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    Canada's Kelt Sells Montney Assets to Conoco


With the acquisition, ConocoPhillips Nearly Doubles Montney Position

by: Dale Lunan

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Canada's Kelt Sells Montney Assets to Conoco

Canadian intermediate Kelt Exploration said July 22 it had entered into an agreement to sell its Inga properties in the western Canadian Montney shale basin to Houston-based ConocoPhillips for cash proceeds of C$510mn (US$380mn).

ConocoPhillips will also assume certain financial obligations related to the assets in the amount of C$41mn.

In the first five months of this year, the assets – covering some 140,000 net acres in the liquids-rich Montney – produced 38.9mn ft3/day of natural gas and about 7,800 b/d of oil and natural gas liquids.

Kelt said it has a large inventory of future drilling locations in the Montney and elsewhere for which net present value was not being reflected in current corporate valuations. Selling the Inga assets, it said, would represent the monetisation of about 27% of its Montney acreage, bring forward the value of certain other assets and increase its financial strength in an “uncertain economic environment.”

After the transaction, which is expected to close on or about August 21, Kelt will be left with nearly 375,000 net acres in the Montney, making it one of the largest players in the region.

Conoco seeing good early results from Montney

In a separate release, ConocoPhillips said the acquired assets are directly adjacent to its existing Montney position, which will nearly double to 295,000 acres with the transaction. The transaction adds over 1bn barrels of oil equivalent resource at an all-in cost of supply in the mid-US$30/b range and more than 1,000 high-quality drilling locations.

“We have tracked and analysed this adjacent acreage position for a long time,” ConocoPhillips COO Matt Fox said. “It represents a high-value extension of our existing Montney position, and we’re pleased to capture this opportunity at an attractive cost of supply that meets our criteria for resource additions.”

ConocoPhillips is a relative newcomer to the liquids-rich Montney shale gas basin – it initiated its first production in Q1 2020 and continues to ramp up production from its first multi-well pad.

“Our current Montney development is performing according to our projections and plans,” Fox said. “We’re still in the process of bringing our initial wells online, and early results are encouraging.”