NEWS BULLETIN

January 27, 2002 --- Vol. 8, No. 10January 2002

Alberta Energy, PanCanadian agree to create new energy juggernaut

With blinding speed, Alberta Energy Co. Ltd. and PanCanadian Petroleum Corp. said today they have locked up their merger deal, barely 48 hours after talks were announced.

The end result is a new C$27 billion energy giant, EnCana Corp., with a bulging portfolio of domestic and international assets.

As widely expected, AEC's current chief executive officer Gwyn Morgan has been rewarded for his ambitious expansion moves with the same post at EnCana.

"This isn't about job cuts and this isn't about getting smaller and trying to squeeze cost cuts - there will be some of that," he told reporters.

"We're talking about one of the highest growth companies - if not the highest growth company - in the business," Morgan said.

The growth plans include assembling an offshore team to steer the exploitation of reserves off Nova Scotia's coast and the British North Sea.As well, EnCana will become a powerhouse in northern Alberta's oil sands, Western Canada's gas fields, the U.S. Rocky Mountains, the Gulf of Mexico and Ecuador.

The entity also has interests in Alaska, both the North Slope and foothills plays, and the Mackenzie Delta, which were acquired by AEC for what it calls "new ventures exploration."

Assuming shareholders approve the merger in early April, EnCana will easily be Canada's largest energy producer, hurdling over the long-time leader, Imperial Oil Ltd., which is 69.6 percent owned by ExxonMobil Corp. and has assets worth about C$12 billion. The deal includes a C$350 million break fee, but neither company expects a hostile bid to surface.

David O'Brien, named chairman of EnCana, said the transaction is designed to give Canada a flagship, world-class independent energy company. He said that only by becoming big enough and growing consistently can companies attract the higher multiples on the stock markets that will reduce their cost of capital and help future growth.

EnCana will have one of the fattest reserve bases of any independent in the world. The list includes 7.8 trillion cubic feet of gas and 1.3 billion barrels of oil and gas liquids.

A task force will be created to review the consolidated holdings and consider selling off up to C$1 billion in non-core assets.

Cook Inlet units approved

The Department of Natural Resources, Division of Oil and Gas, has approved Unocal-operated units at Deep Creek and South Ninilchik on the Kenai Peninsula. Both will be jointly administered by the state and Cook Inlet Region Inc. All of the Deep Creek acreage and the majority of South Ninilchik acreage are in state or CIRI oil and gas leases.

Unocal plans an exploration well in each unit in 2002 and also plans to acquire new seismic data.

The Deep Creek unit is approximately five miles inland from the nearest communities of Ninilchik and Happy Valley. The South Ninilchik unit is northeast of the town of Ninilchik.

BP America's January term price for Alaska North Slope crude is $9.37 a barrel, down $2.08 a barrel (18.2 percent) from December's term price of $11.45 a barrel and down 42.9 percent from January 1998's term price of $16.41 a barrel. This is the lowest BP's term price has been since July 1986 when it stood at $9 a barrel. The term price represents an average of spot prices for the previous month.


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