The transaction allows Talisman to develop the Farrell Creek area and unlock some of the value of the estimated 44tcfe of net contingent resource held across its Montney shale play.
Farrell Creek represents approximately 22% (9.6tcfe) of Talisman’s resource potential in the play and about 27% (51,000 net acres) of the company’s 190,000 net Tier 1 acres of land in Montney.
Sasol will pay 25% of the consideration (approximately $260m) in cash at closing and carry 75% of Talisman’s future capital commitments in the Farrell Creek area to a total of approximately $790m.
The play has been largely de-risked and production at Farrell Creek is expected to exit this year at between 40-60mmcfe/d.
Talisman’s processing facilities at Farrell Creek have been expanded to 120mmcf/d and the company has secured over 500mmcf/d of egress capacity from the region.
Sasol will acquire a 50% working interest in all Talisman lands, existing wells and processing facilities in the Farrell Creek region.
Talisman and Sasol will each own 50% of the Farrell Creek assets, with Talisman as operator of the partnership.
Closing of the transaction is expected in the first half of 2011.
