Strathcona Resources Sells Montney Shale Assets for $3 Billion

Strathcona Resources has exited the Montney shale after striking deals to sell its assets there to three companies, including ARC Resources and Tourmaline Oil. The company also acquired the Hardisty Rail Terminal.

The total value of the three assets that Strathcona owned in the Montney shale stood at $2.84 billion. The largest portion of the asset sale was the disposal of the Kakwa asset, which Strathcona sold to ARC Resources for $1.695 billion.

The company noted that the three assets had generated $149 million in operating profit during last financial year, which represented 12% of its total operating profit for the period.

The deals are expected to close in the second and third quarter of the year.

Strathcona produces some 72,000 barrels of oil equivalent in Montney. This is up from just 5,000 barrels daily when it entered the play, the company said. The current output from the play also accounts for a solid part of Strathcona’s total, which the company has projected at between 150,000 and 160,000 barrels of oil equivalent daily for this year.

The Montney formation in Western Canada spans Alberta and British Columbia is one of the largest natural gas deposits on the continent. Currently, the Montney shale produces some 2 million barrels of oil equivalent daily. A lot of this is gas, and even more will be gas once LNG Canada begins operation, with the launch scheduled for later this year. Indeed, the launch of the project is leading to growing interest in the play, which also has some rather solid crude oil resources—and some of the lowest production costs in the industry.

Enverus pointed the advantage of Montney’s low-cost resources in a report earlier this year, and then Kimmeridge also highlighted the bright prospects for drillers active in the area. It appears this is a good time to cash in on Montney assets, which is what Strathcona has just done.

By Irina Slav for Oilprice.com

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