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Encana Selling U.S. LNG Fuel Business to Stabilis

Encana Corp. has agreed to sell most of its Denver-based liquefied natural gas (LNG) fuel distribution operations to Stabilis Energy, which also supplies gas fuel to oilfield service operators.

The transaction with subsidiary Encana Natural Gas Inc. (ENGI) is set to close by the end of the month. ENGI distributes fuel to domestic high-horsepower engine operators in the oilfield, mining, rail, marine, over-the-road transportation and industrial sectors. No financial details were offered.

Stabilis CEO Casey Crenshaw said the company would bring aboard ENGI staff to "help us reach our goal of being the leading provider of LNG fuel solutions to high-horsepower operators in North America." Senior management from ENGI would assume leadership positions with Stabilis.

Stabilis also agreed to purchase ENGI's fleet of cryogenic rolling stock assets, including storage and regasification trailers, mobile fueling units and other related equipment. Stabilis plans to fulfill all of ENGI's existing customer obligations, including its existing contracts, subject to customer consent.

"Encana Natural Gas Inc.'s customers should expect business as usual with the same great people, great equipment, and great customer service," said Stabilis COO Jim Reddinger. "But they also will benefit from the expanded scope and scale of the new Stabilis Energy business. Our fully integrated LNG fuel solutions offering -- spanning from LNG production to delivery and on-site technical service -- will give our customers the confidence they need to choose LNG to fuel their mission critical high horsepower engine activities."

Stabilis, based in Beaumont, TX, plans to open its first LNG production facility in George West, TX, in January to service oilfield customers in the Eagle Ford Shale. The facility is being built as part of a previously announced venture with Flint Hills Resources LLC, a subsidiary of Koch Industries, to build up to five LNG production facilities that target oilfield customers. The George West facility now is under construction now and would be able to produce around 100,000 gallons/day when complete.

Other targeted LNG liquefaction plant locations include West Texas, North Dakota and other major oilfield regions. Stabilis also would continue to source fuel from ENGI's large existing third-party supply network.

Encana would remain a customer of Stabilis for LNG supplies. Once the transaction is complete, Stabilis would operate fleets in 20 states and multiple end markets.

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