Nucor Corp. has agreed to team up with the U.S. division of Encana Corp. on a project that would provide natural gas for its steelmaking facilities. Financial terms were not disclosed.
Nucor said Tuesday that Encana will drill and operate onshore natural gas wells. Nucor will pay its share of the costs plus an additional amount of carried interest as each well is drilled, subject to caps. Either company may suspend drilling if natural gas prices fall below a predetermined threshold.
Nucor, like other manufacturing companies, is striving to take advantage of cheap natural gas to fuel its operations.
The Charlotte, N.C., company said it expects to be able to better manage its exposure in the natural gas commodities market. It also will give Nucor a competitive advantage in natural costs for its Convent, La., facility, which is scheduled to open in mid-2013.
The agreement between Nucor and Encana Oil & Gas (USA) Inc. is in addition to one signed between the two companies in 2010 for a smaller operation. Parent Encana Corp. is based in Alberta, Canada.
Shares of Nucor rose 54 cents, or 1.3 percent, to $41.48 in morning trading. In the past 52 weeks, the price has ranged from $34.23 to $45.75 per share.