Direct Energy, Centrica's North American subsidiary, to become leading B2B gas supplier in the Eastern US through $731m

Direct Energy, Centrica's North American subsidiary, to become leading B2B gas
             supplier in the Eastern US through $731m acquisition

PR Newswire

HOUSTON, July 30, 2013

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

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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 NewYork.

Hess' Energy Marketing business had revenues of over $6 billion in 2012 and is
expected to deliver around $200million 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:

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

SOURCE Direct Energy

Website: http://www.directenergy.com
Contact: Micah Hirschfield, Direct Energy, +1-713-877-3805 office, or
+1-281-908-6597 mobile, micah.hirschfield@directenergy,com; or Bethany Ruhe,
Direct Energy, +1-412-667-5616, bethany.ruhe@directenergy.com, or Will
Briganti, +1-646-805-2034, RLM Finsbury, will.briganti@rlmfinsbury.com
 
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