El Paso Corp. To Acquire Velvet Exploration
El Paso Corporation, through a wholly-owned Canadian subsidiary, announced it has entered into an agreement to acquire Canadian-based Velvet Exploration Ltd. for C$8.15 per share in cash for an equity value of US$228 million plus the assumption of debt estimated at US$52 million. Both companies’ boards of directors have unanimously approve the acquistion.
"The acquisition of Velvet provides El Paso with a strong platform to build a significant production business in western Canada," said Rod Erskine, president of El Paso Production Company. "Velvet has a large acreage position which can be effectively developed using our proven technical skills. Further, we are very enthusiastic about the prospect of adding Velvet's high quality employee group to our team." Based on El Paso's evaluation of Velvet's reserves, in consultation with El Paso's independent reserve evaluators, Velvet has 172 billion cubic feet equivalent of net proved reserves (after royalties, on a 6:1 basis). Approximately 59 percent of the reserves are natural gas. Current average daily net production is 54 million cubic feet equivalent (MMcfe).