Athabasca Oil Corp. said Jan. 27 it has formed a strategic joint venture (JV) to develop the Duvernay and Montney in the Kaybob area in Alberta.

The JV, with the Canadian subsidiary of Murphy Oil Corp. (NYSE: MUR), is valued at about net C$475 million (US$337.8 million).

Athabasca is selling a 70% working interest in production, acreage and infrastructure within the Greater Kaybob area. Murphy will assume operatorship of the assets.

The Duvernay assets include about 200,000 acres across the condensate rich and volatile oil windows. December gross production averaged about 6,900 barrel of oil equivalent per day (boe/d), of which 58% was liquids.

Athabasca is also selling a 30% working interest in production, acreage and infrastructure within the Greater Placid area. The Calgary, Alberta company will be operator of the Montney within this area.

The Montney assets include about 60,000 acres. Specifically, Athabasca is establishing a core area at Placid where it has high graded 25,000 acres in the Montney in two separate intervals. December gross production averaged about 900 boe/d, of which 44% was liquids.

Athabasca will retain operatorship of the regional midstream infrastructure in the near term, the release said.

Murphy will pay about C$250 million in cash to Athabasca at closing.

Additional consideration of C$225 million will be in the form of a capital carry in the Duvernay. As a result, Murphy will fund 75% of Athabasca's share of development capital up to a maximum five-year period.

Expected gross capital investment over this time period will be about C$1 billion in the Duvernay with flexibility on spending as commodity prices recover.

At closing, Athabasca forecasts about C$900 million of liquidity with a net cash position of about C$80 million adjusted for debt. The balance sheet will be further bolstered by the C$225 million capital carry in the Duvernay over the mid-term.

The effective date of the transaction is Jan. 1. Closing is expected in late first quarter and is subject to meeting certain conditions and regulatory approvals.