Chevron Corporation’s indirect, wholly-owned subsidiary, Chevron Canada, has reached agreement to sell a 30% interest in its Duvernay shale play to Kuwait Foreign Petroleum Exploration Company’s wholly-owned subsidiary, KUFPEC Canada, for USD 1.5B. The total purchase price includes cash paid at closing as well as a carry of a portion of Chevron Canada’s share of the joint venture’s future capital costs.
The Duvernay is located in west-central Alberta, and is believed to be among the most promising shale opportunities in North America. The agreement creates a partnership for appraisal and development of liquids-rich shale resources in approximately 330,000 net acres in the Kaybob area of the Duvernay. Following the closing of the transaction, Chevron Canada will hold a 70% interest in the joint venture Duvernay acreage and will remain the operator. The transaction is expected to close in November 2014.
Chevron Canada has drilled 16 wells since beginning its exploration program, with initial well production rates of up to 7.5MCF of natural gas and 1,300 barrels of condensate per day. A pad drilling program, which is intended to further evaluate and optimise reservoir performance as well as reduce execution costs and cycle time, commenced recently.
