Encana Corp. has launched a plan to sell its 52,000 net acres of property in the Barnett Shale of North Texas, which currently produce 125 MMcfe/d.
The Calgary-based independent’s U.S. subsidiary, Encana Oil & Gas (USA) Inc., has retained Scotia Waterous (USA) Inc. to assist in the sale, which would include associated processing and pipeline facilities.
“The initiation of the process to sell Encana’s North Texas assets is a continuation of the company’s ongoing divestiture program, which is well under way and is targeting net divestitures of between $1 billion and $2 billion for 2011,” said Jeff Wojahn, president of the company’s U.S. division. “These North Texas assets are high-quality, relatively mature producing properties that hold strong potential for future development.”
The sale is expected to be completed by early next year. Although more assets are up for sale, Encana doesn’t plan to sell its properties in the Haynesville Shale.
“We acquired our core position in the Barnett Shale play in 2004 as a result of a corporate acquisition that was focused on building a major land and production position in the U.S. Rockies,” Wojahn said. “Alongside developing this strong asset, over the years we built a suite of high-growth, early-life resource plays in the Midcontinent, led by about 295,000 net acres of land in the Haynesville Shale play, where our production is now more than 500 MMcfe/d.
“In East Texas, our production is about 250 MMcfe/d and our 240,000 net acres hold strong growth potential. Our Midcontinent resource play teams and operations, based in Dallas, will continue to be a leading contributor to Encana’s long-term growth strategy.”
The Barnett Shale “provided Encana with high-quality natural gas growth and foundational knowledge, which the company has applied across its U.S. and Canadian portfolio of newer resource plays,” the company said. “That foundational knowledge will continue to provide Encana with operational expertise as the company applies multiple advanced technologies to manage costs over the long term and pursue maximizing the margins from all of its natural gas production.”
The Barnett sale would be subject to receiving an “acceptable bid,” along with approval by the board of directors and regulatory approvals.
Encana said it remains “actively engaged with a number of parties in a competitive process to divest midstream and producing assets in the U.S. and Canada that no longer fit” the company’s development plans. The company is also “in discussions with a number of potential partners looking to make third-party investments aimed at accelerating the value recognition of Encana’s enormous resource potential on its undeveloped lands.”
The company is one of North America’s biggest gas producers with around seven million net acres of undeveloped land that holds resource potential. Based on an independent assessment of its proved reserves and a low estimate of economic contingent resources, Encana said its gas inventory currently could last around 30 years based on 2010 annualized production.
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