This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Direct Energy, Centrica's North American Subsidiary, To Become Leading B2B Gas Supplier In The Eastern US Through $731m Acquisition

Stocks in this article: CNA

HOUSTON, July 30, 2013 /PRNewswire/ -- Direct Energy Business, LLC, a North American subsidiary of Centrica plc, has agreed to acquire the New Jersey-based Energy Marketing business of Hess Corporation, for $731 million in cash plus net working capital, estimated at approximately $300 million.

(Logo:  http://photos.prnewswire.com/prnh/20121004/MM87276LOGO)

The Energy Marketing business is one of the largest B2B energy suppliers in the Eastern US, operating in 18 states.  The acquisition builds on Direct Energy's existing capabilities and further integrates these activities along the gas value chain, linking gas supply from producers and other market participants through secured transport and storage capacity to the gas and power customer base.

In 2012, the Energy Marketing business supplied 378 billion cubic feet (bcf) of gas and 28 terawatt hours (TWh) of power to over 23,000 customers.  When combined with Direct Energy's existing business, which in 2012 supplied 77bcf of gas and 51TWh of power, the acquisition will make Direct Energy the largest business gas supplier on the East Coast of the US and the second largest business power supplier in the competitive US retail markets.

The business has an extensive portfolio of existing gas and power contracts.  These include purchase agreements with Marcellus shale gas producers, gas storage and pipeline capacity, and gas and power supply agreements with customers, including local distribution companies.  In addition it has a tolling arrangement on the Bayonne Energy Centre gas-fired power plant, to supply power to its customers in New York.

Hess' Energy Marketing business had revenues of over $6 billion in 2012 and is expected to deliver around $200 million of EBITDA in 2013, with margins similar to those of Direct Energy's existing B2B activities.  The combination of the skills and capabilities of the employees of Direct Energy and Hess' Energy Marketing business will enable the delivery of enhanced products and services to our customers.  The acquisition is expected to be earnings accretive in its first full year, after the effect of fair value accounting, and in addition is expected to deliver operational efficiencies.

Badar Khan, President and CEO of Direct Energy, said: "This transaction will transform our B2B operations in North America, giving us leading positions in business gas and power supply and creating a unique dual fuel business in the US.  It marks a significant step towards delivering on our strategy – substantially increasing the scale of our North American downstream business and integrating along the gas value chain – with the aim of doubling the profitability of our North American downstream business over the next 3-5 years."

"The acquisition positions us to provide a full suite of energy and energy solutions to our customers across all of our markets, especially in the Eastern United States," said Maura Clark, President of Direct Energy Business, the company's commercial and industrial division. "The addition of the Hess business dramatically increases the scale of our activities, and we are excited about working with the Hess team and building on the long history of success that they have delivered."

About Direct Energy

Direct Energy is one of North America's largest energy and energy-related services providers with over six million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE: CNA), one of the world's leading integrated energy companies, Direct Energy operates in 46 states plus DC and 10 provinces in Canada. To learn more about Direct Energy, please visit www.directenergy.com.

Notes:

  • Further information summarizing the transaction is available at www.centrica.com
  • Hess' Energy Marketing business is headquartered in Woodbridge, New Jersey.
  • The transaction is subject to customary regulatory approvals and is expected to close later this year.

SOURCE Direct Energy

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs