The steel manufacturer carried out certaintransactions with Encana Corp.in restructuring its natural gas supply agreements to boost access and lowercosts.
Nucor acquired a 49% leasehold interest covering about54,000 acres in the South Piceance Basin from Encana. The two companies alsocanceled two carry and earning, or C&E, drilling agreements between them,and Encana acquired Nucor's 50% equity stake in their gas gathering jointventure Hunter Ridge Energy Services LLC, according to an Oct. 4 news release.
The South Piceance Basin assets include certainmineral leases to all depths, which would allow Nucor full discretion onparticipation in all future drilling capital investment, in contrast to thelimited contractual commitments under its cancelled C&E agreements.Terminating the C&E contracts also removed all future carry capital andcontingent liabilities associated with them, which is expected to cut unitcosts for future drilling, Nucor said in the release.
Nucor struck long-term agreements with third-partygathering and processing service providers to underpin all future developmentsand wells already in operation at the South Piceance Basin acreage.
"These transactions give both companies capitalflexibility. In addition, they preserve Nucor's long-term access to low costgas resources in support of Nucor's raw material strategy," said JohnFerriola, chairman, CEO and president of Nucor.