Company quickly transitioning to balanced liquids/gas mix
Encana Corp. (TSX: ECA) (NYSE: ECA) has reached an agreement with Ember Resources Inc. to sell the majority of its Clearwater assets, located in southern and central Alberta, for approximately C$605 million.
Calgary-based Encana has worked to realign its portfolio—divesting natural gas-weighted assets to acquire and development higher-margin oil and natural gas liquids (NGLs) opportunities. This recent deal comes on the heels of its $7.1 billion acquisition of Athlon Energy to position itself in the oil-rich Permian Basin. In May, the company entered a deal with Freeport-McMoRan Oil & Gas to purchase Eagle Ford shale assets for $3.1 billion.
In its most recent transaction, Encana will sell approximately 1.2 million net acres of land and over 6,800 producing wells with second quarter average production of approximately 180 million cubic feet equivalent per day (MMcfe/d) of natural gas.
The company will retains approximately 1.1 million net acres in Clearwater, including around 480,000 net acres along the eastern edge of the Horseshoe Canyon Fairway.
"This divestiture continues to advance our strategy. We are unlocking additional value from non-core dry gas assets as we focus on liquids rich growth areas. Our growth portfolio now includes the top two resource plays in Canada, the Montney and the Duvernay, and the top two resource plays in the United States, the Eagle Ford and, by year-end, the Permian Basin," says Doug Suttles, Encana president and CEO.
Following Encana’s second quarter update in which it accounted for Jonah and East Texas divestitures and its Eagle Ford acreage acquisition, analysts at Global Hunter Securities made note of the company’s turnaround. “Post the asset sales, ECA is transitioning to a balanced liquids/gas mix faster than expected with production mix becoming +25% liquids by YE14, up from 12% in 2013.”
For Ember, the deal adds to recent acquisitions in which it has ammassed a significant land and production base in the Horseshoe Canyon coalbed methane fairway. With this acquisition, Ember will own interests in 2.2. million net acres with combined gross production of 290 MMcfe/d of natural gas.
The sale of the Clearwater assets is subject to the satisfaction of normal closing conditions and is expected to close in the first quarter of 2015.