ST. JOHN'S, N.L. - Newfoundland and Labrador has reached a tentative agreement with Husky Energy for a five per cent ownership share in an expanded area of the White Rose offshore oil project, Premier Danny Williams said Wednesday.
The agreement in principle marks the second time the province has gained equity ownership in the offshore oil sector.
Last month, the province reached a tentative agreement to develop the Hebron offshore oilfield with a 4.9 per cent equity share.
Under the deal, Newfoundland will pay roughly $44 million plus a $3.50 processing fee per barrel of oil for the equity stake as well as a so-called super royalty that would kick in after development costs of the White Rose extension are recovered.
Williams made the announcement while delivering a speech to the St. John's Board of Trade, hours after reaching an agreement in principle with Husky CEO John Lau.
"This is indeed, ladies and gentlemen, a significant development for the province, especially ... when you see oil prices closing at about $78 US (a barrel),'' Williams said.
Husky estimates the total reserves for the White Rose extension at an additional 214 million barrels, Williams said, adding that the province could earn $6 billion from its equity in the extension.
Last week, the Newfoundland government allowed Calgary-based Husky to produce 24 million more barrels of oil from the extension as part of a larger expansion the company has planned.
Husky Energy holds a 72.5 per cent working interest in White Rose, with Petro-Canada holding the remaining 27.5 per cent.
