PETRONAS to Acquire Progress Energy

    




 Companies agree to $5.5 Billion Acquisition 

 CALGARY, June 28, 2012 /CNW/ - PETRONAS, the Malaysian national oil and  gas company, and Progress Energy Resources Corp. (Progress)   today announced that PETRONAS' Canadian subsidiary, PETRONAS Carigali  Canada Ltd (PETRONAS Canada), and Progress have entered into an  agreement for the purchase by PETRONAS Canada of all of Progress'  outstanding common shares at a cash price of C$20.45 per share.  Including the amount to be paid for Progress' outstanding convertible  debentures, the transaction is valued at approximately C$5.5 billion.  The transaction is to be completed by way of an arrangement under the  Business Corporations Act (Alberta). 

 Highlights 




        --  Cash price of C$20.45 per Progress share
        --  Transaction has received the unanimous approval of Progress'
            Board of Directors
        --  PETRONAS brings substantial investments in LNG infrastructure
            and access to world markets through established channels
        --  Canadian operations to remain based in Calgary for upstream
            with commercial office in Vancouver for LNG




 The transaction price represents a premium of 77% over Progress' closing  share price on the Toronto Stock Exchange of C$11.55 on June 27, 2012,  and 83% over Progress' 30-trading day volume weighted average trading  price of C$11.18 per share ending on June 27, 2012. 

 The acquisition of Progress is consistent with PETRONAS' strategy of  strengthening its position as one of the global leaders in Liquefied  Natural Gas (LNG). The transaction follows a joint venture established  between the two companies last year to develop a portion of Progress'  Montney shale assets in the Foothills of northeast British Columbia  which reflected the desire by both parties to explore additional  opportunities to develop LNG export capacity on the west coast of  British Columbia. 

 Net Benefit to Canada "The proposed transaction will combine PETRONAS' significant global  expertise and leadership in developing LNG infrastructure with  Progress' extensive experience in unconventional resource development  to build a strong and growing world class energy business based in  Canada," said Datuk Anuar Ahmad, Executive Vice President of the gas  and power business for PETRONAS. "This development will generate  substantial economic benefits for the provinces and local communities,  as PETRONAS' access to capital will help to bring Canada's abundant and  clean-burning natural gas resources to global markets, leveraging our  well-established and extensive network of customers worldwide." 

 "We are pleased to announce that the joint venture has selected a site  in Prince Rupert, British Columbia for our planned LNG export facility  on the west coast of British Columbia. A Feasibility Assessment  Agreement has been signed with the Prince Rupert Port Authority (PRPA)  giving our project the exclusive right to conduct further feasibility  and investigative studies on Lelu Island. We have begun engagement with  relevant authorities and First Nations, as well as community groups,  and we look forward to working closely with them in the course of our  site investigation. A key consideration in our investigation will be  understanding the environmental and social impacts as well as  ascertaining technical feasibility." 

 Following a successful transaction, PETRONAS plans to combine its  Canadian business with that of Progress and intends to retain all the  employees of Progress to capitalize on the experience and depth of the  Progress team. PETRONAS plans to work in partnership with Progress'  employees in realizing the joint vision of both companies to grow the  business with ongoing investment in its Canadian operations. 

 In addition to its desire to grow its Canadian operations, PETRONAS is  committed to fostering strong community relations. PETRONAS intends to  continue with and build upon Progress' existing community and  charitable commitments. 

 "Our relationship with PETRONAS has been very productive and they have  clearly demonstrated a commitment to the local communities, both  economically and environmentally," said Michael Culbert, President and  CEO of Progress Energy. "Our asset base requires extensive capital to  develop its large potential and ultimately access international LNG  markets. 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." 

