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EVEP acquires over $1.2B in Barnett Shale assets

By Oil & Gas Financial Journal staff

EV Energy Partners (NASDAQ: EVEP) and certain other parties related to EnerVest have signed agreements with two companies to acquire over $1.2 billion in Barnett Shale assets in Montague, Wise, Denton, Parker and Tarrant counties.

Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corp., is the seller of $975 million in North Texas assets. The second set of assets was acquired from an undisclosed private seller for $233 million.

Of the total volumes of 138.7 million cubic feet equivalent per day acquired in the transactions, Encana’s portion accounted for the majority. The properties sold currently produce about 125 million cubic feet equivalent per day (MMcfe/d) and include the associated gathering pipelines on about 50,000 net acres of land in the Fort Worth Basin.

A note to investors from Global Hunter Securities (GHS), puts the Encana portion of the transaction with an implied valuation of $7,800 per flowing mcfe, while the combined Encana and private portion of the transaction implies an $8,700 per flowing mcfe valuation.

Overall, noted GHS, the transaction includes 82,000 net acres, implying a valuation of $14,732 per acre.
The combined transaction includes 763 active wells as well as 300 identified PUD drilling locations.

"The sale of this North Texas asset in the Barnett Shale is part of Encana's ongoing portfolio optimization aimed at enhancing the long-term value of the company's vast resource potential. Since we first acquired substantive Barnett Shale production in North Texas seven years ago, we have greatly expanded production and assets on other earlier-life resource plays in Texas and Louisiana. Our Texas and Haynesville key resource plays are producing more than 750 million cubic feet per day and they offer long-term growth opportunities in our well-established Mid-Continent business unit. As we look to 2012, we continue to focus on our highest return projects and we plan to direct a greater portion of our capital investment to grow our oil and natural gas liquids production from the more than 2 million net acres we hold on liquids-rich lands across North America," said Randy Eresman, Encana's president and CEO.

Just as Encana’s portion of the deal is part of its ongoing portfolio optimization, the transaction is consistent with EVEP’s acquisition strategy, as well. The company added bolt-on acreage with its previous purchase of Barnett assets from Dallas-based Talon for $976 million in 4Q10.

Scotia Waterous (USA) Inc. advised Encana on the transaction.

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