Burlington also announced that the U.S. $2.1 billion (CAN $3.3 billion) acquisition of Canadian Hunter was completed on December 6, 2001, and that key Canadian regulatory approvals have been received for the acquisition of certain producing properties from ATCO Gas for U.S. $352 million (CAN $550 million).
"Burlington has undergone a significant transformation during recent years, culminating with the acquisition of Canadian Hunter. We've emerged from this process more focused than ever on applying our core competencies to our unique franchise in the Rocky Mountain natural gas fairway," said Bobby S. Shackouls, chairman, president and chief executive officer. "The Canadian Hunter and ATCO transactions will provide an infusion of new opportunities, while our strong cash flow gives us the financial capability to fund aggressive exploitation programs. As a result, we believe we are well positioned for a profitable future that includes visible per-share growth."
During 2002, approximately 40 percent of Burlington's exploration and development expenditures will go to Canada, with nearly 30 percent allocated to development in the San Juan Basin and Mid-Continent areas of the U.S. Roughly 30 percent of the budget will fund major development programs in Algeria, the East Irish Sea and China, and exploration in South America and other areas.
As previously announced, Burlington reached agreement with ATCO Gas of Edmonton, Alberta, to purchase gas-producing properties in the Viking-Kinsella area and has now received approval from the Alberta Energy and Utilities Board, as well as Investment Canada Act approval. The transaction is expected to close January 3, 2002. The properties hold proved reserves of 251 billion cubic feet (Bcf). In addition, Burlington estimates that approximately 200 Bcf of probable reserves exist on the properties, which are located 70 miles southeast of Edmonton. Current production from the properties is approximately 35 net million cubic feet of natural gas per day (in U.S. reporting standards), and Burlington expects to double that rate within one year.
Burlington also confirmed plans to sell approximately $500 million worth of properties in various areas, including all its Gulf of Mexico Shelf properties and certain onshore properties in South Texas, in the Permian Basin of West Texas and in the Williston Basin of North Dakota. The company disclosed that in anticipation of these divestitures, it would record a pre-tax, non-cash impairment to earnings of $175-to-$225 million during the current year's fourth quarter. In addition, the company will record a one-time charge of up to $15 million for restructuring costs associated with the sale of these properties. The company does not anticipate any additional non-cash charges or write-downs for the current year.
"We've wanted to fine-tune our portfolio for some time," said Shackouls. "The new property acquisitions now pose an ideal opportunity to upgrade our asset base. The properties we are offering will be attractive to a number of potential buyers, and their sale will enable us to focus in areas where we have a major presence and more compelling competitive advantages."
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