Washington Gas, a subsidiary of WGL Holdings Inc. (NYSE: WGL), has signed a conditional purchase and sale agreement with Energy Corp. 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 $126 million in physical natural gas reserves enables Washington Gas to secure a long-term supply of natural gas that is expected to generate savings for Virginia customers over the 20-year investment period.
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, which currently operates more than 4,600 wells throughout Appalachia.
KeyBanc Capital Markets acted as exclusive financial advisor to Washington Gas.