North America’s Direct Energy on Thursday agreed to pay Suncor Energy C$375 million to acquire natural gas assets in the Wildcat Hills of the Western Canadian Sedimentary Basin (WCSB). With the acquisition, Direct Energy’s total natural gas equivalent production would increase by around 80% to 180 MMcfe/day, 95% weighted to gas.
“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 Direct Energy CEO Chris Weston. “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. This acquisition will bring our upstream asset cover to approximately 35% of the load required by our North American natural gas customers.”
The addition of the Wildcat Hills assets, which are near Cochrane, AB, would provide Direct Energy with more than 240 Bcfe of natural gas reserves, an increase of around 60%. Recovery factors “may be improved through the utilization of our expertise in technologies designed for large gas-in-place reservoirs.” The transaction is expected to close by the end of the year.
Direct Energy has been active in the WCSB since 2000. The Wildcat Hills assets are about 35 kilometers northwest of Calgary and complement the company’s existing acreage position in central and southern Alberta. The Wildcat Hills property now 97 producing wells, associated infrastructure and 42,000 net acres of undeveloped land.
“The existing low commodity price cycle in North American energy markets presents significant growth opportunities for our business,” said Badar Khan, president, of Direct Energy upstream and trading. “We will continue to seek out both natural gas and power assets that present good value, which is consistent with our strategy for greater integration.”
In addition to its 4,500 producing gas wells in Alberta, Direct Energy generates 1,260 MW of electricity through three natural gas-fired plants and has invested in 813 MW of wind-powered electricity through long-term power purchase agreements in Texas.
As part of its strategic business alignment weighted to oilsands projects, Suncor is continuing to divest several noncore assets. Announced sales to date, which total around $2.8 billion, include all oil and gas producing assets in the U.S. Rockies, some noncore natural gas properties in Western Canada, all shares in Petro-Canada Netherlands BV and all Trinidad and Tobago assets. Remaining proposed divestments include certain natural gas assets in Western Canada and noncore North Sea assets.
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