State smarts

28 June 2012 By Christopher Swann

By paying a 77 pct premium for Canada’s Progress, the Malaysian state firm would seem to confirm clichés about dumb government money. But the world’s third-largest liquefied gas exporter is taking a longer view. Gas-hungry Asia can pay top dollar for Canada’s exported energy.

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Petronas, Malaysia’s state oil company, on June 28 agreed to buy Canada’s Progress Energy Resources for C$4.8 billion ($4.7 billion).

The deal comes a year after Petronas formed a joint venture with Progress to develop a portion of its Montney shale assets in the foothills of northeastern British Columbia. Calgary-based Progress owns shale fields in the provinces of British Columbia and Alberta.

The two companies, which have been studying the feasibility of a new liquefied natural gas terminal on Canada’s West Coast as a way to secure higher prices for shale gas, also outlined plans to build a terminal in Prince Rupert, British Columbia.

Petronas said its Canadian subsidiary, Petronas Carigali Canada, would pay C$20.45 for each share of the Calgary-based gas producer - a 77 percent premium to Progress Energy’s closing price. Including debt, the deal is valued at about C$5.5 billion ($5.36 billion), the companies said.

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