Chevron has agreed to sell a 30% stake in its Duvernay shale play to Kuwait Foreign Petroleum Exploration Company (KUFPEC) for $1.5bn.
The deal was signed by Chevron Canada and KUFPEC Canada, and creates a partnership for the development of liquids-rich shale resources in the Duvernay basin.
The purchase price includes cash paid upon closing and a carry of a part of Chevron Canada’s share of the joint venture’s (JV) future capital costs.
The JV features around 330,000 net acres of leases, operated by Chevron, in the Kaybob area of the Duvernay play in Alberta.
Chevron Canada will operate the JV Duvernay acreage with a 70% stake.
Chevron senior vice-president of upstream Jay Johnson said: "This sale demonstrates our focus on strategically managing our portfolio to maximise the value of our global upstream businesses and is consistent with our partnership strategy.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData"The transaction provides us an expanded relationship with a valued partner. It also recognises the outstanding asset base we have assembled."
The transaction is expected to be complete in November 2014.
Chevron North America Exploration and Production Company president Jeff Shellebarger said: "We remain encouraged by the early results of our exploration program and view the Kaybob Duvernay as an exciting growth opportunity for the company."
Chevron Canada has drilled 16 wells since the start of its exploration programme, with initial well production rates of up to 7.5 million cubic feet of natural gas and 1,300 barrels of condensate per day.
The company has also started a full appraisal drilling programme, which will be undertaken between 2014 and 2017.
Plans also include conducting a rolling development programme, which will see the position developed in phases.
KUFPEC expects that its share of production will contribute materially to its goal of 200,000boepd.
Image: The Kaybob Duvernay play is located about 200km north-west of Edmonton. Photo: courtesy of Chevron Corporation.
