Unconventional/complex reservoirs

Imperial Sells Montney, Duvernay Shale Assets to Whitecap Resources for $1.47 Billion

Whitecap enters into the liquids-rich Duvernay play, including 74,000 acres with more than 250 identified drilling locations.

A gas processing facility in the Montney Shale where Whitecap is seeking to expand operations.
Source: ConocoPhillips

Imperial Oil together with ExxonMobil Canada has entered into an agreement to sell the jointly owned XTO Energy Canada to Whitecap Resources for $1.47 billion in cash. The deal includes 567,000 net acres in the Montney shale, 72,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta. Net production from these assets is about 140 MMcf/D of natural gas and about 9,000 B/D of crude, condensate, and natural gas liquids (NGLs) .

The sale completes the marketing effort announced in January 2022 and is in line with Imperial’s strategy to focus upstream resources on key oil sands assets and deliver long-term value to shareholders.

The deal is expected to close before the end of the third quarter 2022, subject to regulatory approvals.

Imperial, 70% owned by ExxonMobil, started taking offers on its holdings in the Canadian acreage in early 2022. At that time, Imperial said that the exercise was part of ExxonMobil’s ongoing evaluation of its unconventional position and consistent with its strategy to focus upstream resources on key oil sands assets.

According to Whitecap, the acquired assets are currently producing approximately 32,000 BOE/D (30% condensate and NGLs). The acreage contains more than 20 years of tier one drilling locations and an operated 165 MMcf/D shallow-cut gas processing facility servicing owned and third-party Duvernay volumes.

The acquired reserves are estimated at 226 million BOE proven and upward of 400 million BOE proven plus probable.

The acquisition consolidates working interests at Kakwa, Alberta, from an average of 66 to 100% on around 22,000 gross acres. With this deal, Whitecap enters into the liquids-rich Duvernay play at Kaybob including 74,000 acres with more than 250 identified drilling locations.

Whitecap expects production on the acquired properties to grow to 50,000 to 60,000 BOE/D over the next 3 to 5 years.

Whitecap will fund the deal through existing credit facilities and a new committed 4-year term loan. On closing, Whitecap is expected to have net debt of $1.63 billion on total credit capacity of $2.4 billion.

The western Canada shales have been sought-after assets over the past few years. ConocoPhillips, an active operator in the region, added to its holdings in 2020 via the $375-million acquisition of Kelt Exploration. The deal added around 15,000 B/D of oil production to its output.

Just last year, Arc Resources and Seven Generations Energy, a pair of Montney-weighted companies, merged in a deal valued at $2.2 billion. At the time of the deal, the merged entity held a combined 1.2 million net acres in the play.