Direct Energy, a subsidiary of UK-based energy company Centrica, has signed a deal with the Encana Corporation to buy natural gas assets in the Carrot Creek region of west central Alberta, Canada.
The transaction will provide Direct Energy with an additional 6.2 million cubic feet equivalent a day (MMcfe/d) production, incremental 25.6 billion cubic feet equivalent (Bcfe) of proven plus probable gas and liquid reserves, split 42% gas and 58% liquids and a 40 MMcf/d capacity gas plant with related infrastructure.
In exchange, Encana will receive C$58m ($56.8m) in cash and a property that produces gas and related infrastructure operated by Direct Energy in southeast Alberta.
Direct Energy said the transaction gives it increased access to the multizone, liquids-rich Deep Basin gas and Cardium oil fairway.
The move follows Encana's recent deal to sell two Canadian natural gas processing plants to energy infrastructure company Veresen for C$920m ($901m).
Direct Energy president and CEO Chris Weston said the development potential of the Carrot Creek assets represents a promising addition to the company's upstream gas business in North America.
"We continue to pursue our growth strategy for North America through strong organic and acquisitive growth in both our upstream and downstream energy businesses," Weston said.
The acquisition of the Carrot Creek assets is expected to be completed in early 2012, subject to regulatory approvals.
Since 2000, Direct Energy has been active in the western Canadian sedimentary basin and has increased its natural gas reserves by about 60%.
The company now owns more than 4,600 producing wells in the region with current daily production of 163 million cubic feet equivalent a day.
Direct Energy purchased Suncor Energy's assets in the Wildcat Hills region of Alberta in 2010 and related interests from Shell Canada Energy in 2011.