North American Shale Oil Attracts Asian Companies

Brian Hicks

Written By Brian Hicks

Posted June 29, 2012

On Thursday, Malaysian state-owned oil and gas concern Petroliam Nasional Bhd (Petronas) agreed to purchase Progress Energy Resources (TSE: PRQ) of Canada.

Petronas will pay $4.6 billion for the company, around $20 a share, representing roughly an 83 percent premium.

The deal means that Petronas CEO Shamsul Azhar Abbas now not only owns the largest share of British Columbia’s Montney shale but also controls three Progress oil fields, which Petronas had bought earlier.

Bloomberg quotes Datuk Anuar Ahmad, executive vice president of Petronas’s gas and power sector:

“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.”

With this transaction, Petronas gains a stake in the North American natural gas boom, much like Asian companies PetroChina Co. (NYSE: PTR), Mitsubishi Corp (TYO: 8058), and Cnooc Ltd.(NYSE: CEO).

The Asian influx is a direct consequence of drastically low gas prices in North America, particularly compares with prices back in Asia, as well as recent dramatic developments in shale oil operations.

Petronas will merge its own Canadian operations with Progress Energy’s, and it will not dismiss any employees.

If for any reason Progress decides to opt out of this deal, Petronas stands to receive $150 million in fees.

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