Direct Energy agrees to acquire a package of liquids-rich natural gas assets located in west central Alberta from Encana Corporation
Centrica plc’s North American subsidiary, Direct Energy, has agreed to acquire a package of liquids-rich natural gas assets located in west central Alberta (the Carrot Creek Assets) from Encana Corporation (Encana) for C$58m (£37m) in cash. As part of the transaction Encana will also receive from Direct Energy a number of gas producing wells and related infrastructure in southern Alberta.
The Carrot Creek Assets include 80 producing wells, associated infrastructure and a gas processing plant with natural gas liquid extraction capability. The transaction will provide Direct Energy with a net additional 25.6 billion cubic feet equivalent (Bcfe) of proven and probable reserves, an increase of approximately 4%, split 42% gas and 58% liquids. The resulting net increase in production will be 6.2 million cubic feet equivalent per day (MMcfe/day).
Carrot Creek is located 160 km west of Edmonton and lies adjacent to the successful Cardium oil development in which Direct Energy is already involved. This acquisition represents a unique opportunity to invest in a liquids-rich, multi-zone area that has significant development potential, deploying the same horizontal drilling techniques currently utilised by Direct Energy.
Chris Weston, President and CEO of Direct Energy said: “The acquisition of the Carrot Creek Assets is an attractive opportunity to grow our North American upstream gas business while exiting some non-core positions in southern Alberta. This represents both a valuable addition to our existing reserves and offers the potential to develop significant resources.”
This acquisition marks the latest stage in the growth of Direct Energy’s upstream business. The company has been active in the Western Canadian Sedimentary Basin since 2000. Last year it acquired ownership of natural gas assets in the Wildcat Hills region of Alberta, increasing its natural gas reserves by approximately 60%. During 2011 Direct Energy has also seen its customer demand grow steadily, adding nearly half a million new customer accounts through the purchase of the New York-based energy retailer Gateway Energy Services and the addition of First Choice Power in Texas.