Encana announced plans to sell Barnett Shale assets in North Texas as part of the company’s plans to sell $1-2 billion in assets this year. This comes on the back of low gas prices and lower oil prices than just a few months ago. Major independent producers continue to outspend cash flow and we expect you’ll see more divestitures in the second half of 2011.
CALGARY, Alberta-Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corporation (TSX & NYSE: ECA), has initiated a process to divest of its North Texas natural gas producing assets in the Fort Worth Basin located in the Barnett Shale play. Scotia Waterous (USA) Inc. has been retained as advisor to assist in the process.
“The initiation of the process to sell Encana’s North Texas assets is a continuation of the company’s ongoing divestiture program, which is well underway and is targeting net divestitures of between US$1 billion and $2 billion for 2011. Encana continuously looks for opportunities to manage its portfolio of producing assets and improve the long-term value creation capacity of its vast resource portfolio. These North Texas assets are high-quality, relatively mature producing properties that hold strong potential for future development. The assets currently produce about 125 million cubic feet equivalent per day (MMcfe/d) and include the associated processing and pipeline facilities on about 52,000 net acres of land in the Fort Worth Basin. We would expect this divestiture to be completed in late 2011 or early 2012,” said Jeff Wojahn, Encana’s Executive Vice-President & President, USA Division.
“We acquired our core position in the Barnett Shale play in 2004 as a result of a corporate acquisition that was focused on building a major land and production position in the U.S. Rockies. Alongside developing this strong asset, over the years we built a suite of high-growth, early-life resource plays in the Mid-Continent, led by about 295,000 net acres of land in the Haynesville Shale play, where our production is now more than 500 MMcfe/d. In East Texas, our production is about 250 MMcfe/d and our 240,000 net acres hold strong growth potential. Our Mid-Continent resource play teams and operations, based in Dallas, will continue to be a leading contributor to Encana’s long-term growth strategy,” Wojahn said.
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