Husky Energy Inc. says it is buying natural gas properties in west-central Alberta which will double its operations in the region.
The Calgary-based energy company is focusing on growing its near-term production through acquisitions such as Wednesday's deal, chief executive officer Asim Ghosh said in a statement.
"This agreement represents an important step in executing that strategy," he said.
Husky said the acquisition will add 65 million cubic feet per day to its gas production, as well as 37 million barrels of oil equivalent of proven reserves and 11.7 million barrels of oil equivalent probable reserves.
The transaction will contribute nearly 65,000 hectares to the company's holdings in the area, where Husky currently produces 50 million cubic feet of gas per day.
The company did not disclose the seller or the price it paid for the gas properties.
It said the deal is expected to receive regulatory approval this fall.
The purchase will also enable Husky to make better use of its Ram River Gas Plant, which will process a big portion of the production the company is gaining through the deal.
"This is an important acquisition that adds to our natural gas production and reserves in an area where we have significant gas gathering and processing infrastructure," said Mr. Ghosh, who became CEO this summer.
"The terms of the deal provide an attractive rate of return at today's natural gas prices and offers Husky significant upside potential."
The purchase comes days after an energy-focused investment bank said it was abandoning all hope in a natural gas price recovery over the next two years.
FirstEnergy Capital cut its 2010 price forecast by 40 cents (U.S.) to $4.63 per 1,000 cubic feet, its 2011 forecast by a full dollar to $4.75 and its 2012 forecast by $1.25 to $5.
"Placing money in the natural gas investment space, aside from special one-time circumstances, is likely to be dead on arrival," analyst Martin King wrote in a research note.
Husky, majority owned by Hong Kong billionaire Li Ka-Shing, is active in Western Canada, off Canada's East Coast, in the United States and in Southeast Asia. It has said it plans to spin off its Asian assets into a new company.
The company is also a major heavy oil and oil sands company through its Tucker and Sunrise projects. and operates a string of Husky-branded gasoline stations, primarily in Western Canada.
Husky, with nearly 4,300 employees at the end of last year, also operates refineries in Canada and the United States.
Former CEO John Lau stepped down earlier this year after a 17-year tenure to head up the Asian business.
The Canadian Press