Centrica, Qatar Petroleum to buy Suncor Energy’s Canadian hydrocarbon assets for $987 mn

British utility Centrica Plc and Qatar Petroleum International (QPI) today jointly agreed to buy gas and oil assets in Canada from Suncor Energy for C$1 billion, ($987 million), both companies said in a statement today.

The deal is the first joint investment by Centrica and Qatar Petroleum since they signed a memorandum of understanding (MoU) in December 2011.

The acquisition will be carried out through CQ Energy Canada Partnership, a newly formed Canadian company that will be owned 60 per cent by Centrica and 40 per cent by QPI Energy Canada.

The assets are located principally in South and Central Alberta where they overlap with existing Centrica assets, providing the opportunity for cost savings in production and development, and in North East British Columbia.

The assets include proven and probable (2P) reserves estimated at 978 billion cubic feet equivalent (90 per cent natural gas), with estimated 2013 production of approximately 250 million cubic feet equivalent per day, equal to 15 million barrels of oil equivalent per annum. 

The deal also includes over 1 million acres of undeveloped land and there is significant potential for shale gas production. 

Sam Laidlaw, CEO of Centrica, said, ''I am delighted to achieve our first investment with QPI under the MoU, and the establishment of a new partnership in North America. The acquisition provides attractive returns in a region we know well, and significantly increases the size and quality of our portfolio. It also presents exciting development opportunities, with the potential to improve returns further.

''Today's announcement marks another step in delivering the strategy we announced in February and strengthens the relationship between Centrica and QPI. We look forward to working together to further expand the scale and scope of our joint North American operations.''

''This investment in the Western Canadian Sedimentary Basin is a significant step in the development of QPI's global upstream business. We look forward to continuing to advance QP's overall North American energy business through the MoU and other initiatives,'' said Nasser Al-Jaidah, CEO of QPI.