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ExxonMobil, Qatar Petroleum Sign MOU on North American Unconventionals

ExxonMobil Corp. and Qatar Petroleum International (QPI) on Monday signed a memorandum of understanding (MOU) to jointly evaluate unconventional natural gas and associated liquids resources in North America, as well as global opportunities for liquefied natural gas (LNG).

The MOU was announced at a conference in Berlin, Germany.

QPI and ExxonMobil partner in LNG ventures in Qatar, the United States, the UK and in Italy. In the United States, they are seeking an export permit for the Golden Pass LNG terminal at Sabine Pass, TX.

The MOU "signifies our joint interest in expanding our partnership both domestically and internationally in order to address the growing and evolving role of natural gas, which continues to play a larger role in meeting the needs of an increasing population," said QPI CEO Nasser Al-Jaidah.

No transactions have been set yet, he said.

Also on Monday partners Centrica and QPI paid Suncor Energy US$986 million for natural gas-weighted properties in the Western Canadian Sedimentary Basin. The estimated one million-acre leasehold is expected to produce about 250 MMcfe/d this year.

The Suncor transaction gives QPI leverage in North America's gas markets. A decade ago QPI had been laying plans to export LNG to North America; now it is working on plans to assist in its export.

"This investment in the Western Canadian Sedimentary Basin is a significant step in the development of QPI's global upstream business," said Al-Jaidah. "We look forward to continuing to advance QPI's overall North American energy business through the memorandum of understanding and other initiatives."

The properties being bought from Suncor have proved and probable reserves of about 978 Bcfe, 90% weighted to gas, and are in Alberta (AB), northeast British Columbia (BC) and southern Saskatchewan. The acquired assets would be 60% owned by Centrica and 40% owned by QPI; Centrica would be the operator.

The purchase marked the first made under an agreement Centrica signed with Qatar officials in December 2011 to join forces to grow internationally.

Not included in the sale are most of Suncor's unconventional natural gas properties in BC's Montney Shale and the Wilson Creek, AB unconventional oil assets. The deal is equivalent to 78% of Suncor's 1.13 Tcf of natural gas reserves, but is only a fraction of Suncor's overall proved and probable energy resources, most of which are crude oil.

Monday's "announcement is further proof of our commitment to capital discipline and aligning assets with strategic objectives," said Suncor CEO Steve Williams. "We will continuously review and refine our portfolio of assets to ensure we are investing in projects that deliver profitable growth and strong returns for our shareholders."

The sale, expected to close later this year, is subject to regulatory approval, including under the Investment Canada Act and Competition Act. Suncor plans to adjust its North American onshore production guidance once the transaction is completed.

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