pancanadian buys montana power note : this article gives some of the strategy and economics of the purchase
of montana power by pan canadian .
we will look at the oklahoma reserves for location and strategy with our
pipe - - with the switch in ownership , they may be
receptive to strategy changes .
lorna
pancanadian says montana power purchase ' beautiful fit '
to extend what it sees as dominance in canada ' s natural gas market and to
boost its production by 10 % , pancanadian petroleum ltd . yesterday agreed to
purchase montana power co . for $ 475 million . the properties will extend
pancanadian ' s existing shallow gas properties in southern alberta into
northern montana , adding 94 mmcf / d and 3 , 800 barrels of crude oil and natural
gas liquids .
the acquisition will give pancanadian properties in alberta , montana ,
colorado , oklahoma and wyoming , along with three gas pipelines linking
alberta and saskatchewan to montana .
" we have a focus on natural gas , " said ceo david tuer during a conference
call yesterday in calgary . " this is clearly our future . it is difficult to
put any negative on this ( acquisition ) and it ' s likely to stay valuable for
the foreseeable future . "
montana power ' s production is more than 90 % natural gas and associated
liquids , and the acquisition substantially extends pancanadian ' s land and
infrastructure , allowing it to use its technology and operating strategies in
a region that extends along the alberta - montana border .
" the montana power assets clearly fit our strengths and allow us to employ
our expertise in developing long life reserves of shallow and medium depth
natural gas , " tuer said . " the potential in these assets is significant , and
over the next few years , we will add substantially to pancanadian ' s daily
natural gas production . "
tuer said that the acquisition extends the company ' s dominance in shallow
gas , and called montana power a " beautiful fit with pancanadian ' s gas
strategy , land position and technological capability . "
pancanadian ' s newest acquisition adds reserves of 550 bcf and 20 mm barrels
of oil and natural gas liquids on a proven and one - half probable basis , said
officials . production and reserves account for $ 520 million of the purchase
price , while the remainder is made up of $ 135 million for the midstream and
marketing assets , $ 40 million for the undeveloped land ( about 600 , 000 acres ) ,
and $ 7 million of working capital .
tuer said the company was paying 77 cents / mcfe of proven and on - half probable
reserves . the price for daily flowing production , based on a 6 : 1 ration of
gas to boe is $ 4 , 450 / mcfe , or $ 26 , 710 / boe .
along with the added alberta and montana properties , pancanadian also picks
up some land in colorado ' s denver basin , which now produces about 31 mmcf / d .
other land that is part of the sale is located in the anadarko basin of
oklahoma and the green river basin of wyoming .
three natural gas pipelines that cross from montana into alberta and
saskatchewan also are included . the pipelines allow direct access to the u . s .
markets for southern alberta and saskatchewan gas , and serve more than 1 . 2
million net acres of developed and undeveloped lands , with most of it
concentrated in parcels that span the canada - montana border .
midstream assets that go to pancanadian include a natural gas marketing
company in butte , mt , along with a deep cut gas processing and fractionation
plant in colorado . the fort lupton , co plant processes more than 60 mmcf / d
and 5 , 500 barrels of natural gas liquids and condensate .
in all , the total developed and undeveloped land is roughly 1 . 2 million net
acres , or 1 . 7 million gross acres , said pancanadian .
" montana power fit us like a glove , " tuer said during the conference call . he
said the acquisition will help pancanadian to remain " best of class " for what
it does . " it makes our sandbox that much bigger . "
the acquisition , which is expected to close around oct . 31 , will increase
both pancanadian ' s net income and cash flow this year and in subsequent
years , said tuer . the added gas production will immediately increase the
company ' s natural gas , as a percentage of total production , to 58 % , based on
a 6 : 1 ratio of gas to boe .
about 25 % of the natural gas being acquired from montana power now is being
sold to montana power utilities for $ 1 . 50 to $ 1 . 60 mmcf until july 2002 , and
because it ' s priced below the open market officials think future earnings
will be good .
" as that contract expires , there ' s a lot of potential from the price in this
transaction , " tuer said .
and what ' s to become of montana power ? earlier this year , the 88 - year - old
company , headquartered in butte , announced it would divest itself of four of
its traditional energy businesses . by selling its coal production , natural
gas transmission and distribution , independent power production and oil and
gas exploration and production businesses , it plans to reinvest the proceeds
in touch america , a fiber optics and telecommunications business , which is
also a subsidiary of montana power .
" the process to determine the buyer for our oil and gas business was robust ,
and we are delighted with the result , " said montana power ceo robert p .
gannon . " we believe there will be a meshing of business strategies and that
cultural synergy ' s exist between the purchased companies and pan canadian . "
he noted that montana power has had a canadian presence for almost 50 years .
pancanadian purchased the entire oil and gas division , which now employs
about 170 . pancanadian plans to maintain a regional office in butte , invest
in the acquired properties and grow daily gas production . there was no word
on whether any jobs would be lost .
