Direct Energy to Acquire Carrot Creek Gas Assets in Alberta

Direct Energy has agreed to acquire a package of liquids-rich natural gas assets located in west central Alberta (the Carrot Creek Assets) from Encana Corporation for $58m (Canadian $) in cash.

As part of the transaction Encana will also receive from Direct Energy a number of gas producing wells and related infrastructure in southern Alberta.

The Carrot Creek Assets include 80 producing wells, associated infrastructure and a gas processing plant with natural gas liquid extraction capability. The transaction will provide Direct Energy with a net additional 25.6 billion cubic feet equivalent (Bcfe) of proven and probable reserves, an increase of approximately 4%, split 42% gas and 58% liquids. Direct will also receive a 40 MMcf/d capacity gas plant with related infrastructure

The resulting net increase in production will be 6.2 million cubic feet equivalent per day (MMcfe/day).

Following the transaction Direct Energy will be able to meet approximately 30% of the daily gas requirements of its growing competitive customer base across North America with owned supply

Carrot Creek is located 160 km west of Edmonton and lies adjacent to the successful Cardium oil development in which Direct Energy is already involved. "This acquisition represents a unique opportunity to invest in a liquids-rich, multi-zone area that has significant development potential, deploying the same horizontal drilling techniques currently utilised by Direct Energy," Centrica said.

Chris Weston, President and CEO of Direct Energy said, "The acquisition of the Carrot Creek Assets is an attractive opportunity to grow our North American upstream gas business while exiting some non-core positions in southern Alberta. This represents both a valuable addition to our existing reserves and offers the potential to develop significant resources."