Encana Corp. last week checked off more items on its “to do” list after agreeing to sell two packages of properties, including a C$920 million deal to sell two natural gas processing plants that service the Cutbank Ridge area to Veresen Inc.

Gas and natural gas liquids (NGL) in the region, which straddles the Alberta and British Columbia (BC) border, are produced from the prolific Montney Shale, as well as the Cadomin and other geological formations. Veresen is acquiring the Hythe/Steeprock complex, which includes two gas processing plants with combined functional capacity of 516 MMcf/d, as well as 40,000 hp of compression and 370 kilometers of gas gathering lines.

The Hythe plant processes both sour and sweet natural gas, while the Steeprock plant is a sour gas processing facility. The Steeprock plant is about 50 kilometers south of Dawson Creek, BC, and about 10 kilometers west of the Hythe plant.

“This transaction establishes a high-quality, independent natural gas midstream business for Veresen, which we expect will generate attractive returns and make a significant contribution to our cash flow,” said CEO Stephen White. “In an active and highly competitive midstream landscape, we remain focused on our strategy of growing our business through the selective development and acquisition of contracted, high-quality, long-life infrastructure assets that generate stable cash flows.

Veresen and Encana also completed a long-term midstream services agreement under which Encana would provide a “competitive, long-term, take-or-pay throughput commitment averaging 370 MMcf/d, representing 72% of the functional capacity of the Hythe/Steeprock complex,” said Veresen.

Veresen would operate the two interconnected gas processing plants following a transition period, and the company plans to retain all operational employees at the processing plants. Encana would be the contract operator of the compression and gas gathering system, which would allow the producer to coordinate its drilling program and gas production in the area.

Veresen, which like Encana is based in Calgary, owns and operates pipeline transportation, NGL and power facilities. It holds a stake in Aux Sable Liquids Products, which processes nearly all of the natural gas delivered by Alliance Pipeline, which Veresen owns with Enbridge Inc.

The Encana sale, which is expected to close early next year, is subject to regulatory approvals and normal closing conditions.

“This sale agreement marks the conclusion of the major components in our 2011 divestiture program, which, upon closing of all transactions, will result in proceeds of about US$3.5 billion,” said CEO Randy Eresman. “Although not all of our announced transactions will be completed this year, the expected proceeds will help us achieve our 2011 target range for net divestitures of between $1 billion and $2 billion.”

In a second transaction, announced on Friday, Canada’s Direct Energy agreed to pay Encana C$58 million in cash to acquire a package of gas-weighted producing assets in the Carrot Creek region of west-central Alberta.

The transaction would give Direct Energy an additional 6.2 MMcfe/d of output with an incremental 25.6 Bcfe of proven plus probable reserves that are split 42% gas and 58% liquids. Also included is a 40 MMcf/d capacity gas plant with related infrastructure. In exchange, Encana would receive gas assets and related infrastructure operated by Direct Energy in southeastern Alberta.

Carrot Creek is about 160 kilometers west of Edmonton and immediately northwest of the Cardium oil development in which Direct Energy is already involved. The acquisition would give the services company increased access to the multi-zone, liquids-rich Deep Basin gas and Cardium oil fairway.

“The development potential of the Carrot Creek assets represents a promising addition to our North American upstream gas business as we seek further opportunities to increase production and reserves,” said Direct Energy CEO Chris Weston.

Direct Energy has acquired about C$1 billion of assets in the last 19 months and added nearly 500,000 residential and commercial customers, it noted. In 2010 it also became the largest home energy services company in North America with the acquisition of Clockwork Home Services Inc.

Direct Energy has been active in the Western Canadian Sedimentary Basin since 2000 and increased its natural gas reserves by about 60% with the 2010 acquisition of Suncor Energy’s assets in the Wildcat Hills region of Alberta and related interests from Shell Canada Energy in 2011. It owns more than 4,600 producing wells in the region with current daily production of 163 MMcfe/d.

Once the Encana transaction is completed, which is expected in January, Direct Energy said it would be able to meet around 30% of the daily gas requirements for its growing competitive customer base across North America.

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