Talisman, Sasol in second B.C. deal

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.

"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.