Encana to double oil output with $3.1 billion U.S. shale deal
By Euan Rocha
TORONTO (Reuters) - Encana Corp (ECA.TO: Quote), Canada's largest natural gas company, said on Wednesday it is buying producing assets in the Eagle Ford shale field in Texas from Freeport-McMoRan Copper & Gold (FCX.N: Quote) for $3.1 billion, nearly doubling its oil output and boosting its shares by as much as 6.2 percent.
The purchase adds another core region to the five shale fields Encana is concentrating spending on as it restructures its operations away from low-value natural gas to concentrate on valuable crude and natural gas liquids.
"Gaining a position in a world class, oil-rich resource play like the Eagle Ford accelerates the transition of our portfolio and underscores our investment focus on high margin assets" Encana Chief Executive Doug Suttles, said in a statement.
Encana shares were up C$1.14 to C$25.70 by early afternoon on the Toronto Stock Exchange after earlier touching C$26.08.
The acquisition is Suttles' first major purchase since the former BP Plc (BP.L: Quote) executive arrived at the Calgary-based Encana last June with a mandate to reshape a company that had endured a series of strategic missteps that had it relying on natural gas from wide flung operations throughout North America.
Suttles has begun selling off surplus properties, shedding its stake in Wyoming's Jonah gas field in March for $1.8 billion and late last month selling east Texas gas lands for $530 million.
Encana said the Eagle Ford assets offer a large contiguous land position in the core of the play, fitting well with Encana's technical expertise in developing resource plays.
Canaccord Genuity analyst Phil Skolnick said he views the transaction as positive for Encana, as the deal will boost cash flows for the company. Continued...