Qatar Petroleum International and the UK’s Centrica on Monday said they have agreed to buy gas and oil assets from Suncor Energy for C$1bn ($979m) in cash.
The acquisition is the first investment under the Memorandum of Understanding signed between the international arm and wholly owned subsidiary of Qatar Petroleum (QP) and Centrica in December 2011.
The assets will be held in a newly established partnership between Centrica (60 percent share) and QPI (40 percent share), which will be operated by Centrica, a statement said.
The assets include proven and probable reserves estimated by the partners at 978 billion cubic feet equivalent (bcfe), with estimated 2013 production of approximately 250 million cubic feet equivalent per day (mmcfe/d), equal to 15 million barrels of oil equivalent (mmboe) per annum.
The assets are located principally in South and Central Alberta where they overlap with existing Centrica assets, providing the opportunity for cost savings in production and development, and in North East British Columbia, the statement said.
The package also includes over 1 million acres of undeveloped land and the companies said there is significant potential for reserves and production upside through the use of horizontal drilling and multi-stage fracturing.
Nasser Al-Jaidah, CEO of QPI, said: “We are pleased to be advancing our important ongoing relationship with Centrica under the MoU through this joint acquisition.
“This investment in the Western Canadian Sedimentary Basin is a significant step in the development of QPI’s global upstream business. We look forward to continuing to advance QP’s overall North American energy business through the MoU and other initiatives.”
Sam Laidlaw, chief executive of Centrica, added: “I am delighted to achieve our first investment with QPI under the MoU, and the establishment of a new partnership in North America.
“The acquisition provides attractive returns in a region we know well, and significantly increases the size and quality of our portfolio.
“Today’s announcement marks another step in delivering the strategy we announced in February and strengthens the relationship between Centrica and QPI. We look forward to working together to further expand the scale and scope of our joint North American operations.”