Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corporation, has reached an agreement to sell its North Texas natural gas producing properties to certain partnerships managed by EnerVest, Ltd. of Houston, Texas for approximately US$975 million.
With the completion of this divesture, plus other non-core asset sales, Encana expects to have net divestitures of approximately $1.7 billion by year-end, which is well within the company’s 2011 target of between $1 billion and $2 billion. Proceeds from these transactions are expected to supplement cash flow generation, strengthen the company’s balance sheet and provide financial flexibility going into 2012.
Optimizing Encana’s resource portfolio, investing in highest return projects, growing oil and liquids production
“ The sale of this North Texas asset in the Barnett Shale is part of Encana’s ongoing portfolio optimization aimed at enhancing the long-term value of the company’s vast resource potential. Since we first acquired substantive Barnett Shale production in North Texas seven years ago, we have greatly expanded production and assets on other earlier-life resource plays in Texas and Louisiana. Our Texas and Haynesville key resource plays are producing more than 750 million cubic feet per day and they offer long-term growth opportunities in our well-established Mid-Continent business unit. As we look to 2012, we continue to focus on our highest return projects and we plan to direct a greater portion of our capital investment to grow our oil and natural gas liquids production from the more than 2 million net acres we hold on liquids-rich lands across North America ,” said Randy Eresman, Encana’s President & Chief Executive Officer.
These North Texas assets currently produce about 125 million cubic feet equivalent per day (MMcfe/d) and include the associated gathering pipelines on about 50,000 net acres of land in the Fort Worth Basin. This sale of Encana’s North Texas assets is subject to normal closing conditions as well as regulatory approvals and is expected to close prior to year-end with an effective date of November 1, 2011. Scotia Waterous (USA) Inc. advised Encana on this transaction.
Joint venture and midstream divestiture initiatives continue to progress
Encana continues to advance its competitive processes for the establishment of a joint venture partnership on the company’s undeveloped lands in its Cutbank Ridge resource play in British Columbia, and the prospective sale of its Cutbank Ridge midstream assets in British Columbia and Alberta. These corporate development initiatives are aimed at accelerating growth and value creation from the company’s enormous resource base and unlocking value from Encana’s midstream assets. Encana recently completed the sale of a portion of its Piceance Basin midstream assets for approximately $590 million.
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Source: Encana, November 3, 2011