Centrica boosts gas reserves with Suncor deal

Centrica, the owner of British Gas, has agreed to buy 97 natural gas wells and 42,000 acres of land in western Canada, in a deal that will help move its North American operation from supplying energy to being an integrated production and supply business.

Direct Energy, Centrica’s wholly owned US subsidiary, will pay Canada’s Suncor Energy C$375m (£229m) in cash for land, wells and associated infrastructure, increasing its natural gas reserves about 60 per cent to 641bn cu ft.

The land, in south-eastern Alberta, will add to Direct Energy’s existing holdings in the area.

The company’s strategy includes doubling the size of its North American business over the next five years, with acquisitions being a central part of the plan.

Sam Laidlaw, chief executive, said on Thursday: “We will continue to explore opportunities to secure further strategic gas and power assets in North America to enhance the scale of the business, and support Direct Energy’s expanding retail energy businesses.”

In February, the group agreed to purchase Suncor’s gas assets in Trinidad for $380m (£246m).

Centrica last month reported first-half pre-tax profits of £2bn thanks, in part, to lower wholesale gas prices that helped it lift margins at British Gas.

It also benefited from the £1.3bn acquisition last year of Venture Production, a North Sea producer, and a £2.3bn purchase of a 20 per cent stake in British Energy. EDF of France owns the other 80 per cent.

The Venture deal helped clinch the group’s position as a vertically integrated producer and supplier in the UK. Centrica now hopes to transport that model to North America.

Centrica said: “The transaction will enable Direct Energy to meet about 35 per cent of its customers’ gas demand through its own sources of production.”

Centrica shares on Thursday closed up 6.5p at 326.2p.