Less than two weeks after being formed by a merger of AEC and PanCanadian, EnCana Corp. has embarked on a major expansion of its Rocky Mountain region producing assets by purchasing 500 Bcf of long-life natural gas and associated natural gas liquids reserves and about 338,000 net acres of land in northwestern Colorado from El Paso Corp. (see Daily GPI, April 5)

Subsidiaries of EnCana Oil & Gas (USA) Inc., an indirect subsidiary of EnCana Corp., reached agreement to purchase the assets from subsidiaries of El Paso for C$461 million (US$292 million) in cash. The acquisition includes developed and undeveloped reserves, a gathering system, a gas plant and 180,000 net acres of undeveloped land in the Piceance Basin. The acquisition complements EnCana’s current Piceance Basin gas production at Mamm Creek and the surrounding area near Rifle, CO.

“The U.S. 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. “These are high working interest operated properties containing liquids-rich reserves in the early stages of development. EnCana has achieved great success applying its tight gas development expertise to multi-zone formations of this nature. 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.”

About 85% of the reserves are gas, with the balance associated natural gas liquids. Current daily production is about 38 MMcfe/d. This year EnCana plans to drill 50 wells on the acquired lands, and anticipates increasing daily production to about 55 MMcfe/d by the end of 2002. Production, which is centered in the North Douglas Creek Arch north of Grand Junction, CO, is sold under short-term agreements.

“This acquisition is of a similar character to our previous U.S. Rockies acquisitions. In-fill drilling and further exploitation have the potential to triple production from this property in the next three years,” said Roger Biemans, president of EnCana Oil & Gas (USA) Inc.

Subject to receipt of regulatory approvals and certain other conditions, the transaction is expected to close by the end of May 2002. The transaction will be funded from cash on hand and available credit facilities. A map illustrating the location of the acquisition is on the EnCana Web site www.encana.com.

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