CALGARY—Chevron Canada Ltd. has signed a deal to sell a 30 per cent stake in its Duvernay shale play to Kuwait Foreign Petroleum Exploration Co. for US$1.5 billion.
The company’s U.S. parent said the deal creates a partnership for the appraisal and development of the project in the Kaybob area of the Duvernay, about 200 kilometres northwest of Edmonton.
“This sale demonstrates our focus on strategically managing our portfolio to maximize the value of our global upstream businesses and is consistent with our partnership strategy,” said Jay Johnson, Chevron Corp.’s senior vice-president, upstream.
“The transaction provides us an expanded relationship with a valued partner. It also recognizes the outstanding asset base we have assembled.”
The investment is the first in North America by Kuwait Foreign Petroleum Exploration, a subsidiary of Kuwait Petroleum Corp.
“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,” KUFPEC chief executive Shaikh Nawaf Saud Nasir Al-Sabah said in a statement.
Chevron Canada will hold a 70 per cent interest in the joint venture and will remain the operator of the project.
The price includes the amount paid at closing as well as a portion of Chevron Canada’s share of the joint venture’s future capital costs.
The deal is expected to close in November.
Chevron Canada has drilled 16 wells since it started its exploration program in the region.