LONDON - U.K.-based energy firm Centrica PLC and state-owned Qatar Petroleum International said Monday they have reached an agreement with Suncor Energy Inc. to acquire a vast chunk of its natural gas and crude oil business in Canada for $1 billion Canadian dollars (US$0.986 billion), marking the first investment the two companies have made together since signing an agreement to explore such purchases two years ago.
The deal is in line with Centrica's quest to become a more self-sufficient retail energy provider in North America where it owns the retail business Direct Energy, and marks its first big purchase after announcing two months ago that it would no longer invest in a new U.K. nuclear power plant, thus freeing up cash to invest elsewhere in its business.
For QPI, the international arm of Qatar Petroleum, the deal represents an attempt to diversify its business, which is heavily concentrated in oil and gas production in the Persian Gulf.
The assets will be jointly held by Centrica and QPI in a joint venture that will own be 60% owned by Centrica and 40% owned by QPI, with Centrica acting as the operator. The transaction is expected to close in the third quarter of 2013, subject to regulatory approval.
The assets are located in the Canadian regions of Alberta, northeastern British Columbia and southern Saskatchewan.
The business is forecast to produce about 250 million cubic feet of natural gas equivalent a day in 2013 or 15 million barrels of oil equivalent a year, and has proven and probable reserves of 978 billion cubic feet equivalent of natural gas of which 10% is crude oil.
"Growing our upstream gas operations is an important step to ensuring the company is a solid long-term partner to millions of residential and business customers across North America," said Wes Morningstar, senior vice president at Centrica in Calgary.
Once the transaction is closed, Centrica will be able to cover about 60% of its unregulated daily gas requirements from its growing North American Direct Energy retail energy business.
Nasser Al-Jaidah, chief executive officer of QPI, said the deal "is a significant step in the development of QPI's global upstream business. We look forward to continuing to advance QP's overall North American energy business."
Copyright (c) 2012 Dow Jones & Company, Inc.
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