Thursday, August 26, 2010

Penn West Energy and Mitsubishi Corp. - Horn River Shale Update

By Andrea:

Penn West Energy Trust (PWE) and Mitsubishi Corp. (MC) recently announced that they will enter into a joint venture to develop Penn West's Horn River Shale assets. This will be a 50-50 joint venture and involves 30 million cubic feet per day of natural gas sitting on 550,000 net acres of land. Press release below:

Penn West Energy Trust (PWE) is pleased to announce it has entered into an agreement with a wholly owned subsidiary of Mitsubishi Corporation (MC), forming a 50-50 joint venture to develop Penn West's shale gas assets in the Cordova Embayment area and certain of its conventional gas assets in the Wildboy area of northeastern British Columbia. Penn West will serve as operator of the Assets.

Strategic Rationale
Since 2006, Penn West has accumulated a significant shale gas position in the Cordova Embayment. Penn West's initial drilling results in the area have been promising and we have expanded the size of our land base. It is Penn West's view that the Joint Venture will accelerate the exploration and development of this significant unconventional gas asset. The Joint Venture supports our corporate strategy, which recognizes the importance of maintaining a balanced exploration and development portfolio as we assess and develop the full potential of our diverse resource plays. This Agreement is the foundation for a long-term relationship with MC, who has world-wide experience in major project development.

Cordova Joint Venture
As part of the Agreement, MC will commit approximately $850 million to the Joint Venture. Under the terms of the Agreement, Penn West will sell MC 50% of its working interest in its Wildboy conventional gas assets including current production of approximately 30 million cubic feet per day of natural gas, 550,000 gross acres of land including approximately 120,000 acres targeting shale gas in the Cordova Embayment, the Wildboy gas processing facility, a sales gas pipeline connecting the area to the TransCanada gathering system in Alberta, and associated infrastructure.

At closing, MC will pay Penn West approximately $250 million in consideration for the existing assets and additionally will fund approximately $600 million of the first $800 million of exploration and development capital expenditures in the Joint Venture.

The closing of the transaction and the formation of the Joint Venture is expected to occur on or about September 23, 2010, subject to MC's final board approval at a meeting to be held in September 2010, the receipt of regulatory approvals and the satisfaction of customary closing conditions.

For more shale updates, visit:

For more stock updates, visit: