Houston-based Southwestern Energy Co., which up to now has focused its exploration efforts in the Fayetteville Shale of Arkansas, plans to test new hydrocarbon basins in New Brunswick (NB) after winning bids in a tender call for licenses covering more than 2.5 million acres (1.02 million hectares).

The company’s winning bids in the recent NB auction require it to make investments of about US$47 million over the next three years. The three-year program would be the first venture for Southwestern outside the United States.

“While the Maritimes Basin has been recognized for years, we have identified a large area which we believe is prospective for oil and natural gas,” said CEO Steve Mueller. “There is a significant amount of data yet to be collected in order to confirm its economic merit, but if our testing yields positive results, we expect that our activity in the area could increase substantially over the next several years. This could be the beginning of an exciting new chapter in our company’s history.”

NB Natural Resources Minister Wally Stiles said the province’s tender call “was the largest ever issued in New Brunswick by land mass and has generated the highest bid ever received for exploration rights in our province. It is indicative of the strong level of interest in oil and natural gas exploration that we are currently experiencing in our province, and we are pleased to welcome Southwestern Energy to our province.”

Analysts with Tudor, Pickering, Holt & Co. Inc. (TPH) last week said the transaction “isn’t a stock mover but the valuation should be,” as Southwestern ranks second to Chesapeake Energy Corp. among “gassy large cap” producers. The TPH team noted that Southwestern is pricing long-term natural gas at $5.60/Mcf. Southwestern joins Apache Corp. and EOG Resources Inc. “who are/have attempted exploration in the basin.”

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