Direct Energy announced that it has acquired natural gas assets located in the Wildcat Hills region of Alberta from Shell Canada Energy for $47 million in cash
Calgary, AB (April 1, 2011) - Direct Energy announced on [Friday] that it has acquired natural gas assets located in the Wildcat Hills region of Alberta from Shell Canada Energy for $47 million in cash. The acquisition includes production of approximately 10 million cubic feet equivalent (mmcfe) per day (97 per cent natural gas), 45 billion cubic feet equivalent (bcfe) of proven and probable reserves - increasing Direct Energy's reserves by 8 per cent to 617 bcfe - and complements the company's investment in the area in the fall of 2010. The Wildcat Hills assets are located 35 km northwest of Calgary and have been operated by Direct Energy since October 1, 2010.
"This acquisition gives us 100 per cent working interest in certain Wildcat Hills' assets and gas processing facilities, providing Direct Energy with the ability to optimize our investment and operations in the area", said Direct Energy Upstream & Trading President, Badar Khan. "These are assets that our Direct Energy team was already operating; the acquisition makes sense for us in many ways, and allows us to maintain our natural gas asset cover of the growing retail base in the 35 to 40 per cent range we have identified as part of our North American growth strategy."
Direct Energy has been active in the Western Canadian Sedimentary Basin since 2000 and operates approximately 4,600 producing gas wells in Alberta. This acquisition brings its total natural gas production to 172 mmcfe per day. The company has a strong track record of acquiring and safely operating natural gas assets.
In March, Direct Energy announced it intends to grow its retail customer base by 275,000 customer relationships, concentrated primarily in the US Northeast, through the acquisition of electricity and natural gas retailer Gateway Energy Services. The company, which is a leading competitive retailer of natural gas and electricity in North America, has also seen its natural gas retail base grow organically through new market entries in Ohio and Maryland in the last year.
"Growing our upstream gas and power assets is important to ensuring we are a stable, long-term partner to the millions of residential and business customers we serve across North America," said Chris Weston, President & CEO, Direct Energy. "The existing low commodity price cycle in North American energy markets presents significant growth opportunities for our business. Much like our parent company, UK-based Centrica plc, has done, we intend to increase the amount of power and gas sourced from our own production. "