* Centrica, QPI acquire Western Canada natural gas
* Pay C$1 bln for Suncor conventional operations
* Production of 250 mmcf/d from 978 bfc of reserves
* Suncor shifting focus to unconventional gas
* Proceeds could be used for share buyback
* Suncor shares down 3.6 pct
(Recasts with details on acquisition, adds Suncor share-price
move and analyst's comment)
April 15 Britain's Centrica Plc and
Qatar Petroleum International said on Monday they will buy
Suncor Energy Inc's conventional natural-gas business in
Western Canada for C$1 billion ($986.73 million), their first
acquisition since they decided in 2011 to hunt jointly for
international energy assets.
Centrica, Britain's biggest energy supplier and its partner,
the international arm of the world's largest liquefied-natural
gas exporter, will take control of Suncor gas assets in Alberta,
British Columbia and Saskatchewan that produce 250 million cubic
feet per day from reserves pegged at 978 billion cubic feet.
When combined with its other Canadian gas properties, the
acquisition will give Centrica 60 percent of the gas needed for
its Direct Energy unit, which delivers energy to six million
customers in Canada and the United States, while Qatar gets its
first exposure to the Canadian natural gas industry.
"The acquisition provides attractive returns in a region we
know well, and significantly increases the size and quality of
our portfolio," Sam Laidlaw, Centrica's chief executive, said in
The deal stands apart from of the recent foreign interest in
Canada's natural gas sector, which has been aimed at the
country's massive shale-gas deposits and feeding its nascent
liquefied natural gas industry.
Recent acquisitions include PetroChina's C$2.2
billion purchase of a 49.9 stake in Encana Corp's
Duvernay shale-gas property in Alberta, and Exxon Mobil Corp's
C$2.6 billion buyout of Celtic Exploration Ltd for its
unconventional gas properties in Alberta and British Columbia.
Indeed, North America's shale-gas boom over the last decade
has forced Qatar Petroleum to find new buyers for
millions of tonnes a year of LNG it had planned to sell to the
"For Centrica, the transaction is primarily a hedge against
its power business in Western Canada and has reasonable overlap
with its existing Western Canadian production," Andrew Potter,
an analyst at CIBC World Markets, said in a research note. "For
Qatar, the motivation is a diversification strategy outside of
its traditional core region."
Qatar has imposed a moratorium on further gas export
projects from its vast North Field in the Middle East, prompting
Qatar Petroleum International to look abroad for growth.
"This investment in the Western Canadian Sedimentary Basin
is a significant step in the development of QPI's global
upstream business," Nasser Al-Jaidah, QPI's chief executive
officer, said in a statement.
Centrica will have a 60 percent stake in the Suncor
properties, while Qatar will own the remainder. The acquisition
is the first for the pair since they signed a memorandum of
understanding in December 2011 to cooperate on energy-related
The deal also includes more than 1 million acres of
undeveloped land, including some that may have the potential for
more production through the use of horizontal drilling and
multi-stage fracturing, a technique used to flush out
Suncor, Canada's No. 1 oil and gas company, has used its
conventional natural-gas business as a hedge against the gas
used in its extensive operations in the Alberta oil sands.
However, the company's unconventional gas assets, including its
holdings in the vast Montney shale gas region of northeastern
British Columbia were not included in the sale and development
could be speeded up if gas prices were to rise sharply.
"Natural gas is still an important part of our portfolio,"
said Sneh Seetal, a spokeswoman for Suncor. "This deal marks a
shift from conventional gas production to a smaller portfolio of
Suncor has not yet decided how it will use the proceeds from
the sale of its conventional gas operations. While the money
could be applied to its oil and gas business, Seetal said the
cash could also be used to fund a stock repurchase program.
"One of our priorities is returning cash to shareholders
through share buybacks and dividends," Seetal said.
Suncor's shares have fallen nearly 7 percent over the past
year. There were down again on Monday along with most commodity
stocks on fears that China's growth is slowing, falling C$1.04
to C$27.78 at midday on the Toronto Stock Exchange
Subject to regulatory approval, the acquisition will be made
by a joint venture called CQ Energy Canada Partnership owned by
Centrica's wholly owned subsidiary Direct Energy Resources
Partnership and QPI Energy Canada Ltd.
The deal is expected to close in the third quarter of 2013.
(Reporting by Scott Haggett in Calgary, Brenda Goh in London
and Daniel Fineren in Dubai. Editing by Rhys Jones, Jane
Merriman and Peter Galloway)