 Information on the Transaction Following an extensive review and analysis of the proposed transaction  and consideration of other available alternatives, the Board of  Directors of Progress has unanimously determined that the arrangement  is in the best interests of Progress and is fair to Progress'  shareholders and debenture holders. The Board of Progress has  unanimously approved the transaction and determined to recommend that  Progress' shareholders and debenture holders vote in favour of the  arrangement.  Each of the senior officers and directors of Progress,  and Canada Pension Plan Investment Board, representing in aggregate  approximately 25% of the outstanding common shares (on a fully diluted  basis), have entered into support agreements with PETRONAS Canada  supporting the transaction, pursuant to which they have agreed to vote  in favour of the approval of the arrangement. The Board of Directors of  Progress has received from its financial advisor, and from an  independent advisor, opinions that, as of the date of the agreement,  the consideration proposed to be paid to Progress' shareholders and  debenture holders is fair from a financial point of view. 

 In accordance with the terms of the arrangement agreement, the Board of  Progress has determined that no Progress common shares will be made  available for issuance from treasury nor will additional Progress  common shares be purchased on the market in connection with Progress'  dividend reinvestment plan effective immediately.  As a result, no  Progress common shares will be available under the dividend  reinvestment plan in connection with the dividend announced on May 1,  2012, which will be paid on July 16, 2012 to shareholders of record on  June 30, 2012 and will be the last dividend paid prior to the closing  of the transaction. 

 The agreement between PETRONAS Canada and Progress provides for, among  other things, a non-solicitation covenant on the part of Progress,  subject to "fiduciary out" provisions that entitle Progress to consider  and accept a superior proposal and a right in favour of PETRONAS Canada  to match any superior proposal. If the arrangement agreement is  terminated in certain circumstances, including if Progress enters into  an agreement with respect to a superior proposal or if the Board of  Directors withdraws or modifies its recommendation with respect to the  proposed transaction, PETRONAS is entitled to a termination payment of  C$150 million. 

 Completion of the transaction is subject to customary closing  conditions, including receipt of court, shareholder and regulatory  approvals, including under the Investment Canada Act and Competition  Act. Progress' shareholders will be asked to vote on the transaction at  a special shareholders meeting and the completion of the transaction  will require the approval of two-thirds of the votes cast by  shareholders in person or by proxy at the meeting. 

 Under the proposed transaction, the holders of the two series of  Progress convertible subordinated debentures outstanding will receive a  cash amount, including the make whole payments provided under the terms  of the debentures, equal to the amount that they would otherwise  receive upon conversion of the debentures following the completion of  the arrangement if they were not acquired under the arrangement, plus  accrued interest to the closing date. Based on an estimated closing  date of September 25, 2012, the cash consideration for each C$1,000  principal amount, excluding accrued interest, would be approximately  C$1,202 for the 5.25% debentures maturing in 2014 and C$1,162 for the  5.75% debentures maturing in 2016. 

 The holders of the two series of debentures will be asked to vote on the  arrangement, each as separate classes. However, completion of the  arrangement is not conditional on such approvals. If the requisite  debenture holder approval is not obtained, the applicable series of  debentures will be excluded from the arrangement and will remain  outstanding following completion of the arrangement. 

 An information circular regarding the arrangement is expected to be  mailed to security holders in late July for a special meeting of the  holders of common shares and debentures to take place in late August,  with closing expected to occur in late September. 

 A copy of the arrangement agreement and the information circular and  related documents will be filed with Canadian securities regulators and  will be available at www.sedar.com. 

 PETRONAS' exclusive financial advisor for the transaction is Bank of  America Merrill Lynch.  Norton Rose Canada LLP is acting as legal  counsel to PETRONAS. 

 BMO Capital Markets is acting as exclusive financial advisor to Progress  for the transaction and has provided the Board of Directors of Progress  with a fairness opinion regarding the proposed transaction for the  shareholders and the holders of each series of debentures.  Scotia  Waterous has also provided the Board of Directors of Progress with an  independent fairness opinion regarding the proposed transaction for the  shareholders and the holders of each series of debentures.  A copy of  each opinion will be included in the information circular to be sent to  Progress securityholders for the special meeting to be called to  consider the arrangement.  Burnet, Duckworth and Palmer LLP is acting  as legal counsel to Progress. 

