An EnCana Corp. spokesman said last week that Colorado's decision to rewrite its drilling rules has nothing to do with the company's decision to sell its Paradox Basin natural gas field, which currently produces around 50 MMcf/d.
Subsidiary EnCana Oil & Gas (USA) Inc., which is based in Denver, late last month initiated a process to sell the 417,000-acre field, where it is the largest gas producer. EnCana now has 85 producing wells and midstream facilities with 120 MMcfe/d of processing capacity in the basin. The assets, which are 100% operated by EnCana, straddle western Colorado and eastern Utah. The producing assets include four fields: Andy's, Mesa, La Sal, Hamilton Creek and Lisbon.
EnCana retained Scotia Waterous (USA) Inc. to assist in the sale process.
"In this sale EnCana will be monetizing all of its oil and gas and related assets, including gas plants and more than 260 miles of gathering pipelines in the Paradox Basin," it stated in the offering. The offering's operating cash flow from January to May was estimated at $41.5 million net ($99.6 million annualized).
The fields produce from multiple stacked sandstone and carbonate reservoirs at depths ranging 3,000-9,500 feet, EnCana stated. In addition, EnCana said it had identified 16 "exploration opportunities with exposure to 170 Bcfe."
EnCana spokesman Doug Hock told the Rocky Mountain News that the decision to sell the property had nothing to do with ongoing efforts by Colorado regulators to rewrite drilling rules. "The asset just didn't fit with the profile of the company and we felt some other operator would bring more value to it," said Hock.
The Colorado Oil and Gas Conservation Commission (COGCC) last month provisionally passed a set of regulations that, among other things, would protect drinking water and manage odors at natural gas drilling sites (see NGI, Sept. 1). Three more hearings on the tentative rules are scheduled for Tuesday-Thursday (Sept. 9-11) by the COGCC. If enacted, the rules would take effect in October 2009.
Bids on the EnCana properties will be taken through Oct. 8. More information is available at www.scotiawaterous.com. All proposals will be considered, but EnCana said it "prefers cash consideration and a single counterparty."
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