Encana Corporation (Encana) (TSX:ECA) (NYSE:ECA) announced today that its wholly-owned subsidiary, Encana Oil & Gas (USA) Inc., has reached an agreement with an affiliate of TPG Capital (TPG) to sell certain natural gas properties in the Jonah field located in Sublette County, Wyoming, for a purchase price of approximately US$1.8 billion.
"This transaction is consistent with our strategy," says Doug Suttles, Encana President & CEO. "With the divestment of Jonah, we are unlocking value from a mature, high-quality asset and allowing our teams to focus on our five core growth areas and continue with execution of our new strategy."
Encana's Jonah field comprises a total productive area of about 24,000 acres and over 1,500 active wells. Estimated year-end 2013 proved reserves for Jonah totaled approximately 1,493 billion cubic feet equivalent (Bcfe). The transaction also includes over 100,000 undeveloped acres adjacent to Jonah known as the Normally Pressured Lance (NPL) area.
"The Jonah field is a world-class, low-risk resource with long reserve life and future drilling opportunities that will be a strong platform to continue to grow a portfolio of cash flow-producing assets," says Tom Hart, CEO of the new oil and gas platform formed by TPG to pursue this investment.
The buyer expects to retain the employees currently working in connection with the Jonah field and plans to continue investment in the field and adjacent acreage, which will assist in supporting local employment in the area.
"We look forward to working with the talented Encana team that has made Jonah a successful operation for many years," says Craig Manaugh, President and COO of the new TPG oil and gas platform. "We are also pleased to announce that we will be maintaining the Jonah field office near Pinedale, Wyoming and opening a Denver office as a result of the transaction."
This sale of Encana's Jonah assets is subject to satisfaction of normal closing conditions, as well as regulatory approvals, and is expected to close in the second quarter of 2014 with an effective date of December 1, 2013. Evercore and Davis Graham & Stubbs LLP advised Encana on this transaction. Vinson & Elkins LLP advised TPG on the transaction.
Encana's Corporate Guidance will be updated when the company reports its 2014 first-quarter results.