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Aug. 8, 2012 /PRNewswire/ - Nexen Inc. (TSX, NYSE: NXY) today announced that we have completed the previously announced sale of a 40% interest in our northeast
British Columbia shale gas assets to a consortium led by INPEX CORPORATION of
Japan. The total consideration for the sale is
$700 million, with 50% cash and a 50% capital carry, effective
July 1, 2011.
With the deal closed, Nexen now holds a 60% operated interest in the joint venture lands, which are located in the Horn River, Cordova and Liard basins of northeast BC. The remaining 40% is now owned by INPEX Gas British Columbia Ltd. (IGBC), which is jointly established by INPEX and JGC Corporation.
Upon closing, we receive
$821 million in cash, comprised of the initial cash payment and IGBC's share of costs since the effective date of the transaction, including reimbursement of their 40% share of capital and payment of capital carry on our 60% share. The remaining carry amount is approximately
$106 million. We expect to record a gain on the sale in our third quarter financial results.
Nexen and IGBC are continuing with completion activities on an 18-well pad in the Horn River and expanding in-field facilities. The 18-well pad is slated to come on-stream in the fourth quarter and the facility expansion will increase our current production capacity to about 175 million cubic feet per day (mmcf/d) from approximately 50 mmcf/d. Nexen and IGBC plan to develop this resource as economic conditions permit. We have also agreed to jointly investigate the feasibility of LNG export opportunities.
"This is the beginning of a valuable long-term strategic partnership," said
Kevin Reinhart, Nexen's interim President and CEO. "Our new partners have technical and commercial strengths that complement our own, and we look forward to working with them to capture the value of this vast resource."
About INPEX & JGC
INPEX currently conducts 74 oil and gas projects in 27 countries, making them
Japan's largest oil and gas exploration and production (E&P) company. They are engaged in exploration, development and production activities around the globe with production of over 420,000 boe/d and have the largest oil and gas reserves and production volume among Japanese companies.
INPEX brings significant LNG expertise and market access to the partnership. They own interests in large LNG projects including resource in both
Indonesia and are building a regasification terminal in
Japan. INPEX holds a 72.805% working interest in the Ichthys LNG project offshore
Australia and is the operator. The project is expected to deliver LNG production volumes of 8.4 million tonnes per year and its production start-up is targeted by the end of 2016. INPEX holds a 60% working interest in the Abadi LNG project offshore eastern
Indonesia and is the operator. The project is expected to deliver LNG production volumes of 2.5 million tonnes per year. The production volume from these two projects will be equivalent to 13% or more of
Japan's current LNG annual import volumes.
JGC Corporation is one of the world's top engineering contractors, with extensive project management capabilities in the fields of petroleum refining and gas processing, LNG and petrochemicals.