 About PETRONAS PETRONAS is the national oil and gas company of Malaysia. Incorporated  in 1974 the company, ranked among the most profitable among the Fortune  Global 500 entities, is engaged in the oil, gas and petrochemicals  industries with strategic business assets and interests in more than 30  countries. It is one of the world's leading LNG companies and is fully  involved in every value chain of the LNG business, from liquefaction  and shipping to re-gasification and trading. Apart from its Malaysian  production facility, currently one of the world's largest, PETRONAS  also owns interests in LNG assets in Australia and Egypt. 

 About Progress Energy Progress is a Calgary, Canada-based Energy Company focused on  exploration, development and production of large, unconventional  natural gas resources in northeast British Columbia and northwest  Alberta. Progress holds the largest acreage position in the Montney  shale gas play. Throughout its history, Progress has a solid track  record of growing reserves, production and the underlying value of the  Company for its shareholders. Common shares of Progress are listed on  the Toronto Stock Exchange under the symbol PRQ. 

 Cautionary Statement on Forward-Looking Information This press release contains forward-looking statements and  forward-looking information within the meaning of applicable securities  laws. The use of any of the words "expect", "anticipate", "continue",  "estimate", "objective", "ongoing", "may", "will", "project", "should",  "believe", "plans", "intends" and similar expressions are intended to  identify forward-looking information or statements.  In particular,  forward looking statements in this press release include, but are not  limited to, statements  regarding the expected benefits of the  transaction; considerations in respect of the LNG export facility;  PETRONAS's plans for the Company, including, but not limited to, its  plans for employee retention, following successful completion of the  transaction; the anticipated timing of the meeting of securityholders  and of closing of the transaction; and the estimated consideration  payable to holders of the debentures. 

 The forward-looking statements and information are based on certain key  expectations and assumptions made by Progress and PETRONAS, including,  but not limited to, expectations and assumptions concerning the ability  of Progress and PETRONAS to obtain all required regulatory approvals  for the transaction, including, but not limited to, shareholder, Court  and regulatory approvals. Although Progress and PETRONAS believes that  the expectations and assumptions on which such forward-looking  statements and information are based are reasonable, undue reliance  should not be placed on the forward looking statements and information  because there can be no assurance that they will prove to be correct. 

 Since forward-looking statements and information address future events  and conditions, by their very nature they involve inherent risks and  uncertainties. Actual results could differ materially from those  currently anticipated due to a number of factors and risks. These  include, but are not limited to, the risk that the transaction may not  close when planned or at all or on the terms and conditions set forth  in the arrangement agreement; the failure of Progress and PETRONAS to  obtain the necessary shareholder, Court, regulatory and other third  party approvals required in order to proceed with the transaction;  operational risks in development, exploration and production for  natural gas; delays or changes in plans with respect to exploration or  development projects or capital expenditures; the uncertainty of  reserve and resource estimates; health, safety and environmental risks;  commodity price and exchange rate fluctuations; marketing and  transportation; loss of markets; environmental risks; competition;  incorrect assessment of the value of acquisitions; ability to access  sufficient capital from internal and external sources; and changes in  legislation, including but not limited to tax laws, royalties and  environmental regulations. Readers are cautioned that the foregoing  list of factors is not exhaustive. 

 Management has included the above summary of assumptions and risks  related to forward-looking information provided in this press release  in order to provide securityholders with a more complete perspective on  the proposed transaction and such information may not be appropriate  for other purposes.  Actual results, performance or achievement could  differ materially from those expressed in, or implied by, these  forward-looking statements and, accordingly, no assurance can be given  that any of the events anticipated by the forward-looking statements  will transpire or occur, or if any of them do so, what benefits that  Progress and PETRONAS will derive there from. 

 The forward-looking statements and information contained in this press  release are made as of the date hereof and Progress and PETRONAS  undertakes no obligation to update publicly or revise any  forward-looking statements or information, whether as a result of new  information, future events, or results or otherwise, other than as  required by applicable securities laws. 


   

Progress Energy Resources Corp.


CONTACT:  INVESTORSGreg KistVice President, Marketing, Corporate and Government RelationsProgress Energy Resources [e-mail] MacNicholSenior Vice President, Finance and Chief Financial OfficerProgress Energy Resources [e-mail] BoleyNATIONAL Public [e-mail] 


    

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