EnCana Corp. units acquire US Rockies acreage from El Paso Corp.

May 1, 2002
Units of EnCana Oil & Gas (USA) Inc. will acquire 338,000 net acres of land holdings in the Northwest Colorado Rocky Mountains containing natural gas and NGL reserves from El Paso Corp., Houston, for $461 million (Can.) in cash.


By OGJ editors
HOUSTON, Apr. 26 -- Units of EnCana Oil & Gas (USA) Inc. will acquire 338,000 net acres of land holdings in the Northwest Colorado Rocky Mountains containing natural gas and NGL reserves from El Paso Corp., Houston, for $461 million (Can.) in cash.
The units are indirect, wholly owned subsidiaries of Calgary-based EnCana Corp., which was formed through the merger of PanCanadian Energy Corp. and Alberta Energy Co. Ltd. (OGJ, Feb. 4, 2002, p. 35). The acquisition includes developed and undeveloped reserves, a gathering system, a gas processing plant, and 180,000 net acres of undeveloped land in the Piceance basin.

"The US Rockies are a major component of our North American natural gas growth strategy, and this acquisition solidifies our position as a leading producer in the region," said Randy Eresman, president of EnCana's onshore North America division. The acquired assets, Eresman added, contain "liquids-rich" gas reserves that are in the initial stages of development. "These properties offer growth potential similar to our Mamm Creek field, where we have significantly expanded production and reserves since we acquired it about 15 months ago," Eresman said.

Current production from the assets is about 38 MMcfed, EnCana said. The assets contain 500 bcf of proven plus one-half probable (established) gas equivalent reserves, the company added. "Roughly 85% of the reserves are gas, with the balance associated natural gas liquids," EnCana said.

EnCana intends to drill about 50 wells on the acquired lands during 2002, which would increase production to about 55 MMcfed by yearend. "Production, which is centered in the North Douglas Creek arch north of Grand Junction, Colo., is sold under short-term agreements," EnCana noted. "Infill drilling and further exploitation have the potential to triple production from this property in the next 3 years," said Roger Biemans, president of EnCana Oil & Gas.

The transaction, which is subject to regulatory approvals and certain other conditions, was expected to close by the end of April.