November 3, 2011 / 11:25 AM / 7 years ago

UPDATE 2-Encana to sell some gas assets for $975 mln

* EnerVest building a position in the Barnett (Adds bacground, details about sale; figures in U.S. dollars except for share price)

Nov 3 (Reuters) - Canadian energy company Encana Corp (ECA.TO) said on Thursday it had reached an agreement to sell its North Texas natural gas-producing properties to partnerships managed by EnerVest Ltd for about $975 million.

Encana, one of the world’s largest natural gas producers, said the assets included wells and gathering pipelines on about 50,000 acres in the Barnett shale region of North Texas.

The assets currently produce about 125 million cubic feet equivalent per day of natural gas.

With the completion of the deal and the sale of other non-core assets, Calgary, Alberta-based Encana expects to have net divestitures of about $1.7 billion by year-end.

Encana had planned to sell between $1 billion and $2 billion of non-core assets to reduce spending and cope with weak natural gas prices.

In September, it sold some U.S. midstream assets in Colorado for $590 million. Last month, it sold its interest in the Cabin gas plant in British Columbia’s Horn River Basin. [ID:nL3E7K71UQ] [ID:nL3E7L71FX]

Encana said proceeds from the sale of the North Texas assets were expected to supplement its cash flow generation, strengthen its balance sheet and provide more financial flexibility.

Energy companies have rushed to tap into potentially lucrative shale rock formations in states including Texas, Louisiana and Pennsylvania that are believed hold vast quantities of oil and gas.

The Barnett shale was among the first of these formations to attract this investment.

However, many companies have turned their attention to shales with higher concentrations of oil and natural gas liquids because prices for so-called dry natural gas have fallen.

Enervest, an energy-focused private equity firm based in Houston, has recently built a position in the Barnett shale.

The firm said last week that along with partners it paid $967 million to buy 20,207 gross acres in the core of the Barnett shale from Talon Oil and Gas.

Encana shares were up 25 Canadian cents at C$21.30 on the Toronto Stock Exchange. (C$1.01=$1) (Reporting by Euan Rocha in Toronto and Michael Erman in New York; Editing by Frank McGurty)

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