Washington Gas, a subsidiary of WGL Holdings, Inc., has signed a conditional purchase and sale agreement with Energy Corporation of America (ECA) to acquire natural gas reserves through working interests in producing natural gas wells in Pennsylvania’s Appalachian Basin. The investment of approximately US$126 million in physical natural gas reserves enables Washington Gas to secure a long-term supply of natural gas that is expected to generate substantial savings for Virginia customers over the 20 year investment period.
“Washington Gas is pleased to announce this important partnership with ECA,” said WGL and Washington Gas Chairman and Chief Executive Officer, Terry D. McCallister. “This opportunity to invest directly in low-cost natural gas supplies will help to reduce gas price volatility impacts and provide expected savings to our Virginia customers.”
The purchase of the reserves is conditional upon approval by the Virginia State Corporation Commission. Washington Gas expects to file its proposal with the Commission within a week. The agreement with ECA is the first announced transaction to be filed under a 2014 Virginia law that allows natural gas utilities to recover investments in strategic natural gas facilities that provide cost savings, reduce price volatility or reduce supply risk to utility customers.
The acquired assets include 22 producing wells in Greene County, Pennsylvania, and three producing wells in Clearfield County, Pennsylvania, all of which will be operated by ECA.
“From our perspective, ECA’s more than 50 years of production experience in the Appalachian Basin combined with Washington Gas’ long history of reliable delivery of natural gas will serve for a great partnership,” said ECA Chief Executive Officer John Mork.
ECA is one of the premier operators in the region and currently operates more than 4600 wells throughout Appalachia. KeyBanc Capital Markets acted as exclusive financial advisor to Washington Gas.
Adapted from press release by Hannah Priestley-Eaton