Encana Corporation says it intends to sell its North Texas natural gas producing assets in the Fort Worth Basin located in the Barnett Shale play.
“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 under way and is targeting net divestitures of between US$1 billion and $2 billion for 2011,” says Jeff Wojahn, Encana’s executive vice-president and president of the company’s USA Division. “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."
“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 US Rockies,” Wojahn added. “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.”
A sale of Encana’s North Texas assets would be subject to receiving an acceptable bid, the approval of the companies’ boards of directors, normal closing conditions as well as regulatory approvals.
On other fronts, Encana is actively engaged with a number of parties in a competitive process to divest of midstream and producing assets in the U.S. and Canada that no longer fit with its development plans. The company is also in discussions with a number of potential partners looking to make third-party investments aimed at accelerating the value recognition of Encana’s enormous resource potential on its undeveloped lands. Proceeds from these transactions are expected to supplement cash flow generation and strengthen the company’s balance sheet, providing financial flexibility going into 2012.
Across North America, Encana has about 7 million net acres of undeveloped land holding tremendous resource potential. Based on an independent assessment of Encana’s proved reserves and low estimate economic contingent resources, as of Dec. 31, 2010, this natural gas inventory would last approximately 30 years based on 2010 annualized production.