Chevron to buy stake in Kitimat LNG from Encana, EOG
By Scott Haggett
CALGARY, Alberta (Reuters) - Chevron Corp said on Monday it will enter the Canadian liquefied natural gas business with the acquisition of the 50 percent stake in the Kitimat LNG project held by Encana Corp and EOG Resources Inc.
Chevron will take Encana's and EOG's 30 percent stakes in the LNG-export project for an undisclosed price as the No.2 U.S. oil company looks to jumpstart North American natural gas exports.
It will also buy the two companies' interest in a pipeline serving the project, at Kitimat, 650 kilometers (400 miles) north of Vancouver, and will pay $550 million for a half stake in 644,000 acres of exploration lands in the Horn River and Liard shale-gas fields owned by Apache Corp.
Apache will then pay Chevron $150 million to raise its stake in the British Columbia project and associated lands to 50 percent, netting the U.S. independent oil and gas producer $400 million from the transaction.
Analysts say the addition of a deep-pocketed partner increases the likelihood that the multi-billion dollar Kitimat LNG -- the most advanced of a handful of gas-export facilities slated for British Columbia's northern coast -- will be completed.
"With Chevron involved it will happen sooner than it otherwise would have," said Michael Dunn, an analyst with FirstEnergy Capital.
Though no price was given, Robert Morris, an analyst with Citi Research, estimates that Encana and EOG each received about $450 million for their stakes and the exploration lands.
Kitimat LNG was last year awarded Canada's first LNG export license by the National Energy Board, allowing it to export 10 million tons of LNG per year. The project is slated to begin shipping gas to Asian markets by 2017. Continued...