Direct Energy, a North American subsidiary of Centrica, has reached an agreement with Suncor Energy to acquire its natural gas assets in the Wildcat Hills region of Alberta, for £229m.
According to a statement, the acquisition will provide Direct Energy with 241 billion cubic feet equivalent (bcfe) of additional natural gas reserves, an increase of approximately 60 per cent, and an incremental 80 million cubic feet per day (mmcfe) of natural gas production.
This will enable Direct Energy to achieve significant economies of scale and operational efficiencies, resulting in lower unit costs of production and greater returns across its gas portfolio.
The transaction will enable Direct Energy to meet around 35 per cent of its customers’ gas demands through its own production sources, which is said to be in line with Centrica’s strategy to build a more integrated North American business with leading positions in deregulated markets.
The acquired assets are located 35km north west of Calgary, adding to Direct Energy’s existing acreage positions in central and southern Alberta, and consist of 97 producing wells, associated infrastructure and 42,000 net acres of undeveloped land.
Further gas development opportunities may also exist by utilising the unconventional reservoir gas exploitation expertise that Centrica has in Canada and in the UK following the £1.3bn acquisition of Venture in 2009.
The transaction is subject to regulatory approval and pre-emption rights on some of the assets. The deal is expected to close during the fourth quarter of 2010.