It was speculated this takeover was in the making, after Petronas said it was looking to spend $5 billion securing Canadian natural gas supplies in April. At that time Progress President and CEO Michael Culbert said his company was not in any discussion with Petronas beyond their established joint venture.
The two companies have been in business for a while, with Petronas buying into Progress' Montney stakes last year. Recently, Progress cut back its Montney spending by $100 million, in light of poor natural gas prices.
The companies announced today that they've chosen a site at Prince Rupert to conduct feasibility studies on a potential LNG facility. Progress' board says it has approved the offer and has the support of the company’s senior executives and the Canada Pension Plan Investment Board.
"Our relationship with Petronas has been very productive and they have clearly demonstrated a commitment to the local communities, both economically and environmentally," said Culbert in a statement. "Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today."
The deal will be finalized September 25, pending government approval. Paying $4.8 billion in cash for the company, Petronas is offering $20.45 a share, which is 77 per cent more than Progress' closing price yesterday. Operations will remain in Calgary.