Nexen (NXY) announced that the company has entered into a joint venture to help develop shale assets in the Horn River Basin and other areas in Western Canada.
Nexen will sell a 40% working interest in properties in the Horn River, Cordova and Liard basins to Inpex Corporation for $700 million. The company will received 50% up front and the balance as a drilling carry.
Inpex is a Japanese company and will own its 40% interest through INPEX Gas British Columbia Ltd. This entity is jointly owned by Inpex and JGC Corporation.
Nexen is currently drilling an eighteen well pad in the Horn River Shale and expects these wells to be completed by the fourth quarter of 2012. Gross production is expected to peak at 155 million cubic feet of natural gas per day in early 2013.
Nexen estimates that the Horn River and Cordova basins contain from 4 to 15 Tcf of recoverable contingent resources, while the Liard basin contains from 5 to 23 Tcf of recoverable contingent resources. The company expects to invest $400 million in the Horn River Basin in 2012, or $60 million net to the company after the drilling carry.