"The acquisition of Tom Brown accelerates EnCana's pursuit of North American resource plays - long-life assets where we expect to apply our core competencies to deliver steady, reliable growth in production and reserves. The U.S. Rockies have been EnCana's highest growth region since 2000, with about 75 percent of the double-digit growth coming from the drill bit. The Tom Brown assets offer similar potential for profitable organic growth for several years ahead," said Randy Eresman, EnCana's Chief Operating Officer.
"We will move quickly to welcome the Tom Brown employees, integrate the acquired properties into our U.S. and Canadian operations and build upon the excellent accomplishments of Tom Brown and its people," Eresman said. The acquisition of Tom Brown will add about 325 million cubic feet per day of gas equivalent production. EnCana's U.S. gas production is expected to reach 1 billion cubic feet per day this year. To help assure strong returns on the acquisition, EnCana has hedged volumes equivalent to all of the forecasted production from Tom Brown's U.S. assets at a NYMEX equivalent price of approximately US$5.60 per thousand cubic feet through 2006.
The completion of the Tom Brown acquisition is the first step in a two-step process. The company has also begun the sale process on approximately 30,000 barrels of oil equivalent per day of mature, Western Canadian production, with bids due at the end of June. It is expected that an additional 10,000 to 30,000 barrels of oil equivalent per day will also be divested over the balance of the year. Total proceeds from these divestitures are estimated in the range of US$1 billion to US$1.5 billion. EnCana anticipates issuing an updated sales forecast in June.
EnCana's tender offer for Tom Brown commenced on April 21, 2004 and expired as scheduled at midnight Eastern Time on Tuesday, May 18, 2004. EnCana has been advised by the Bank of New York, the Depository for the tender offer, that a total of at least 44,583,673 shares of Tom Brown common stock, including shares tendered pursuant to guaranteed delivery, were tendered and not withdrawn prior to the expiration of the tender offer. All validly tendered shares have been accepted for purchase at a price of $48.00 per share, net to the seller in cash, in accordance with the terms of the tender offer and payment for these shares will be made promptly. The number of Tom Brown shares that were not tendered and that remain outstanding is 1,935,683. All necessary regulatory approvals have also been received.
EnCana intends to complete the acquisition of Tom Brown through a merger in which all shares of common stock not validly tendered into the tender offer will be converted into the right to receive $48.00 per share, net to the seller in cash. Payment of such amount will be made following the merger upon proper presentation of certificates formerly representing shares to the Bank of New York, Paying Agent for the merger, together with a properly completed letter of transmittal. Transmittal materials will be sent to stockholders following the merger. Under applicable law, the proposed merger is not subject to the approval of the remaining outstanding stockholders of Tom Brown.
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