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Shell Energy to Acquire Integrys' Canadian Customers

The Canadian trading arm of Shell Energy North America LP said Friday it would buy nearly all of the natural gas and power customer contracts of Integrys Energy Services of Canada Corp. The purchase price was not disclosed.

Integrys Energy Services Inc., a subsidiary of Integrys Energy Group Inc., is a nonregulated energy supply and service company that serves residential, commercial, industrial and wholesale customers in the United States and Canada. The Canadian contracts being sold would become part of Shell Energy North America (Canada) Inc.

The acquisition still requires some contractual and regulatory approvals, but it is expected to be completed by early fall.

Integrys Energy Group's collateral requirements would be reduced by an estimated $300 million with the Shell sale, officials said.

"This sale is one step on the way to our objective of reducing the collateral requirements and capital investment for Integrys Energy Services," said Group CEO Charles A. Schrock.

Integrys separately plans to sell a 2 Bcf natural gas storage contract that is part of the company's Canadian wholesale gas operation. Integrys' principal Canadian operations are in Alberta, Ontario and Quebec.

"This is the right opportunity to divest of our natural gas and power contract assets to a strong company in the industry that will also provide ready access to resources, financial stability and flexibility to customers," said Integrys Energy Services CEO Mark Radtke.

Although Integrys disclosed few financial details, Schrock said the sale was "at a value that is in keeping with our recovered capital expectations for the full nonregulated segment divestiture. This deal, as part of our structured capital redeployment process, will reduce our collateral requirements, strengthening our balance sheet to support the growth of our core regulated utilities business."

Shell Energy President Mark Quartermain said the "addition of these energy services contracts in Canada merges well with Shell Energy's existing infrastructure and strengthens and supports our strategic growth plans -- a primary reason we were attracted to Integrys Energy Services' Canadian contractual assets."

The acquisition, he added, would benefit existing Shell Energy customers because the broader portfolio would create opportunities for more synergy and efficiency in the marketplace.

Shell is one of the top North American natural gas marketers, according to NGI. In the first three months of 2009 Shell Energy sold an estimated 14.7 Bcf/d, which put it behind only BP plc in gas sales in NGI's Top North American Gas Marketers ranking.

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