Canada’s Whitecap in Montney/Duvernay deal with Exxon
Canada’s Whitecap Resources said June 28 it had reached agreement with the Canadian affiliates of US major ExxonMobil to acquire XTO Energy Canada for a total cash consideration of C$1.9bn (US$1.48bn) and the assumption of positive working capital on closing, yielding a net purchase price of C$1.7bn.
XTO Energy Canada is jointly owned by ExxonMobil affiliates Imperial and ExxonMobil Canada. The sale, ExxonMobil said June 29, completes a marketing effort announced in January, and is consistent with its “strategy to focus upstream resources on key assets to deliver long-term value to shareholders.”
The acquired assets comprise about 567,000 net acres in the Alberta portion of the Montney, increasing Whitecap’s total Montney holdings by about 500%, and 72,000 net acres in the liquids-rich Duvernay play. Production currently averages about 32,000 barrels of oil equivalent (boe)/day, weighted about 70% to natural gas – some 140mn ft3/day – and improving the gas exposure of the heavily liquids-weighted Whitecap.
“On the back of a positive outlook for North American natural gas driven by increased natural gas exports and a focus on global energy security, the acquisition allows Whitecap to deliver a more balanced portfolio and diversify its commodity revenue streams, gaining significant long-term exposure to North American natural gas prices and development optionality,” Whitecap said.
The acquisition adds about 1,772 drilling locations in the Montney and another 217 in the Kaybob region of the Duvernay, where Whitecap is not yet active. It also includes an operated 165mn ft3/day shallow cut gas processing facility servicing owned and third-party Duvernay volumes.
Forecast 2023 production of 36,000 boe/day from the acquired assets consists of 27% condensate, 9% natural gas liquids and 64% natural gas volumes, increasing Whitecap’s forecast 2023 gas weighting to 35% from a pre-acquisition estimate of 27%.
The acquisition also contains attractive environmental attributes, Whitecap said, including an expected reduction in its corporate carbon intensity driven by the focus on natural gas. It is also expected to mesh well with Whitecap’s existing carbon capture, utilisation and storage (CCUS) projects and expertise.
Whitecap operates the world’s largest CCUS project for enhanced oil recovery (EOR) at Weyburn, Saskatchewan, and Canada’s first commercial CO2 flood for EOR at Joffre, in east central Alberta. Together, the two projects sequester about 2mn mt/yr of CO2.
The acquisition is expected to close before the end of Q3 2022, subject to customary closing conditions, including the receipt of necessary regulatory approvals.