- -
pancanadian buys montana power
note : this article gives some of the strategy and economics of the purchase
of montana power by pan canadian .
we will look at the oklahoma reserves for location and strategy with our
pipe - - with the switch in ownership , they may be
receptive to strategy changes .
lorna
pancanadian says montana power purchase ' beautiful fit '
to extend what it sees as dominance in canada ' s natural gas market and to
boost its production by 10 % , pancanadian petroleum ltd . yesterday agreed to
purchase montana power co . for $ 475 million . the properties will extend
pancanadian ' s existing shallow gas properties in southern alberta into
northern montana , adding 94 mmcf / d and 3 , 800 barrels of crude oil and natural
gas liquids .
the acquisition will give pancanadian properties in alberta , montana ,
colorado , oklahoma and wyoming , along with three gas pipelines linking
alberta and saskatchewan to montana .
" we have a focus on natural gas , " said ceo david tuer during a conference
call yesterday in calgary . " this is clearly our future . it is difficult to
put any negative on this ( acquisition ) and it ' s likely to stay valuable for
the foreseeable future . "
montana power ' s production is more than 90 % natural gas and associated
liquids , and the acquisition substantially extends pancanadian ' s land and
infrastructure , allowing it to use its technology and operating strategies in
a region that extends along the alberta - montana border .
" the montana power assets clearly fit our strengths and allow us to employ
our expertise in developing long life reserves of shallow and medium depth
natural gas , " tuer said . " the potential in these assets is significant , and
over the next few years , we will add substantially to pancanadian ' s daily
natural gas production . "
tuer said that the acquisition extends the company ' s dominance in shallow
gas , and called montana power a " beautiful fit with pancanadian ' s gas
strategy , land position and technological capability . "
pancanadian ' s newest acquisition adds reserves of 550 bcf and 20 mm barrels
of oil and natural gas liquids on a proven and one - half probable basis , said
officials . production and reserves account for $ 520 million of the purchase
price , while the remainder is made up of $ 135 million for the midstream and
marketing assets , $ 40 million for the undeveloped land ( about 600 , 000 acres ) ,
and $ 7 million of working capital .
tuer said the company was paying 77 cents / mcfe of proven and on - half probable
reserves . the price for daily flowing production , based on a 6 : 1 ration of
gas to boe is $ 4 , 450 / mcfe , or $ 26 , 710 / boe .
along with the added alberta and montana properties , pancanadian also picks
up some land in colorado ' s denver basin , which now produces about 31 mmcf / d .
other land that is part of the sale is located in the anadarko basin of
oklahoma and the green river basin of wyoming .
three natural gas pipelines that cross from montana into alberta and
saskatchewan also are included . the pipelines allow direct access to the u . s .
markets for southern alberta and saskatchewan gas , and serve more than 1 . 2
million net acres of developed and undeveloped lands , with most of it
concentrated in parcels that span the canada - montana border .
midstream assets that go to pancanadian include a natural gas marketing
company in butte , mt , along with a deep cut gas processing and fractionation
plant in colorado . the fort lupton , co plant processes more than 60 mmcf / d
and 5 , 500 barrels of natural gas liquids and condensate .
in all , the total developed and undeveloped land is roughly 1 . 2 million net
acres , or 1 . 7 million gross acres , said pancanadian .
" montana power fit us like a glove , " tuer said during the conference call . he
said the acquisition will help pancanadian to remain " best of class " for what
it does . " it makes our sandbox that much bigger . "
the acquisition , which is expected to close around oct . 31 , will increase
both pancanadian ' s net income and cash flow this year and in subsequent
years , said tuer . the added gas production will immediately increase the
company ' s natural gas , as a percentage of total production , to 58 % , based on
a 6 : 1 ratio of gas to boe .
about 25 % of the natural gas being acquired from montana power now is being
sold to montana power utilities for $ 1 . 50 to $ 1 . 60 mmcf until july 2002 , and
because it ' s priced below the open market officials think future earnings
will be good .
" as that contract expires , there ' s a lot of potential from the price in this
transaction , " tuer said .
and what ' s to become of montana power ? earlier this year , the 88 - year - old
company , headquartered in butte , announced it would divest itself of four of
its traditional energy businesses . by selling its coal production , natural
gas transmission and distribution , independent power production and oil and
gas exploration and production businesses , it plans to reinvest the proceeds
in touch america , a fiber optics and telecommunications business , which is
also a subsidiary of montana power .
" the process to determine the buyer for our oil and gas business was robust ,
and we are delighted with the result , " said montana power ceo robert p .
gannon . " we believe there will be a meshing of business strategies and that
cultural synergy ' s exist between the purchased companies and pan canadian . "
he noted that montana power has had a canadian presence for almost 50 years .
pancanadian purchased the entire oil and gas division , which now employs
about 170 . pancanadian plans to maintain a regional office in butte , invest
in the acquired properties and grow daily gas production . there was no word
on whether any jobs would be lost .
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