Centrica selling off Canadian gas assets

CALGARY The U.K.’s largest residential energy utility company is closing in on the sale of all of its natural gas production business in Canada.

Centrica PLC, along with jointventure partner Qatar Petroleum, are in the middle of a sales process to dispose of natural gas producing assets they jointly bought from Suncor Energy Inc. for $1 billion in 2013, the Financial Post has learned. Centrica confirmed its sales process will see it leave the Canadian upstream natural gas business.

“We’ve started the process to dispose of them,” Centrica spokesman Ross Davidson said, adding, “Our exploration and production business is going to be focused on Europe.”

Centrica produced an average of 63,835 barrels of oil equivalent per day in Canada last year. About 90 per cent of that production is natural gas from formations in southern Alberta and southern Saskatchewan. The Canadian volumes represent about 30 per cent of Centrica’s total production.

Analysts expect Centrica will sell the assets for less than it spent to acquire them.

Centrica has previously said it is looking to trim its overall oil and natural gas production by over 40 per cent as it refocuses on its downstream business, which includes Direct Energy, its natural gas and energy delivery business.

The company’s CEO, Iain Conn, said in February that Canada’s upstream business was non-core for the company. Bloomberg reported then that Conn said Centrica was not “in any rush” to divest its exploration and production business.

Natural gas prices have since risen sharply. The spot price for gas in southern Alberta, called the AECO price, has risen more than 104 per cent since March and closed at $2.81 per thousand cubic feet Thursday.

Upstream natural gas producers have faced extreme pressure in recent years as low commodity prices have forced many producers to shift capital away from gas and toward oil production. Delays in sanctioning gas export terminals in B.C. have also weighed on many producers.