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Nexen Inc. has completed the previously announced sale of a 40% interest in its northeast British Columbia shale gas assets to a consortium led by Inpex Corp. 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 Corp.
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 4Q, and the facility expansion will increase its current production capacity to about 175 MMcf/d from approximately 50 mmcf/d. Nexen and IGBC plan to develop this resource as economic conditions permit. They also have 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.”