Calgary-based Talisman Energy Inc. announced a deal Tuesday with South African Chemical producer Sasol on a shale natural gas project in northeastern British Columbia.

Sasol has agreed to pay $1.05 billion for half of Talisman's Cypress A properties.

The deal represented an expansion of their relationship, after Sasol in December paid the same amount for a half-stake in Talisman's nearby Farrell Creek assets.

Cypress A and Farrell Creek are both part of the Montney shale formation, which stretches through northeastern B.C. and northwestern Alberta.

Both assets will be operated by Talisman.

Talisman 3-month chart

"This transaction allows Talisman and Sasol to unlock additional value in the world-class Montney shale play and potentially accelerate development of the resources in the area," said Talisman CEO John Manzoni.

The two companies are also examining the feasibility of building a plant in western Canada that would convert natural gas to liquids (GTL) for possible export to countries outside North America.

Sasol is leading this study with a design decision likely in the second half of next year.

Talisman would have the option to participate in the project as a 50 per cent partner.

Talisman's deal comes in the wake of other recent agreements between Canadian companies and foreign partners.

Encana recently announced a $5.4-billion joint venture with PetroChina for some of its B.C. and Alberta shale holdings. It also has a deal with Korea's Kogas.

Penn West Exploration is working with Japan's Mitsubishi on its shale holdings.

Talisman shares dropped nine cents to $23.46 on the Toronto Stock Exchange at midday.

With files from The Canadian Press