Encana initiates process to divest of its North Texas natural gas producing properties
Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corporation (TSX &
NYSE: ECA), has initiated a process to divest of its North Texas natural
gas producing assets in the Fort Worth Basin located in the Barnett
Shale play. Scotia Waterous (USA) Inc. has been retained as advisor to
assist in the process.
'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
underway and is targeting net divestitures of between US$1 billion and
$2 billion for 2011. Encana continuously looks for opportunities to
manage its portfolio of producing assets and improve the long-term value
creation capacity of its vast resource portfolio. These North Texas
assets are high-quality, relatively mature producing properties that
hold strong potential for future development. The assets currently
produce about 125 million cubic feet equivalent per day (MMcfe/d) and
include the associated processing and pipeline facilities on about
52,000 net acres of land in the Fort Worth Basin. We would expect this
divestiture to be completed in late 2011 or early 2012,? said Jeff
Wojahn, Encana′s Executive Vice-President & President, USA Division.
'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. Alongside developing
this strong asset, over the years we built a suite of high-growth,
early-life resource plays in the Mid-Continent, 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
Mid-Continent resource play teams and operations, based in Dallas, will
continue to be a leading contributor to Encana′s long-term growth
strategy,? Wojahn said.
As a leading North American natural gas shale property, the Barnett
Shale has 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. 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.
A sale of Encana′s North Texas assets would be subject to receiving an
acceptable bid, the approval of the companies′ boards of directors,
normal closing conditions as well as regulatory approvals.
On other fronts, Encana is actively engaged with a number of parties in
a competitive process to divest of midstream and producing assets in the
U.S. and Canada that no longer fit with its 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. Proceeds from these transactions are expected to supplement cash
flow generation and strengthen the company′s balance sheet, providing
financial flexibility going into 2012.
Tremendous resource potential across Encana lands
Across
North America, Encana has about 7 million net acres of undeveloped land
holding tremendous resource potential. Based on an independent
assessment of Encana′s proved reserves and ?low estimate economic
contingent resources, as of December 31, 2010, ?this natural gas
inventory would last approximately 30 years based on 2010 annualized
production.
Encana Corporation
Encana is a leading North American
natural gas producer that is focused on growing its strong portfolio of
natural gas resource plays in key basins from northeast British Columbia
to Texas and Louisiana. By partnering with employees, community
organizations and other businesses, Encana contributes to the strength
and sustainability of the communities where it operates. Encana common
shares trade on the Toronto and New York stock exchanges under the
symbol ECA.
ADVISORY REGARDING OIL AND GAS INFORMATION ? In this news
release, certain crude oil and natural gas liquids volumes have been
converted to cubic feet equivalent (cfe) on the basis of one barrel
(bbl) to six thousand cubic feet (Mcf). Cfe may be misleading,
particularly if used in isolation. A conversion ratio of one bbl to six
Mcf is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent value equivalency at
the well head.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS ? In the interests
of providing Encana shareholders and potential investors with
information regarding Encana, including management′s assessment of
Encana′s and its subsidiaries′ future plans and operations, certain
statements contained in this news release are forward-looking statements
or information within the meaning of applicable securities legislation,
collectively referred to herein as 'forward-looking statements.?
