Asian Governments See Canada's Natural Gas Resources as Very Cheap. Petronas to Pay 77% Premium for Progress.

Petronas Energy of Malaysia is going to pay a 77% premium, or $5.5 Billion for Canada's Progress Energy. Foreign companies like Petronas are racing to secure Canadian natural gas properties, and build a Liquefied Natural Gas facility on the country's west coast in British Columbia.

One the Progress' key owners is the Canada Pension Plan, and they have already signed-on to the deal, which indicates that most others will follow, and that it is doubtful that this deal will be held-up by the Federal Government.

Officials for Petronas state that:

"The proposed transaction will combine Petronas’ significant global expertise and leadership in developing LNG infrastructure with Progress' extensive experience in unconventional resource development to build a strong and growing world class energy business based in Canada."

Undoubtedly, the purchase is a boon for shareholders of Progress, and most of them will side with the deal and choose to tender their shares. 

What does this announcement mean for the Intelligent Investor? In the eyes of energy hungry Asian government's, Canada's natural gas supplies look abundant and severely undervalued at present levels. At about $20 per share, and with a fat dividend yield of almost 4% per annum, Canada's EnCana Corp. is also looking like a deep value play (TSE: ECA) (NYSE: ECA).

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