Calgary-based Nexen Inc. has agreed to sell its North American downstream natural gas marketing business to Goldman Sachs’ commodity trading subsidiary J. Aron & Co., according to an e-mail Nexen sent to customers earlier this month.
J. Aron is expected to take over the operations of Nexen’s gas marketing business by the third quarter, according to the e-mail.
“The downstream natural gas marketing business will be integrated into J. Aron’s existing North American commodity business…We expect the integration period to be seamless. In the interim, we will continue to operate as Nexen Marketing,” the e-mail said.
Nexen intends to assign and novate existing contracts and positions to J. Aron prior to the closing of the transaction. Nexen Marketing would continue to market Nexen’s proprietary gas production in both Canada and the United States.
Nexen provided some early insight into the deal — without naming a buyer — during a recent discussion of its 1Q2010 earnings (see Daily GPI, April 28). At the time Nexen said it had “substantially completed negotiations” for the sale of its gas marketing business. Nexen said it expected the deal to be cash-neutral and that it would likely recognize a noncash loss on the sale of C$250-290 million due in part to the transfer of long-term natural gas physical transportation commitments that are less valuable with increased gas supplies, which reduce the need for transport services.
The deal comes on the heels of Nexen successfully unloading its European gas and power marketing business for C$15 million. Nexen said last July that it was reviewing alternatives for its natural gas and power marketing businesses, which it said could include the sale of all or part of them (see Daily GPI, July 24, 2009).
During 4Q2009 Nexen was the ninth largest North American gas marketer, according to NGI‘s 4Q2009 Top North American Gas Marketers Ranking. The company, which transacted 5 Bcf/d in 4Q2009, recently reported that it transacted 4.80 Bcf/d in 1Q2010.
Nexen was ranked eighth in NGI‘s Full Year 2009 Top North American Gas Marketers survey with a reported 4.90 Bcf/d for the year. The company scaled back its marketing operations in early 2009 (see Daily GPI, April 29, 2009; Feb. 13, 2009).
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