ExxonMobil steps in liquids-rich Montney shale acreage
October 2012, ExxonMobil announced to acquire the Canadian company Celtic Exploration (Celtic) for the amount of $3.15 billion.
ExxonMobil has already a strong presence in Canada since the 1940s in beginning with offshore exploration and production in Nova Scotia with the Sable project and in Newfoundland with Hibernia project.
Currently ExxonMobil is developing the Hebron project in Labrador.
In parallel, ExxonMobil is the reference shareholder of Imperial Oil Limited (Imperial) which owns and operates multi-billion assets in Canada.
According to the existing agreement between ExxonMobil and Imperial, Imperial will have the opportunity later on to take ExxonMobil‘s equal stake in the acquisition.
Home based in Calgary, Alberta, the Canadian company Celtic Exploration was established in 2002 and is listed in Toronto Stock Exchange.
Focusing on the exploration, Celtic selects undeveloped oil and gas fields with great potential for future exploration.
After assets acquisition, Celtic concentrates its operations on the exploration phase to create maximum value of their assets at minimum capital expenditure in converting 2P reserves into 1 P.
This strategy successfully implemented since 2002, contributed Celtic to generate profitable growth and build valuable assets of unconventional oil and gas resources on fast track.
Actually Celtic’s assets are located in Alberta and British Columbia.
Celtic assets split between ExxonMobil and Spinco
With a high percentage of liquids-rich natural gas plays, Celtic benefited so far from the high market prices in condensate and NGL to dump the impact of the low gas prices in North America.
According to the terms of the agreement, Celtic will transfer most of its assets to ExxonMobil and the remaining part will be spin out to create a new company called Spinco.
This newly formed company Spinco will be immediately listed in Toronto according to the value of the assets transferred from Celtic.
ExxonMobil will acquire the largest part of actual Celtic assets including:
– 545,000 net acres in the liquids-rich Montney shale
– 104,000 net acres in the Duvernay shale
The transferred assets to ExxonMobil deliver a production of:
– 72 million cubic feet per day (cfd) of natural gas
– 4,000 barrels per day of crude oil, condensate and natural gas liquids (NGL)
In addition these assets contain:
– 128 million barrel of oil equivalent (boe) of proved and probable reserves (2P)
– 24% of these 2p reserves are liquids (crude oil, condensate, NGL)
– 76% are natural gas
In this dimension, Celtic acquisition will give the opportunity to ExxonMobil to extend its unconventional portfolio of oil and gas resources and to develop offer a new playground to its subsidiary XTO Energy, specialized in tight gas, oil shale and shale gas, and coal bed methane.
For Celtic this $3 billion operation with ExxonMobil after only 10 years existence is also an excellent deal, especially as this successful gamble may repeat again through the newly formed company Spinco.