Forward-looking statements in this news release include, but are not
limited to: potential divestiture of the North Texas natural gas
producing assets in the Fort Worth Basin located in the Barnett Shale
play, including its associated processing and pipeline facilities;
expected completion date of the proposed North Texas divestiture
transaction in late 2011 or early 2012; targeted divestitures of
midstream and producing assets in the U.S. and Canada and the
expectation to net between US$1 billion and $2 billion proceeds from the
same for 2011; expectation for the proceeds of the net divestitures to
supplement cash flow generation and strengthen the company′s balance
sheet to provide flexibility going into 2012; expected growth potential
of various resource plays in the Mid-Continent; anticipated natural gas
inventory and potential to attract third-party investments to accelerate
the value recognition of Encana′s resource potential on its undeveloped
lands. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the plans,
intentions or expectations upon which they are based will occur. By
their nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties, both general and specific,
that contribute to the possibility that the predictions, forecasts,
projections and other forward-looking statements will not occur, which
may cause the company′s actual performance and financial results in
future periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such
forward-looking statements. These assumptions, risks and uncertainties
include, among other things: the risk that the company may not
successfully divest particular assets or within the expected time
periods or attract third-party investments; the risk that the potential
benefits of these transactions will not be realized; the risk that the
company is unable to meet the targets in its 2011 guidance; volatility
of and assumptions regarding commodity prices; assumptions based upon
the company′s current guidance; fluctuations in currency and interest
rates; product supply and demand; market competition; risks inherent in
the company′s and its subsidiaries′ marketing operations, including
credit risks; imprecision of reserves and resources estimates and
estimates of recoverable quantities of natural gas and liquids from
resource plays and other sources not currently classified as proved,
probable or possible reserves or economic contingent resources;
marketing margins; potential disruption or unexpected technical
difficulties in developing new facilities; unexpected cost increases or
technical difficulties in constructing or modifying processing
facilities; risks associated with technology; the company′s ability to
replace and expand gas reserves; its ability to generate sufficient cash
flow from operations to meet its current and future obligations; its
ability to access external sources of debt and equity capital; the
timing and the costs of well and pipeline construction; the company′s
ability to secure adequate product transportation; changes in royalty,
tax, environmental, greenhouse gas, carbon, accounting and other laws or
regulations or the interpretations of such laws or regulations;
political and economic conditions in the countries in which the company
operates; terrorist threats; risks associated with existing and
potential future lawsuits and regulatory actions made against the
company; and other risks and uncertainties described from time to time
in the reports and filings made with securities regulatory authorities
by Encana. Although Encana believes that the expectations represented by
such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Readers are
cautioned that the foregoing list of important factors is not
exhaustive. Forward-looking statements with respect to anticipated
production, reserves, resources and production growth, including over
five years or longer, are based upon numerous facts and assumptions,
including a projected capital program averaging approximately US$6
billion per year that underlies the long-range plan of Encana, which is
subject to review annually and to such revisions for factors including
the outlook for natural gas commodity prices and the expectations for
capital investment by the company achieving an average rate of
approximately 2,500 net wells per year, Encana′s current net drilling
location inventory, natural gas price expectations over the next few
years, production expectations made in light of advancements in
horizontal drilling, multi-stage well completions and multi-well pad
drilling, the current and expected productive characteristics of various
existing and emerging resource plays, Encana′s estimates of proved,
probable and possible reserves and economic contingent resources,
expectations for rates of return which may be available at various
prices for natural gas and current and expected cost trends.
In addition, assumptions relating to such forward-looking statements
generally include Encana′s current expectations and projections made in
light of, and generally consistent with, its historical experience and
its perception of historical trends, including the conversion of
resources into reserves and production as well as expectations regarding
rates of advancement and innovation, generally consistent with and
informed by its past experience, all of which are subject to the risk
factors identified elsewhere in this news release.
Furthermore, the forward-looking statements contained in this news
release are made as of the date of this news release, and, except as
required by law, Encana does not undertake any obligation to update
publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events, or otherwise. The
forward-looking statements contained in this news release are expressly
qualified by this cautionary statement.
Further information on Encana Corporation is available on the company′s
website, www.encana.com,
or by contacting:
Encana Corporate Communications
Investor contact:
Ryder
McRitchie
Vice-President, Investor Relations
(403) 645-2007
Lorna
Klose
Manager, Investor Relations
(403) 645-6977
Media
contact:
Alan Boras
Vice-President, Media Relations
(403)
645-4747
Carol Howes
Manager, Media Relations
(403)
645-4799
