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Progress stakeholders approve $6-billion Petronas takeover

Motorists pump petrol at a Petronas station in Putrajaya outside Kuala Lumpur.


Stakeholders in natural gas producer Progress Energy Resources Corp. have overwhelmingly approved a $6-billion takeover of the company by a subsidiary of Malaysia's state-owned Petronas.

Calgary-based Progress said more than 99 per cent of both stockholders and debenture holders approved the arrangement in voting.

Meanwhile, the company said the sale to Petronas Carigali Canada Ltd. is not being opposed by the federal government under the Competition Act.

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Petronas has received a "no action" letter from the commissioner of competition confirming the commissioner had reviewed the arrangement and concluded that "she does not, at this time, intend to make an application for a remedial order under section 92 of the act," Progress said.

Investment Canada must still approve the deal, based on a finding that it represents a net benefit to Canada.

Under the deal, Petronas is paying $22 per share for all outstanding shares in Progress, which is focused on natural gas exploration, development and production in northeast British Columbia and northwest Alberta.

Petronas originally bid $20.45 per share in June, but sweetened it offer a month later.

Petronas has said the deal would strengthen its position as a supplier of liquefied natural gas – gas that has been chilled into a liquid state, enabling it to be shipped overseas by tanker.

Petronas and Progress were partners in British Columbia's Montney region before the acquisition was announced and the two had been considering building a liquefied natural gas terminal on the West Coast.

The companies announced along with the takeover deal that they had selected Prince Rupert, B.C., for the location of the proposed LNG terminal.

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Natural gas prices in North America have been below $3 (U.S.) for a long time now, making it difficult for many producers to turn a profit. But in Asia, where countries are clamouring for supplies to feed their booming economies, prices can be three to five times higher.

Progress and Petronas have not been the only ones exploring the option of shipping LNG off Canada's West Coast.

In May, Royal Dutch Shell PLC and three Asian partners announced plans to build a liquefied natural gas export terminal in Kitimat, B.C.

The Anglo-Dutch energy giant will have a 40 per cent stake in the project, called LNG Canada. PetroChina, Mitsubishi Corp. and Korea Gas Corp. will each hold a 20-per-cent interest.

Encana Corp. and U.S. partners Apache Corp. and EOG Resources plan to start up their Kitimat LNG plant in 2015, with an initial capacity of five million tonnes a year.

Another proposal called BC LNG, owned by the Haisla First Nation and Houston-based LNG Partners, expects its first shipment in 2014.

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