Calgary-based natural gas producer Peyto Exploration & Development Corp. is poised to substantially expand its natural gas position in the Deep Basin of Western Canada with a $468 million cash acquisition of Repsol SA’s upstream Canada business.

The deal would add 455,000 net acres with an average working interest of 65% in the greater Edson area to Peyto’s already formidable Deep Basin position. Peyto, a Deep Basin pure-play, produced about 527 MMcf/d of natural gas during the second quarter. 

Also included in the transaction are five operated natural gas processing plants with combined net capacity of 400 MMcf/d; roughly 2,200 kilometers (1,367 miles) of operated pipelines; and a 12 MW cogeneration power plant. These assets include the Edson Gas Plant and the 350-kilometer...