Hunt Oil Co. of Canada has agreed to pay C$176 million (US$115million) for a portion of Canadian 88 Energy Corp.’s Albertanatural gas properties to expand its natural gas production in theregion. The acquisition includes all of Canadian 88’s interests inthe Caroline “B” pool natural gas project in west central Albertaand the Waterton gas property in southwestern Alberta.

Along with reserves and production, the acquisition includes66,000 net acres of undeveloped land and a 3D seismic database,which will be used to develop new exploration opportunities.Currently, Hunt holds a 50% working interest in the Caroline “B”property. At Waterton, the company would pick up a 90% workinginterest and ownership of the property.

“We have been working on this deal for several weeks,” said SidDykstra, president of Hunt Oil Co. of Canada, a subsidiary ofDallas-based Hunt Oil Co. He said the acquisitions “are in linewith our strategy to expand our interests in Canadian natural gas.”

Hunt had made a takeover bid to buy Calgary-based Berkley PetroleumCorp. in December, which was turned back by Berkley’s board in January(see Daily GPI, Jan. 2, Dec. 29, 2000). Although its offer remains on the table, Anadarko PetroleumCorp. made an offer to purchase Berkley earlier this month for $777million, and that deal, though not finalized, was accepted unanimouslyby the Berkeley board, and it has also recommended that itsshareholders approve the deal (see Daily GPI, Feb. 13).

Under terms of Hunt’s latest offer, Calgary-based Canadian 88said a “substantial portion” of the Waterton lands and petroleumand natural gas rights are subject to a right-of-first-refusal. Ifthe right-of-first-refusal is exercised and closed, Canadian 88would receive the proceeds from the Waterton sale and Hunt Oilcould elect to not purchase the Caroline assets for C$64 million.

The refusal process is expected to take about a month, and if itcloses, Canadian 88 expects to use the proceeds from the sale topay down a C$195 million debt.

“Either of these transactions is an essential step” for Canadian88 to focus on its core competencies, said CEO Joseph PritchettIII. He said the Hunt transaction would involve a “significantportion of the corporation’s non-producing reserves,” which wouldimprove the balance sheet and retain “significant explorationupside.”

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