Kuwait Foreign Petroleum Exploration Company (KUFPEC) said here on Monday that its wholly-owned subsidiary KUFPEC Canada Inc. has reached an agreement to create a strategic partnership with Chevron Canada Limited, a wholly-owned subsidiary of Chevron Corporation, to develop liquids-rich shale resources in the Duvernay basin in Canada.
This strategic partnership will be made through acquiring a 30 percent interest in Chevron's entire position for USD 1.5 billion, some of which will be paid over time, the KUFPEC, a Kuwait Petroleum Corporation (KPC) subsidiary, said in a statement.
The joint venture position consists of approximately 330,000 net acres of Chevron-operated leases in the emerging liquids-rich Kaybob area of the Duvernay play in Alberta.
The extensive exploration program completed over the last 5 years has produced encouraging well results. These wells and a growing number of others in the Kaybob area with a high liquid content are comparable to the best in the US Eagle Ford shale play, it said.
As of October 2014, 16 wells have been drilled, and 13 wells completed using multi-stage hydraulic fracturing. 10 wells are currently tied into the extensive local pipeline and processing infrastructure, with initial production rates up to 7.5 million cubic feet of natural gas per day and 1,300 barrels of condensate per day, it added.
Chevron has now commenced a full appraisal drilling program which will be conducted between 2014 and 2017. Thereafter, a rolling development is planned, which will see the position developed in phases. KUFPEC estimates that its share of production will contribute materially to its strategic goal of 200,000 barrels of oil equivalent per day (boepd), according to the statement.
Commenting on the transaction, KUFPEC Chief Executive Officer Shaikh Nawaf Saud Nasir Al-Sabah said: "KUFPEC is delivering on its strategic targets. This project will provide diversified, material, long-life reserves, production and upside in a low-risk business environment, with strong and stable cash flows for decades to come. We are securing the future of the company." This transaction, which will be KUFPEC's first investment in North America, provides KUFPEC with the opportunity to develop shale technology with a world-class shale operator. Transfer of knowledge and skills to the Kuwaiti oil sector will be driven by Kuwaiti staff working with Chevron on the project in Canada, it noted.
The transaction is expected to close during November 2014, the statement pointed out.
KUFPEC is an international petroleum company engaged in the exploration, development, and production of crude oil and natural gas outside the State of Kuwait. It is currently active in 14 countries with 60 projects in the international upstream sector.
KUFPEC continues to work aggressively towards meeting its targets and achieving its strategy plans aiming to increase its production to 200,000 boepd with reserves of 650 million barrels of oil equivalent (MMBOE) by year 2020 while delivering value to the Kuwaiti oil sector.