Scottish and Southern Energy (LSE: SSE), through its wholly-owned Exploration and Production unit, has agreed to acquire natural gas assets and infrastructure from Hess Ltd for US$423 million in cash. Through the transaction SSE will acquire around 383bn cubic feet (bcf) or 64m barrels of oil equivalent (mmboe).
"This timely acquisition will enable SSE to enter the upstream gas sector in a measured way by buying proven and geographically diverse production assets," said SSE chief executive Ian Marchant. These assets will provide a new source of primary fuel and a hedge for our gas generation and supply activities. The acquisition will also give us involvement throughout the gas chain - production, transmission, storage, distribution and supply".
The acquired assets are located in three regions of the North Sea - Everest/Lomond, Easington Catchment and Bacton.
SSE said that the headline transaction price for the resources is US$6.6 per boe. Additionally, the company noted that less certain resources of gas may also be identified through further exploration. The main production asset operators are BG Group (LSE: BG), BP (LSE: BP) and Perenco.
In addition to the upstream gas assets, SSE will also acquire a number of other assets from Hess including its 17.7% equity interest in the BP operated Central Area Transmission System (CATS) pipeline. The CATS pipeline delivers over 10% of the UK's total gas demand through a 400km pipeline from the central North Sea to a processing terminal in Teesside.
According to SSE, it currently needs, on average, 1,300mcf of gas per day to supply its customers and to fuel its power stations, and gas from the acquired assets will initially provide around 8% of that supply.
http://www.proactiveinvestors.co.uk/companies/news/15160/scottish-and-southern-energy-acquires-upstream-gas-assets-in-north-sea-for-us423m-15160.html
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