Chevron Corp. (NYSE:CVX) reports that its indirect, wholly owned subsidiary, Chevron Canada Ltd., has reached agreement to sell a 30% interest in its Duvernay shale play in Canada to Kuwait Foreign Petroleum Exploration Co.'s wholly owned subsidiary, KUFPEC Canada Inc., for $1.5 billion.
The total purchase price includes cash paid at closing, as well as a carry of a portion of Chevron Canada's share of the joint venture's future capital costs. The Duvernay shale play is located in west-central Alberta.
The agreement creates a partnership for appraisal and development of liquids-rich shale resources in 330,000 net acres in the Kaybob area of the Duvernay.
Following the closing of the transaction, which is expected to close in November, Chevron Canada will hold a 70% interest in the joint venture Duvernay acreage and will remain the operator.
Chevron Canada has drilled 16 wells since beginning its exploration program, with initial well production rates of up to 7.5 million cubic feet of natural gas and 1,300 barrels of condensate per day. A pad drilling program recently began that is intended to further evaluate and optimize reservoir performance, as well as to reduce execution costs and cycle time.