June 28, 2012 - 7:38 AM
CALGARY - Malaysia's state-owned oil and gas company is offering $5.5 billion to buy Progress Energy Resources Corp. (TSX:PRQ), its partner in an effort to tap Canadian natural gas for export by ship from British Columbia.
Petronas says the Calgary-based company will strengthen its position as a supplier of liquefied natural gas.
Progress Energy chief executive Michael Culbert says his company requires extensive funding to get into international LNG markets and believes the Malaysian company has the necessary resources.
The two companies have already been working together on a project to tap natural gas in northeastern British Columbia and export it in liquefied form — an alternative to shipping gas by pipeline across North America.
The companies announced along with the deal that they've selected Prince Rupert, B.C., for the location of its proposed LNG terminal.
Petronas is offering $20.45 per share for the Calgary-based company.
That's 77 per cent above the price of Progress Energy stock at the end of trading Wednesday on the Toronto Stock Exchange.
The board of Progress is recommending that the company's shareholders accept the Petronas offer, which includes a commitment to keep all of the Canadian company's employees.
"Our relationship with Petronas has been very productive and they have clearly demonstrated a commitment to the local communities, both economically and environmentally," Culbert said in a statement.
"Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today."
News from © The Canadian Press, 2012