence in Canadaand Australia.
LNG SiteThe companies said they’ve selected a site at Prince Rupert, British Columbia, for a potential LNG export terminal and will conduct feasibility studies. Petronas joins groups led by Houston-based Apache Corp., Royal Dutch Shell Plc and the U.K.’s BG Group Plc in the race to export gas from Canada’s West Coast.
Malaysia was the third-largest exporter of LNG in 2010, after Qatar and Indonesia, according to the U.S. Energy Department.
The board of Progress Energy approved the offer and it has the support of the company’s senior executives and the Canada Pension Plan Investment Board, which hold on aggregate about 25 percent of the company’s shares, according to the statement. The transaction is expected to close Sept. 25, subject to government approval.Petronas intends to keep all Progress Energy employees, according to yesterday’s statement.
Under the Investment Canada Act, the federal government reviews foreign acquisitions of companies with assets valued at more than C$330 million, according to the Industry Canada website. The government has never rejected a takeover of an energy company.
Precedents Set“There shouldn’t be any blocks to the deal,” said Michael Harvey, a Calgary-based analyst for RBC Capital Markets. He rates Progress Energy shares outperform, the equivalent of a buy, and owns none. “The shareholders will vote for it and precedents have been set,” he said.
Petronas has the right to match any superior bid for Progress Energy, according to the statement. Petronas would get a C$150 million breakup fee if the deal is terminated.
Petronas was advised by Bank of America Corp.’s Merrill Lynch unit and law firm Norton Rose Canada LLP. Progress Energy was advised by BMO Capital Markets and its board received an independent fairness opinion from Scotia Waterous. Burnet, Duckworth & Palmer LLP is its legal counsel.To contact the reporter on this story: Jim Polson in New York at [email protected]
To contact the editor responsible for this story: Susan Warren at [email protected]
04 March 2014| last updated at 11:23PM
Petronas to downsize stake in LNG project
Read more: Petronas to downsize stake in LNG project - Today's Paper - New Straits Times http://www.nst.com.my/business/todayspaper/petronas-to-downsize-stake-in-lng-project-1.498123#ixzz32A8PA9WV
KUALA LUMPUR: National oil company Petroliam Nasional Bhd (Petronas) will sign an agreement to sell 10 per cent of its liquefied natural gas (LNG) project in Canada to an Indian company this Friday. Its president and chief executive officer, Tan Sri Shamsul Azhar Abbas said Petronas may also sell 15 per cent stake in the Pacific Northwest LNG project to an Asian buyer by the end of this month. However, he declined to name the potential buyers of the 25 per cent stake in its LNG project in Canada. "We have more or less concluded it with the Indian company. That's a done deal," he told reporters on the sidelines of the Petronas' financial results announcement, here yesterday. Last week, Shamsul Azhar was quoted in Singapore as saying that Petronas has agreed to sell a 25 per cent stake in its Canadian shale gas assets to an Indian company and an Asian gas buyer. Petronas is looking to share some of the costs of bringing LNG from North America to energy-hungry Asia. Petronas acquired control of the project through its C$5.2 billion takeover of Canada’s Progress Energy Resources Corp in 2012, making it the second-biggest shareholder in British Columbia’s Montney shale-gas area. Citing it as a massive project, Shamsul Azhar said the company aims to reduce its share in Pacific NorthWest LNG, which runs a gas export facility, to as low as 50 per cent by selling stakes to Asian gas buyer so that it would be able to move forward. "We have to move fast. So, that is why we want to reduce our stakes in the Canada's LNG project to Asian gas buyers," he said. Prior to this, Petronas has completed the sale of 10 per cent share in Canada LNG project to Japan Petroleum Exploration Co Ltd on April 26 last year, and secured the first LNG buyer. A further sale of three per cent to Petroleum Brunei was completed on December 18 last year. "We have set aside another two per cent stake for Petroleum Brunei, and with this, we would have reduced our stake in Canadian LNG to 40 per cent. "The negotiation with other potential buyers is ongoing. We would make the final investment decision (FID) on the project by the end of this year," he said, adding the company has awarded triple front-end engineering design (FEED) and early detailed engineering for Pacific NorthWest LNG on May 2 last year. "When the FEED is completed, we will make the FID on the project," he said.
Apart from this, Progress Energy Resources has entered into a purchase and sale agreement with Talisman Energy Canada and Talisman Energy Inc on November 8 last year to acquire a 50 per cent interest in assets and facilities in Talisman Sasol Montney Partnership as well as a 100 per cent interest in Montney assets in the foothills of British Columbia for about C$1.5 billion. A C$30 million deposit has been paid for the acquisition, which is subject to relevant approvals. The transaction is expected to complete in the first quarter of this year. Asked whether the RM60 billion Refinery and Petrochemicals Integrated Development (Rapid) project in Pengerang, Johor would be scaled down due to delays, Shamsul Azhar said the project would continue and would not be scaled down. "We would make the FID on the project by the end of this month but most important, we see that the project is economic and viable. We would not take it (Rapid) to the board if it is not economical and viable. We have no choice but to continue," he said. He, however, did not deny that there would be delays in implementing the project but said it depends on market condition. "If the market is tight and says we should delay, then we will delay. But let's wait for the FID first," he said. Last week, Thailand's PTT Global Chemical pcl (PTTGC) said it has scrapped a plan to invest in a downstream petrochemical project with Petronas after a study showed chances of low returns. PTTGC, which is 49 per cent owned by top energy firm PTT pcl, has signed an agreement with Petronas for several petrochemical downstream projects within the proposed Rapid complex. Besides PTTGC, other international companies such as Italy’s Versalis SpA, Japan’s Itochu have also signed agreements with Petronas to jointly own, develop, construct and operate two separate complexes for the production of high value-added downstream chemicals. The Rapid project is amounted to US$20 billion and is expected to come on-stream commercially in 2017.
Read more: Petronas to downsize stake in LNG project - Today's Paper - New Straits
Times http://www.nst.com.my/business/todayspaper/petronas-to-downsize-stake-in-lng-project-1.498123#ixzz32A8X0G00
