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EOG Sells Canadian Assets, Keeps Acreage in $410M Deals

Houston-based EOG Resources Inc. on Monday announced the divestiture of all its assets in Manitoba and certain assets in Alberta in two separate confidential transactions that closed on Nov. 28 and Dec. 1. The move was mostly to shed natural gas assets.

Early last year, EOG reported a net loss of $505.0 million (minus $1.88/share) during 4Q2012, including a writedown of $849.4 million for Canadian properties (see Daily GPI, Feb. 15, 2013). At the time, then-CEO Mark Papa said approximately 98% of the total financial writedown occurred in Canada as a result of low gas prices.

Approximate proceeds from the divestitures announced Monday are $410 million, net of customary transaction adjustments, the company said. As a result of the transactions, approximately $150 million of restricted cash related to future abandonment liabilities was released.

"The proceeds and cash will be utilized for general corporate purposes," EOG said. Buyers and transaction details were not disclosed.

EOG officials said the company has retained approximately 382,200 gross acres (282,100 net) in Alberta, British Columbia (BC) and Saskatchewan, and it plans to maintain an operations office in Alberta.

Forecasted production from the divested assets is approximately 7,050 b/d of crude oil, 580 b/d of natural gas liquids (NGL), and 43.5 MMcf/d of natural gas. Net proved reserves divested are estimated to be 7.7 million bbl of oil, 800,000 bbl of NGLs and 78.7 Bcf of natural gas. EOG divested 1.3 million gross acres (1.1 million net), 97% of which are in Alberta. Of the approximate 5,800 producing wells sold, 5,255 are natural gas.

"This decision is consistent with EOG's focus on its outstanding U.S. crude oil opportunities. We plan to reinvest some of the proceeds in these high-return assets, while retaining our position in the (BC) Horn River Basin and other exploration areas," said EOG CEO Bill Thomas.

EOG bills itself as "one of the largest independent (non-integrated) U.S. crude oil and natural gas companies," claiming proved reserves in the United States, Canada, Trinidad, the United Kingdom and China.

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