EnCana Corp. and some of its affiliates agreed to sell virtually all of their gas storage interests to private equity fund Carlyle/Riverstone Global Energy and Power Fund for about $1.5 billion after adjustments.
EnCana said last June that it would sell its storage business, which is composed of 174 Bcf of working capacity at five facilities in Alberta, California and Oklahoma (see NGI, June 27, 2005). The facilities being sold are Suffield in Alberta, 85 Bcf; Countess in Alberta, 40 Bcf; Wild Goose in California, 24 Bcf; Salt Plains in Oklahoma, 15 Bcf; and Starks in Louisiana, 27 Bcf in development. The company will retain the 10 Bcf Hythe gas storage facility in northwest Alberta for its own use as the facility is being integrated with EnCana's upstream operations.
EnCana expects an after-tax earnings gain of about $850 million. The sale, subject to conditions and regulatory approvals, is expected to close in two transactions. All sale components, except for the Wild Goose facility, are expected to close in mid-April. Sale of Wild Goose requires the review and approval of the California Public Utilities Commission, which may take several months, EnCana said.
In addition to the storage divestiture, EnCana is in the process of concluding the $350 million sale of the Chinook oil discovery offshore Brazil to Hydro. It also has sold its Entrega Pipeline in Colorado to Kinder Morgan Energy Partners LP and Sempra Pipelines and Storage for about $240 million (see NGI, Oct. 24, 2005). Including EnCana's recent $1.42 billion sale of its Ecuador interests, the company expects to realize net proceeds of about $3.3 billion from its four asset sales. Proceeds will be used to pay down debt and purchase shares under its normal course issuer bid.
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