El Paso Canada holds approximately 690,000 net acres, of which 630,000 is undeveloped oil and gas acreage, which BG believes holds considerable exploration potential. The acreage is located in four core areas in the Western Canadian Sedimentary Basin, mostly in southern and western Alberta and northeastern British Columbia. The acquisition also includes producing assets, which, at December 31, 2003, had gross working interest production of some 80 million standard cubic feet equivalent per day.
Martin Houston, President, British Gas US Holdings LLC, said: "This acquisition secures valuable producing and exploration properties, and is another step forward in building our position in the North American gas market. These properties are located in an important supply area. With operatorship and high working interests, they also represent a strong platform on which to develop a Canadian exploration and production business.
"The very large position of undeveloped oil and gas acreage provides significant opportunities for expansion and development. With a large inventory of identified prospects, the acquisition has enough opportunities to support a drilling campaign for many years. We look forward to working with the existing employees, whose expertise and regional knowledge will be key to the successful development of the business."
The large exploration potential is evidenced by recent exploration successes. According to an independent evaluation by Ryder Scott, effective 31 December 2003, the properties contain 132 billion cubic feet of gas equivalent (bcfe) of proved reserves, before royalties, of which some 84% is natural gas. The attractiveness of the properties also lies in their low operating costs and their proximity to existing infrastructure.
El Paso Canada has existing offices in Calgary, Alberta and Fort St John, British Columbia. The transaction is conditional upon the receipt of the required government and regulatory approvals and the satisfaction of other customary closing conditions, and is expected to close by the end of the first quarter of 2004.
The El Paso Canada properties are located in the Western Canadian Sedimentary Basin, lying partly in British Columbia (BC) and partly in Alberta (AB). The 630,000 acres of net undeveloped land represent 91% of the total net land position. The Ryder Scott evaluated proved reserves of 132 bcfe are concentrated in four core areas – Bubbles and Ojay/Sundown (BC) and Waterton and Copton (AB). El Paso Canada's average working interest in the assets is estimated at 86%, with an estimated 83% of current production being operated. El Paso Production will retain ownership of its operations offshore Eastern Canada and its interests in the Alliance gas export pipeline.
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