Encana to sell Haynesville assets for $850 million

Encana Corp.’s wholly owned subsidiary, Encana Oil & Gas (USA) Inc., has reached an agreement to sell its Haynesville natural gas assets, located in northern Louisiana, to GEP Haynesville LLC (GeoSouthern), a joint venture formed by GeoSouthern Haynesville LP and funds managed by GSO Capital Partners LP.

Total cash consideration to Encana under the transaction is $850 million. In addition, through the transfer of current and future obligations, Encana will reduce its gathering and midstream commitments, which will be substantially complete through 2020, by approximately $480 million on an undiscounted basis. Further, Encana will transport and market GeoSouthern's Haynesville production on a fee for service basis for the next five years.

Encana will use the total cash consideration to reduce its net debt, further strengthening its balance sheet.

Encana's Haynesville natural gas assets include approximately 112,000 net acres of leasehold, plus additional fee mineral lands. Collectively, they represent Encana's total position in northern Louisiana. Encana operates approximately 300 wells in the area. Estimated year-end 2014 proved reserves were 720 billion cubic feet equivalent of natural gas.

The sale of Encana's Haynesville assets is subject to satisfaction of normal closing conditions, as well as regulatory approvals and post-closing adjustments, and is expected to close in the fourth quarter of 2015 with an effective date of Jan. 1.

Jefferies LLC, Credit Suisse and Gordon Arata McCollam Duplantis & Eagan, LLC advised Encana on the transaction. GeoSouthern was advised by Jefferies LLC, Kirkland & Ellis, and Thompson & Knight.

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