KUALA LUMPUR (Nikkei Markets) -- Progress Energy, a Canadian unit of Malaysia's national oil company Petroliam Nasional, said Thursday it will focus on future investments in North Montney in British Columbia following its plan to sell Deep Basin assets.
Progress Energy has hired BMO Capital Markets to advice on the proposed sale. Progress Energy owns oil and natural gas assets in Alberta's Deep Basin and unconventional natural gas assets in British Columbia's North Montney.
"Progress determined that selling its Deep Basin assets would allow the company to focus future investment on its vast resource in the North Montney in British Columbia, which represents significant growth opportunity for the company," it said.
The move comes after parent Petroliam Nasional, also known as Petronas, delayed or scrapped some projects and laid off more than 2,000 staff since 2016 as the company grappled with plunging profits following a decline in global oil prices. Petronas is also in the midst of cutting capital expenditure by 50 billion ringgit through four years.
In July, Petronas announced that it has scrapped a proposed $29 billion Pacific NorthWest liquefied natural gas project in western Canada due to weak global prices. Still, the company said it would develop natural gas assets in Canada and continue to explore all options going ahead.
The data room for the Deep Basin assets sale will open on October 10 and bids are expected to come in early November, according to an information memorandum of BMO Capital Markets. Technical presentation for the sale will begin October 16, the memo said.
"Progress regularly reviews its assets to ensure alignment with the company's strategy," it said, anticipating that assets will be of interest to companies who specialize in this resource type.
The assets contain proven-and-probable reserves in Alberta, Canada totalling 32.57 million barrels of oil equivalent worth about $241.36 million based on a 10% discount to its net present value, the memo said. The Deep Basin has a stable production rate of about 5,500 barrels of oil a day, it added.
Petronas, the Southeast Asian nation's sole Fortune 500 Company, acquired Progress Energy for 5.5 billion Canadian dollars in 2012 when oil prices were averaging $111 a barrel. Its project plan included a pipeline network stretching some 900 km and a liquefied natural gas terminal aimed at exports to Asia.
Petronas has pledged to channel some of the savings into domestic projects such as the Refinery and Petrochemicals Integrated Development, or RAPID project. The $27 billion project will produce a host of refined products including specialty chemicals and higher-grade gasoline and diesel. Earlier this week, Petronas Chemicals Group, the petrochemical arm of Petronas said it plans to sell half of its stake in its polymers unit in RAPID project to the Saudi Arabian Oil Company for $0.9 billion in cash.
Brent, the global benchmark for crude oil, was trading around $56 a barrel on Thursday.