9 June 2017
("Centrica" or 'the Company')
Centrica agrees the sale of its Canadian E&P business
The CQ Energy Canada Partnership ("CQ"), the Canadian E&P joint venture in which Centrica plc owns a 60% interest, is to be sold to a consortium comprising MIE Holdings Corporation ("MIE"), The Can-China Global Resource Fund and Mercuria for a purchase price of C$722 million (£413 million) in cash. Centrica's net share of sale proceeds is expected to be approximately £240 million after adjustments.
In line with its strategy announced in July 2015, the divestment means Centrica's E&P activity will now be focused solely on European assets, with the Group having completed the sale of its gas assets in Trinidad and Tobago in May 2017.
The transaction is subject to customary regulatory approvals, including under the Canadian Competition Act and the Investment Canada Act, and is also subject to approval from MIE's shareholders. The transaction is expected to close in the second half of 2017.
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Note to Editors:
1. Centrica has operated in the Western Canadian Sedimentary Basin (WCSB) since 2000. Centrica is a 60% owner of CQ, which was formed following the joint acquisition of a portfolio of conventional natural gas and oil assets from Suncor Energy in September 2013 and now holds all of Centrica's E&P assets in Canada.
2. The consortium is setting up a new company, Maple Felix Energy Corporation ("Maple Felix"), to acquire CQ.
3. In addition to disposing of its interest in CQ, Centrica will also be transferring operatorship of the assets to Maple Felix and it is expected that the management team and employees will also be offered roles with the new operator.
4. CQ owns producing assets located throughout Alberta, Saskatchewan and British Columbia, 11 processing facilities with a combined capacity of over 600mmcfe/d, over 2 million net acres of Crown, Fee and Royalty land and over 12,000km in gathering systems. CQ produced 20.5mmboe of natural gas and liquids in 2016 and had 257mmboe of 2P reserves as at the end of 2016 (88% natural gas).
5. CQ made a net loss of C$48 million (£25 million) in 2016 and had gross assets of C$1.8 billion at the end of 2016.
6. Centrica's interest in CQ is expected to be treated as held for sale in the Company's 2017 Interim Financial Results and the sale is expected to result in a total full year net exceptional loss to Centrica of approximately £50 million, before the impact of any releases from the foreign currency translation reserve.
7. The effective date of the transaction is 1 July 2016.
8. Centrica's net proceeds are expected to be used to reduce net debt, in line with the Company's target to achieve net debt in the £2.5-£3.0 billion range by the end of 2017.
Centrica plc is listed on the London Stock Exchange (CNA)
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