Abu Dhabi National Energy Company, or Taqa, has returned to the acquisitions trail with a C$285 million (Dh1 billion) agreement to purchase Canadian natural gas assets from Suncor Energy. It is the first deal the company has announced since the departure last October of its previous chief executive, the acquisitions-focused Peter Barker-Homek.
This time, Taqa is buying near the bottom of the market. Canadian gas prices have been severely depressed due to the recent global recession and simultaneous US shale gas development boom. Into this market, Suncor, one of Canada's biggest oil and gas producers, has been shedding non-core assets following its C$19bn merger with the rival Petro-Canada and decision to focus on oil sands. The Suncor assets in the heart of Alberta, the main Canadian oil and gas-producing province, are near gas properties that Taqa North, the Canadian unit of Taqa, already owns. In some cases, the Taqa and Suncor holdings interlock like squares on a chess board.
"The opportunity to acquire assets that we know deeply is an exciting one," said Abdulla al Nuaimi, the chief executive of Taqa. "We will consolidate our position in west central Alberta, growing organically and returning value to our shareholders through increased efficiencies and productivity." "These assets have significant upside and will add to our current drilling locations in the area, while also adding production and reserves and lowering our operating costs," added Frederic Lesage, the managing director of Taqa North.
The properties are in a prolific gas-producing area in the shadow of the Rocky Mountains that has yielded many large and medium-sized discoveries, including some exploited by Royal Dutch Shell, one of the largest international oil companies. Moreover, compared with Taqa's previous purchases and other recent deals for Canadian oil and gas properties, the price seems reasonable. Taqa will pay about 19 per cent less per unit of current production than the first-quarter average for such purchases.
Suncor produces 6,100 barrels of oil equivalent per day (boepd) from the lands it is sellingbut has not been especially active in developing the properties. Taqa North sees "a large number of locations that we believe we can drill and definitely increase that production", Sean Moore, the vice president of the unit's central asset team, told The Globe and Mail, a Canadian daily newspaper. During Mr Barker-Homek's tenure, Taqa acquired two gas-focused Canadian energy companies, with the largest deal closing in January 2008, just as crude had breached $100 per barrel.
The Canadian acquisitions were part of a worldwide spending spree that saw Taqa purchase about US$25bn of international oil, gas and power assets on four continents in three years. Carl Sheldon, Mr Barker-Homek's former deputy who became the general manager of Taqa last October, vowed to cut back on acquisitions to focus on integrating the company's existing assets. Mr al Nuaimi, who was appointed the chief executive in April, said he would seek opportunities for "organic growth".
Taqa passed up the opportunity to purchase Suncor's Dutch holdings, despite its significant concentration of Netherlands gas production and infrastructure. That is a further sign of a more conservative financial strategy. tcarlisle@thenational.ae