SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 31, 2012
(Exact Name of Registrant as Specified in Charter)
(State or Other Jurisdiction of Incorporation)
|1915 Rexford Road, Charlotte, North Carolina||28211|
|(Address of Principal Executive Offices)||(Zip Code)|
Registrant’s telephone number, including area code: (704) 366-7000
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|o||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|o||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|o||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|o||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
|Item 1.01.||Entry into a Material Definitive Agreement.|
On October 31, 2012, Nucor Energy Holdings Inc. (“Nucor”), a subsidiary of Nucor Corporation, entered into a carry and earning agreement (the “Agreement”) with Encana Oil & Gas (USA) Inc. (“Encana”) under which Nucor will acquire an undivided 50% working interest in certain onshore natural gas wells in the continental United States to be drilled and operated by Encana. Nucor expects to invest approximately $542 million over the next three fiscal years and approximately $3.64 billion over the estimated 13 to 22 year term of the Agreement.
The costs of drilling the wells will be shared by the parties pursuant to pre-determined percentage allocations. The Agreement requires Nucor to incur additional capital costs in excess of its working interest in accordance with a carry provision. It also contains certain limitations on the minimum and maximum number of wells that may be drilled in any calendar year over the duration of the Agreement. Either party may suspend drilling operations if the average price of natural gas falls below a pre-determined threshold for thirty consecutive business days. The Agreement contains representations, warranties and covenants by Nucor and Encana customary for the transactions contemplated therein.
The above summary does not purport to be a complete description of the terms of the Agreement and is qualified in its entirety by the contents of the Agreement, a copy of which will be filed as an exhibit to Nucor Corporation’s Annual Report on Form 10-K for the year ending December 31, 2012. Nucor will seek confidential treatment from the Securities and Exchange Commission for certain portions of the Agreement, which will be omitted from the exhibit.
A copy of the news release announcing the Agreement and Nucor’s strategic relationship with Encana is attached hereto as Exhibit 99.1 and is hereby incorporated by this reference.
|Item 9.01.||Financial Statements and Exhibits.|
|99.1||News Release of Nucor Corporation, issued November 6, 2012|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: November 6, 2012||NUCOR CORPORATION|
|By:||/s/ James D. Frias|
|James D. Frias|
Chief Financial Officer, Treasurer and
Executive Vice President
|99.1||News Release of Nucor Corporation, issued November 6, 2012|
Nucor Enters Long-Term Natural Gas Agreement
CHARLOTTE, N.C., Nov. 6, 2012 /PRNewswire/ -- Nucor Corporation (NYSE: NUE) announced today that we have entered into a long-term agreement with Encana Oil & Gas (USA) Inc. for an onshore natural gas drilling program in the continental United States that we believe will ensure a reliable, low cost supply of natural gas for our existing and expected future needs for more than 20 years.
Under the terms of the agreement, Nucor will pay its share of costs plus an additional amount of carried interest as each well is drilled, subject to a cap on carry paid for each well and a cap on total carried interest. Either party may suspend drilling if natural gas prices fall below a predetermined threshold. Encana, a proven leader in drilling technology and environmental stewardship, will be the operator and will provide expertise to drill, complete and operate the wells. This new agreement is in addition to an earlier and smaller onshore natural gas drilling agreement with Encana that was established in 2010.
By entering into this new agreement, Nucor will be better able to manage its exposure to natural gas volatility and overall energy demand for its manufacturing operations. The agreement will ensure a sustainable competitive advantage in natural gas costs for Nucor's direct reduced iron facility currently under construction in Convent, Louisiana, which is on track for startup in mid-2013 and will significantly increase Nucor's usage of natural gas. This new facility, together with our ability to ensure a long-term low cost of natural gas, is an important phase in the execution of Nucor's raw material strategy of providing 6-7 million tons per year of low cost, high quality iron units to our steel mills. Nucor may build additional DRI capacity at the site in Louisiana, further boosting natural gas usage. Additionally, Nucor currently is a substantial consumer of natural gas at its steel manufacturing operations located throughout the United States. The drilling of natural gas wells resulting from the two agreements is expected to provide enough natural gas to equal Nucor's usage at all of our steel mills in the U.S. plus the usage of two DRI facilities, or alternatively three DRI plants. Although it is not possible to guarantee the production volumes, the agreements are for drilling in areas with proven reserves. In addition, the production of the wells that have thus far been drilled and are producing under the 2010 agreement is exceeding the expectations that Nucor modeled for that investment by more than 60%.
Commenting on the transaction, Nucor's Chairman and CEO, Dan DiMicco noted, "We are always searching for ways to improve our competitive position and drive sustained value creation over cycles. The increased exposure to natural gas prices that will accompany our current and potential DRI production, combined with the tremendous advances that have been made in the natural gas industry, have created a unique opportunity to leverage our strong balance sheet to create what we believe will be a lasting competitive advantage for Nucor. This is a win-win proposition for both Nucor and Encana, and we look forward to a long and productive relationship."
Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel - in bars, beams, sheet and plate; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating and expanded metal; and wire and wire mesh. Nucor, through the David J. Joseph Company, also brokers ferrous and nonferrous scrap. Nucor is North America's largest recycler.
Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. The words "believe," "expect," "project," "will," "should," "could" and similar expressions are intended to identify those forward-looking statements. Factors that might cause Nucor's actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) energy costs and availability; and (4) competitive pressure on sales and pricing, including competition from imports and substitute materials. These and other factors are outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2011 Annual Report on Form 10-K. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.
CONTACT: Nucor Executive Offices, +1-704-366-7000, Fax: +1-704-362-4208