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Exxon deal for Celtic Exploration heats up Canada shale play

SAN FRANCISCO -- Exxon is once again indulging its appetite for so called unconventional energy plays in North America, this time agreeing to fork over $2.9 billion for Calgary based Celtic Exploration. What Exxon gets is 545,000 of undeveloped, mostly natural gas acreage on Montney field and another 104,000 acres on Duvernay, two vast shale formations that straddle the British Columbia Alberta border.

Exxon' s Celtic deal is its biggest acquisition since XTO Energy., which it bought in 2010 for $31 billion, a move that gave it access to the industry' s latest fracking and horizontal drilling technology. Since then, Exxon has been on a tear, snapping up over 1.4 million acres of unconventional oil and gas assets in the United States and Canada.

Given Exxon' s push into western Canada, its generous premium for Celtic, and its estimated $18 billion in cash, today' s deal is understandably generating a bit of a buzz in Calgary. Who' s next?

If Exxon decides to add to its Montney holdings, acreage that could be on its radar includes stakes held by Encana, Royal Dutch Shell, Murphy Oil, Talisman Energy and Canadian Natural Resources.

Even if Exxon is done for the time being with expansion into western Canada' s shale fields, having such a big, deep pocketed producer in the neighborhood bodes well for developing the region' s "unconventional" resources, which are fast becoming one of the hottest energy plays in North America.

Dow Jones Newswires



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