U.S. energy giant ExxonMobil is looking to add more lucrative natural gas liquids to its portfolio through a proposed $3.1-billion acquisition of Calgary-based Celtic Exploration Ltd.
The deal, announced Wednesday, would see Exxon's Canadian affiliate gain control of about 221,000 hectares in the Montney formation in B.C. and Alberta and 42,000 hectares in the emerging Duvernay shale in Alberta.
"This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio," said Andrew Barry, president of ExxonMobil Canada.
Celtic says the deal will be subject to review under the Investment Canada Act. That's the same legislation under which Industry Minister Christian Paradis is reviewing China National Offshore Oil Co.'s $15.1-billion offer for Calgary-based oil and gas producer Nexen Inc. to determine whether the deal is of net benefit to Canada. The prospect of a Chinese state-owned entity controlling a Canadian resource company has become a major political flashpoint in recent weeks. Last week, Ottawa extended its review of the Nexen takeover by a month.
ExxonMobil has been active in Canada since the 1940s. It owns 69 per cent of Calgary-based Imperial Oil Ltd., a major oilsands producer, refiner and fuel retailer.
The Texas-based energy heavyweight made a big move into natural gas in late 2009 when it announced an eye-popping $41-billion acquisition of U.S. natural gas giant XTO.
"We've been doing quite a bit of growth since our agreement with XTO here in the United States several years ago. What we got with XTO was sort of the expertise and the technology," said ExxonMobil spokesman Alan Jeffers in an interview from Texas.
In recent years, ExxonMobil has snapped up acreage in other shale formations throughout North America, such as the Bakken in North Dakota and the Marcellus in the northeastern United States, Jeffers added.
The properties that ExxonMobil is acquiring from Celtic produce 72 million cubic feet per day of natural gas and 4,000 barrels per day of crude, condensate and natural gas liquids.
In the face of prolonged low natural gas prices, producers have been targeting zones rich in natural gas liquids - an important feedstock to the petrochemical and plastics industries - that more closely track oil prices than those of ordinary dry gas.
"We've said very consistently that our long-term view of natural gas is it's the fastest-growing fuel source," said Jeffers. "We've recently, just because of the premium on liquids, been focused on liquids, but we're still producing gas, we're still acquiring gas and liquids resources for development."
Several firms have also been looking to ship the gas to Asia in a more easily transportable liquid state.
ExxonMobil and Imperial are in the early stages of planning such a project.
Celtic CEO David Wilson said his company wasn't actively looking to sell, but was approached by Exxon.
He declined to say whether any other suitors were in the running.
He said Celtic was tackling an enormous resource base on its own.
"You could spend $1 billion a year for the next 30 years. A lot of capital needs to go into those properties," Wilson said.
