Natural Resources

Oil and gas tender call brings in $2.3 million (10/03/29)

NB 427

March 29, 2010

FREDERICTON (CNB) - A tender call for oil and natural gas exploration rights has gained the province more than $2.3 million in new revenue and a commitment by an American energy company to spend almost $47 million on exploration over the next three years.

"This tender call was the largest, by land mass, ever issued in New Brunswick and has generated the highest bid ever received for exploration rights," said Natural Resources Minister Wally Stiles. "It is indicative of the strong level of interest in oil and natural gas exploration that we are currently experiencing, and this is encouraging from an economic and energy self-sufficiency perspective."

Three areas were included in the tender call and bids were received on two of them. Southwestern Energy Company of Houston, Texas, was the high bidder on both areas.

As a result, the company has been granted a three-year licence to search on an area covering more than 934,000 hectares that stretches from the Richibucto-Buctouche region across the province to Charlotte County in the southwest. The second section covers more than 84,000 hectares and is located in the southeastern portion of the province.

"Southwestern Energy is extremely pleased to have been awarded the exclusive licences for these areas which we believe to be prospective for oil and gas,'" said Steven L. Mueller, president and chief executive officer of Southwestern Energy. "We look forward to working on this project over the next three years in partnership with the provincial government, the people and communities in New Brunswick."

Southwestern Energy's bid commits the company to spend $46,884,944 in exploration over the next three years. A cash bonus payment to the province of five per cent of the bid amount gained the province $2,344,246. The company will also pay a land rental fee to the province of about $150,000 per year.

"New Brunswick's petroleum and mineral resources continue to make a major contribution to our provincial economy, and this call for tenders will potentially lead to millions of dollars more in the form of royalties and employment," said Stiles. "In 2008, the oil and gas industry invested about $53 million exploring for oil and natural gas, and we foresee that amount growing with this new commitment."

Stiles said exploration and production is creating direct jobs for New Brunswickers and injecting money into the local economy where work is taking place.

"Another benefit of increased exploration and production is to the potential to bring home New Brunswickers who are working in the industry in the western provinces," he said.

Southwestern Energy was one of two companies that submitted bids under an open bidding process. In New Brunswick, a licence to search is granted to the qualifying bidder that tenders the largest work expenditure commitment over the three-year term of the licence.

Southwestern Energy's bid includes a work commitment of $35,430,579.83 on the largest area covered by the tender call and $11,454,336.83 on the smaller area.

Prior to any work being conducted, Southwestern Energy will be required to obtain all necessary approvals from relevant government agencies. The company will take an active approach to inform the people and communities of New Brunswick by voluntarily holding information sessions to advise the public of the work being conducted and by consulting with First Nations as required.

Two companies, Corridor Resources Inc. and Potash Corporation of Saskatchewan Inc., are now producing natural gas from the McCully Field in the Sussex area. There is also a small amount of oil being produced in the Stoney Creek Field near Moncton.

With the addition of Southwestern Energy, there are now 11 companies exploring for oil and natural gas on almost 1.5 million hectares of land in New Brunswick.

10/03/29

MEDIA CONTACTS: Anne Bull Monteith, communications, Department of Natural Resources, 506-453-2614, anne.bullmonteith@gnb.ca; Brad Sylvester, vice-president, Investor Relations, Southwestern Energy Company, 281-618-4897, brad_sylvester@swn.com.

10/03/29