With the sale of mature oil-producing properties in east central and southern Alberta to Harvest Energy Trust for US$395 million, EnCana Corp. said Thursday it has completed the first tranche of asset sales that it announced following the completion of its merger with Tom Brown in April. The company now plans to sell additional assets over the next 12 months representing another 15,000-35,000 boe/d of production.
The property sale on Thursday, which is expected to close by Sept. 1, represents about 16,800 boe/d of production after royalties and is made up of predominantly medium and heavy oil assets.
“This sale is one in a series of planned divestitures of conventional oil and gas assets, following our acquisition of Tom Brown Inc.,” said COO Randy Eresman. “The production from these mature assets is well suited to a trust, whereas our recently acquired Tom Brown assets are primarily gas-producing resource play properties at an early stage in their life. Currently, our organic production is growing at a rate of about 12%/ year.
“Including Tom Brown and our other acquisitions and divestitures, we expect to grow production this year to between 725,000 and 765,000 boe/d, which at midpoint is a 15% increase from 2003 sales,” he added.
When EnCana announced its acquisition of Tom Brown in April, it also announced that it planned to sell assets producing between 40,000-60,000 boe/d, which were expected to generate between $1-1.5 billion.
The sale of assets to Harvest is subject to typical post-closing adjustments. Tristone Capital Inc. served as a financial adviser to EnCana on this transaction.
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