PanCanadian Energy and Alberta Energy to Merge

On January 27, 2002, PanCanadian Energy Corporation and Alberta Energy Company Ltd. (AEC) announced that their respective boards of directors unanimously agreed to merge the two companies. The combined organization will be a Canadian-headquartered, world-class, independent oil and gas company with an enterprise value of more than $27 billion. Upon completion of the transaction, the combined organization will operate under the name EnCana Corporation.

Under the terms of the agreement, this merger of equals is to be accomplished through an arrangement under Alberta’s Business Corporations Act. It will feature a common share exchange through which AEC common shareholders will receive 1.472 common shares of PanCanadian for each common share of AEC they own. The exchange ratio is a market-to-market ratio based on the average of the closing price for the 10 trading days ended January 23, 2002. On completion of the proposed transaction, PanCanadian shareholders will own approximately 54 per cent and AEC shareholders will own approximately 46 per cent of EnCana. Both boards of directors have endorsed the transaction and have received fairness opinions from their financial advisors. The proposed merger is subject to approvals by the shareholders of both companies, the Court of Queen’s Bench of Alberta and appropriate regulatory and other authorities. The transaction is anticipated to close in early April 2002.

PanCanadian was represented by in-house counsel Laurie Schuller and Trudy Curran; Douglas Foster, John MacNeil, John Burns, Q.C., Margaret Lemay, Chip Johnston, Brent Kraus and Dustin Gemmill (corporate), Marty Kay, Q.C., (litigation), Jo’Anne Strekaf and Beth Riley (competition) and Mike Ryer, Alan Ross and Stan Ebel (tax) of Bennett Jones LLP; Brian Felesky, F. Brenton Perry, Sandra Jack, John Burghardt and R. Mark Coleman of Felesky Flynn; and Jon Gregg, Robert Wootton, Robert Freeman, Mark Kaufmann and Frederic Berner of Sidley Austin Brown & Wood LLP in the U.S.

AEC was represented by in-house counsel Wayne Holt, Kerry Dytes, David Sheridan and Jeff Paulson; Kevin Johnson, Andrew Love and Kent Kufeldt of Macleod Dixon LLP; Edwin Maynard, Robert Schumer, David Sicular, Didier Malaquin, Jeffrey Hellman, Nancy McGlamery, Scott Lyons and Matias Milet of Paul, Weiss, Rifkind, Wharton & Garrison in the U.S.; and Douglas Ewens, Q.C., David Ross, Steven Baum and Jerald Wortsman (tax) of McCarthy Tétrault LLP.