Washington Gas, a subsidiary of WGL Holdings Inc., signed a conditional purchase and sale agreement with Energy Corp. of America (ECA) to acquire natural gas reserves through working interests in producing Appalachian Basin wells, the company said May 6.
The acquired assets include 22 producing wells in Greene County, Pa., and three producing wells in Clearfield County, Pa., all of which will be operated by ECA. ECA currently operates more than 4,600 wells throughout Appalachia.
Washington Gas invested about $126 million in physical natural gas reserves. The long-term supply of natural gas from these reserves will generate “substantial savings” over 20 years to Washington Gas’ Virginia utility customers.
The purchase of the Appalachian Basin reserves is conditional upon Virginia State Corporation Commission approval, the company added, noting it will 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.
KeyBanc Capital Markets was Washington Gas’ financial adviser.
WGL Holdings Inc. is based in Washington, D.C.
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