EnerVest Ltd. on Thursday said it had come to terms with Encana Corp. to acquire the Calgary-based producer's Barnett Shale portfolio in North Texas for $975 million.

The sale by Encana Oil & Gas (USA) Inc. is not a surprise; the producer put the assets up for sale as part of an ongoing plan to sell $1-2 billion in assets this year (see Shale Daily, Oct. 24). With the closure of the EnerVest sale, which is expected by year's end, Encana will have disposed of $1.7 billion in properties. Proceeds from the sales are to be used to supplement cash flow generation, strengthen the company's balance sheet and provide financial flexibility going into 2012.

"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," said CEO Randy Eresman. "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."

EnerVest manages EV Energy Partners LP (EVEP), which signed the agreements with Encana. In addition to the Encana purchase, the partnership paid an undisclosed seller $233 million to buy additional properties in North Texas. The acquisitions initially would be funded with an existing credit facility.

"These acquisitions are consistent with our stated strategy of establishing dominant positions in proven resource basins," said EnerVest CEO John B Walker. "With these deals, EVEP and EnerVest will have acquired more than $2 billion of Barnett Shale assets in the past year, making us one of the largest producers in the basin."

The properties, which are 79% weighted to natural gas, current produce 43 MMcfe/d net and primarily are in the Texas counties of Montague, Wise, Denton, Parker and Tarrant. Included in the sale are 763 active wells with estimated net proved reserves of 405 Bcfe. The properties are 53% proved developed.

The assets currently produce about 125 MMcfe/d and include the associated gathering pipelines on about 50,000 net acres of land in the Fort Worth Basin. Encana operates about 92% of the properties, which have a reserves-to-production ratio of 25.8 years. More than 300 proved undeveloped drilling locations have been identified.

According to EVEP, the estimated lease operating expenses, including gathering and transportation expenses, of about $2.00/Mcfe; production and other taxes total about 2.75% of revenues.

Eresman said that together Encana's Texas and Haynesville resource plays "are producing more than 750 MMcf/d and they offer long-term growth opportunities in our well-established Midcontinent business unit." The Haynesville properties are not being sold.

"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 two million net acres we hold on liquids-rich lands across North America," Eresman said.

The Barnett sale is subject to normal closing conditions as well as regulatory approvals.

Encana still is working on a competitive process to establish a joint venture partnership on its undeveloped lands in the Cutbank Ridge resource play in British Columbia. It also plans to sell the Cutbank Ridge midstream properties in British Columbia and Alberta. Encana recently completed the sale of a portion of its Piceance Basin midstream assets for approximately $590 million.

EVEP also announced Thursday that over the past 10 weeks it has completed three unrelated acquisitions in the Midcontinent area in Ohio and in its existing Barnett Shale holdings for a total of $116 million. Estimated proved reserves, based on strip prices at the time of acquisition, are about 62 Bcfe, of which 46% weighted to liquids. Current net production is more than 8 MMcfe/d.