Centrica to sell Canadian natural gas assets to MIE Holdings

UK-based Centrica has signed a deal to divest its entire Canadian oil and gas exploration and production business, CQ Energy Canada Partnership, to Hong Kong-listed MIE Holdings for C$722m (HK$535.8m).

The natural gas assets are located in Western Canada and currently produce approximately 56,000 barrels of oil a day.

The deal also includes two million net acres of land besides ownership in 11 facilities.

MIE plans to fund the acquisition partly through the sale of $204m in convertible preferred shares to China-based private equity fund, Can-China Global Resource Fund, and Mercuria Energy Netherlands.

With offices in Hong Kong and Beijing, MIE also owns a 33.6% stake in Calgary-based Journey Energy.

The recent months have seen a series of acquisitions by Chinese firms, which expect to benefit from the dip in oil prices and purchase distressed assets. Such firms have invested over $2bn to acquire distressed assets, reported The Globe and Mail.

This deal not only requires approval of its shareholders, but also clearance under Canada’s Competition Act and by Investment Canada.

Canadian Imperial Bank of Commerce served as an adviser for MIE.

Subject to regulatory approvals, the deal is expected to close in the second half of this year.

Centrica expects to use the proceeds to reduce its net debt to £2.5-£3bn by the end of this year.