Sasol and Talisman Increase Scope of their Montney Shale Alliance

In a follow-up to the late 2010 Sasol/Talisman JV alliance in Talisman's Farrell Creek Montney shale acreage, the companies have agreed to extend the JV to include the Cypress A Montney assets as well. In exchange for 54,000 net acres in these two areas, Sasol has paid US$524 million up-front and agreed to carry Talisman on 75% of its future costs up to US$1.6 billion. Unlike Farrell Creek, the partners do not anticipate drilling the Cypress A acreage in the near-term.

These transactions are important examples of the continuing flow of international capital into the North American unconventional resource plays. They are also potentially significant in another essential way.

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EnCana Joins Kitimat LNG Project

EnCana has acquired a 30% interest in the Kitimat LNG liquefaction project planned on the coast of British Columbia. Apache's interest will drop from 51% to 40% and EOG's interest will drop from 49% to 30%.

It remains to be seen whether the size of Kitimat, currently expected to be 5 mmtpa of LNG export capacity will remain the same or whether it will be increased to accommodate additional gas supplies from the new partner.

Repsol Buys into North Slope Exploration Acreage

Repsol recently reached agreement with GMT Exploration and Armstrong Oil & Gas to acquire a 70% interest in 494,000 acres in Alaska. Repsol will pay the companies and contribute exploration capital with its total cost estimated by Repsol at US$ 768 million.

Repsol noted that the transaction is consistent with its plan to increase its asset base in OECD countries. The company already holds significant offshore acreage in the Chukchi Sea and the Beaufort Sea areas in Alaska.

Shell Buys Into Wheatstone

Shell has agreed to buy an additional 8% interest in the Chevron operated fields that will supply the Wheatstone LNG project in Australia. As part of the deal Shell will also acquire a 6.4% interest in the LNG facilities.

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