By OGJ editors
HOUSTON, Nov. 19 -- Centrica PLC, through a wholly owned subsidiary, has acquired Dynegy Storage Ltd. (DSL) and Dynegy Onshore Processing UK Ltd. (DOPUL), subsidiaries of Dynegy Inc., for $500 million, or a net cash consideration of £304 million plus £11.8 million in net working capital consisting of £15.9 million in cash and net liabilities of £4.1 million.
DSL and DOPUL own Rough field—a partially depleted natural gas storage field in the North Sea—along with its associated pipeline and a natural gas processing terminal on the East Yorkshire coast at Easington. The Rough asset is the largest gas storage facility in the UK, with a holding capacity of 100 bcf of stored gas and a deliverability rate of 1.5 bcfd. It is used by about half of UK natural gas shippers. The Easington terminal processes natural gas from Rough and from third parties for delivery into the UK natural gas transportation network.
"The acquisition of this asset is of strategic importance to Centrica, providing us with flexibility to meet the fluctuating gas requirements of our retail customers," said Centrica CEO Roy Gardner. "We also see potential for value creation through improved management of the commercial and operational arrangements of the facility for our storage customers."
The majority of storage will continue to be sold to other gas market participants, Centrica said. As the UK produced gas supply diminishes and the country becomes more reliant on imported gas, Rough will provide users with seasonal storage capacity so that summer produced gas can be used to meet peak winter demand, the company said.
Dynegy also is pleased with the sale. "The storage business sale is yet another significant accomplishment in our capital plan, which continues to improve our liquidity and enable us to focus on our core businesses going forward, " said Bruce Williamson, Dynegy president and CEO. "When combined with the steps we are taking to restructure the organization and address the company's financial obligations, we are continuing to build momentum for the new Dynegy and drive the company forward."
Dynegy Europe Ltd. now consists of energy marketing and trading. The company's previously announced restructuring initiative will involve an exit from this business in the US, Europe, and Canada over the next 3-6 months. Mike Flinn, current president of Dynegy Europe, will manage the exit in Europe, which is expected to reduce the company's collateral requirements and overall corporate expenses, the company said.
