EnCana Oil & Gas (USA) Inc. (EnCana USA), an indirect wholly owned subsidiary of EnCana Corporation, has purchased from Williams Production Rocky Mountain Company, a subsidiary of The Williams Companies, its producing and non-producing assets in the Jonah field for approximately C$539 million (US$350 million). The acquisition includes developed and undeveloped reserves and lands and increases EnCana's interest in the Jonah field by 50 percent. This acquisition increases EnCana's productive capacity from Jonah to in excess of 400 million cubic feet of gas equivalent per day. Certain of the assets are subject to third-party rights of first refusal.
"The U.S. Rocky Mountain region is one of EnCana's four current North American growth platforms and a major component of our North American natural gas growth strategy," said Randy Eresman, President of the Onshore North America Division. "This transaction, involving one of North America's premier gas assets, is consistent with EnCana's approach to pursue high-quality opportunities. The company also has an active non-core asset disposition program outside of its growth areas."
EnCana estimates the newly acquired assets have approximately 600 billion cubic feet of proven plus one-half probable (established) gas equivalent reserves. Approximately 96 percent of the reserves are gas, with the balance associated natural gas liquids. Given the timing of the transaction, EnCana's pro forma full-year 2002 average daily natural gas sales are expected to rise by about 40 million cubic feet per day to between 2,715 and 2,785 million cubic feet of gas.
"As an acquisition of an operated asset, this transaction represents an excellent consolidation and further solidifies EnCana's position as a leading producer in the region," said Roger Biemans, President of EnCana USA. "We now have a greater interest in a world class asset and greater influence over how it will be developed. As we now optimize our current capital program for the Rocky Mountain region, clearly our Jonah assets will be an excellent foundation, given their high quality nature and strong returns."
Discovered in 1993, the Jonah field contains approximately three trillion cubic feet of sweet natural gas, making it one of the largest gas discoveries in North America. Through predecessor companies, EnCana first became involved in Jonah in 2000, with the acquisition of McMurry Oil Company et al. At that time, the company's production from the field was approximately 135 million cubic feet per day; in recent months it has averaged approximately 270 million cubic feet per day. The transaction was funded from cash on hand and available credit facilities.
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