Washington Gas has signed a conditional purchase and sale agreement with Energy Corporation of America to acquire natural gas reserves through working interests in producing natural gas wells in Pennsylvania’s Appalachian Basin.
The investment of approximately $126 million in physical natural gas reserves enables Washington Gas, a subsidiary of WGL Holdings Inc., 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 Energy Corporation of America,” said Terry D. McCallister, WGL and Washington Gas chairman and CEO. “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 Energy Corporation of America 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 Energy Corporation of America.
“From our perspective, Energy Corporation of America’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 Energy Corporation of America Chief Executive Officer John Mork.
Energy Corporation of America currently operates more than 4,600 wells throughout Appalachia. KeyBanc Capital Markets acted as exclusive financial advisor to Washington Gas.