Malaysia Taps Canada Oil

Brian Hicks

Written By Brian Hicks

Posted July 6, 2012

Canada is being courted by Asian firms eager to cash in on emerging oil and gas prospects in Alberta and British Columbia. As economic turbulence keeps oil and gas prices low in North America, Asia stands to benefit by harvesting the resources here and selling them over in Asia where prices are, for the moment, much more robust. Whereas natural gas in North America was going for below $2.80 per million British thermal units on Thursday, it was near $18 per million BTUs in Asia.

Petronas, the Malaysian oil company in question, completed a deal with Canada’s Progress Energy wherein the latter receives $20.45 per share (a 77 percent premium). The overall deal is estimated to be worth $5.5 billion. Progress Energy, based out of Calgary, mainly operates in the Deep Basin (northwest Alberta) and the Foothills (northeast B.C.).

While oil pipelines have met with stubborn resistance from native groups across British Columbia, natural gas exports have not–so far–encountered similar problems.

Under the deal, Progress will not see any layoffs. While government approval is pending, it has received the blessing of investors who collectively control about 25 percent of Progress stock.

The Globe and Mail reports:

“Our asset base requires extensive capital to develop its large potential and ultimately access international LNG markets,” Progress chief executive officer Michael Culbert said in a statement. “Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today.”

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