Talisman Energy Inc. has reached a deal to sell its interests in two B.C. natural gas partnerships for $1.5 billion in cash to a subsidiary of Malaysia's state-owned energy company.

If the proposed deal gets the required approvals as expected, it will go towards Talisman's goal of selling a large chunk of its assets and Malaysia's plan to be a major player in Canada's natural gas sector.

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Talisman's deal is with Progress Energy Corp., a formerly independent Calgary-based company that was acquired last year by Malaysia's Petronas after Ottawa issued a landmark policy statement on foreign takeovers. (Bazuki Muhammad/Reuters)

Talisman's deal is with Progress Energy Corp., a formerly independent Calgary-based company that was acquired last year by Malaysia's Petronas after Ottawa issued a landmark policy statement on foreign takeovers.

Progress is buying a total of 127,000 acres, or 51,395 hectares, in the Farrell Creek and Cypress areas that Talisman owns through two partnerships, as well as wells, pipelines and processing plants.

"The location, resource potential and operational synergies of these assets make this an ideal fit that expands our British Columbia resource base and increases our land position to 1.2 million acres," Progress president and CEO Michael Culbert said Friday.

Coast export terminals planned

The Petronas-Progress alliance is a growing force in British Columbia's expanding natural gas sector. Huge gas deposits in northeastern B.C. are expected to feed several export terminals on the west coast, including one that Petronas-Progress plans to build near Prince Rupert.

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Malaysian national oil company Petronas said earlier this year that it expects to spend up to $16 billion to build a liquefied natural gas export facility. The Pacific Northwest LNG project, located on Lelu Island, seen here in March 2013, will liquefy and export natural gas produced in northeastern British Columbia by Progress Energy Canada. (The Canadian Press)

For Talisman, the deal is part of the Calgary-based company's plan to be a more focused and profitable oil and gas producer. The company had said only days earlier that it was close to announcing a major deal.

"The sale of this long-dated position represents a strong return on our Montney investment and brings us closer to achieving the $2-3 billion asset disposition target we set out in March this year," Talisman chief executive Hal Kvisle said Friday.

"Following receipt of applicable regulatory approvals, expected in the first quarter of 2014, we will use the proceeds to pay down debt and strengthen our balance sheet."

The deal with Progress involves the sale of three-quarters of Talisman's land holdings in the Montney shale formation, covering the equivalent of about 500 square kilometres.

Talisman will retain about 48,000 net acres (19,424 hectares) in the Montney shale formation, known as its Groundbirch and Saturn assets.