Power company Direct Energy Resources, a North American subsidiary of British utility company Centrica, plans to buy the marketing business of Hess Corp. for $1.3 billion.
Hess’ energy marketing business, which is based in New Jersey, centers around natural gas and power contracts, supplying both natural gas and natural gas-fired power to more than 23,000 customers.
“In this deal, we put together our strength, which is delivering electricity, and combined it with Hess’s strength, which is delivering gas,” said Badar Khan, president and CEO of Direct Energy, which is based in Houston. “Putting that combination together will give the combined customer base a more attractive option.”
The value of the $1.3 billion deal includes $731 million in cash plus net working capital, estimated at approximately $300 million.
The acquisition comes just weeks after Direct Energy announced its purchase of Bounce Energy, a small electric retailer, for $46 million.
In March, Direct Energy’s parent company, Centrica, agreed to a 20-year, $5.5 billion deal to buy liquefied natural gas from Cheniere Energy Partners’ Sabine Pass plant in western Louisiana.
Khan said the deal will make the company the first of its kind in offering both electricity and natural gas for retail customers.
It also moves the company towards its goal of doubling its profits of its retail company in the next three to five years.
“We like the acquisition because it allows us to be more integrated along the natural gas value chain,” Khan said. “As a result of this acquisition, we have contractual storage and gas transportation agreements and those agreements allow us to better serve our customers in the Northeast.”