Pieridae Energy announced on Thursday that it has bought all of Shell Canada Energy’s midstream and upstream assets in the southern Alberta Foothills.
The $190 million deal was signed earlier in the month. Pieridae says it paid Shell $175 million in cash and will satisfy the balance of the purchase by issuing Shell 15.2 million common shares in the Calgary-based company.
“We are very pleased to close this transformational acquisition as it secures the majority of the natural gas needed, once developed, to supply the first train at our Goldboro LNG facility for at least twenty years,” said Pieridae’s Chief Executive Officer, Alfred Sorensen.
Sorensen added “We will now complete our negotiations with Kellogg Brown & Root Limited for a fixed price contract to construct the Goldboro LNG facility so that we can then proceed to complete the project financing and final equity raise and make a final investment decision.”
The Goldboro LNG facility will be located in Nova Scotia and will provide natural gas, shipped through existing pipelines, to global markets. Pieridae says that with its existing Foothills drilling and development experience, it is now well positioned to leverage the the US $1.5 billion of the government-backed guarantees for conventional gas supply development, which has been approved in principle by the German government.
With the acquisition, Pieridae says it now has an extensive drilling inventory encompassing multiple dry gas and liquids-rich gas reservoirs within the Foothills area.
In the first six months of 2019, the Shell Foothills assets produced approximately 28,634 barrels of oil equivalent per day consisting of approximately 119 million cubic feet per day of natural gas, 5,656 barrels per day of natural gas liquids and 3,163 bbl/d of condensate and light oil.
The company says it has engaged a number of professionals, many of whom are transitioning from Shell, who have strong experience managing the four major processing facilities and associated midstream assets.
As part of the deal, Pieridae also acquired three deep cut, sour gas processing plants – Jumping Pound, Caroline and Waterton – with a combined capacity of approximately 750 MMcf/d , a 14 per cent working interest in the Shantz sulphur forming plant, and approximately 1,700 kilometres of pipelines.
“There are additional opportunities to develop our liquids-rich areas, process the sour gas, strip out the liquids, store the dry gas and then further develop our dry gas resources down the road,” said Sorensen.
In addition to implementation of certain cost savings initiatives, Pieridae says it anticipates taking full advantage of the gas plant processing capabilities and other associated upstream services earlier developed by Shell.
Pieridae says it is committed to working with the communities surrounding its newly acquired assets, including continuing to build trust with the Treaty 7 Nations through respectful engagement and collaboration.