Canadian oil producer Paramount Resources has signed an agreement to sell 310 net sections of its deep basin oil and gas properties in the Musreau/Kakwa area of west Central Alberta to Seven Generations (7G) Energy for approximately C$1.9bn ($1.47bn).
Under the terms of the deal, Seven Generations will acquire about 30,000 barrels of oil equivalent (boe) of daily production, 155 net sections of Montney land and 199 million boe in proved reserves from Paramount Resources.
The assets considered for sale also include minor facilities and gathering systems related to the oil and gas properties.
Paramount president and CEO Jim Riddell said: "While allowing for significant deleveraging of our balance sheet, the unique structure of this transaction provides Paramount shareholders continued exposure to the considerable upside associated with the Assets through the Company’s significant shareholdings in Seven Generations.
"The pure play Kakwa Montney asset base of Seven Generations provides Paramount shareholders the closest proxy for continued ownership of the disposed assets while significantly reducing our indebtedness."
Seven Generations expects the acquisition to expand its ownership in the low-supply-cost Montney Nest liquids-rich natural gas play.
7G president and CEO said: "Upon deal completion, we will have assembled more than half a million net acres of concentrated Montney lands – one of North America’s most prolific resource plays," said Marty Proctor."
Upon completion of the transaction, Paramount will own about 10% stake in 7G. It will represent the second-largest shareholder in 7G after the Canada Pension Plan Investment Board, reported Reuters.
Scheduled to be completed in August 2016, the transaction is subject to approval of Paramount’s shareholders, the receipt of all necessary regulatory approvals and the satisfaction of other customary closing conditions.
Paramount now plans to continue the development of other Deep Basin properties at Karr/Gold Creek, Smoky/Resthaven and Valhalla, which include Montney and multiple stacked Cretaceous horizons.
It will also focus on developing the Montney play at Birch in northeast British Columbia and Duvernay play at Willesden Green.
Image: Seven Generations Energy intends to expand its ownership in Montney Nest liquids-rich natural gas play. Photo: courtesy of suwatpo/ FreeDigitalPhotos.net.