| Encana to Sell Haynesville Natural Gas Assets for $850M | |
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Encana Oil & Gas (USA) Inc., a wholly owned subsidiary of the upstream energy firm Encana Corporation ECA, has entered into an agreement to sell its Haynesville natural gas assets for a total cash consideration of $850 million. These assets, located in northern Louisiana, would be sold to GEP Haynesville, LLC (GeoSouthern) – a joint venture between GeoSouthern Haynesville, LP and GSO Capital Partners LP.
The company gained about 3% on the NYSE following this announcement.
Production from the assets to be divested averaged 217 million cubic feet per day in the first half of this year. Also, the Haynesville assets contributed about 9% to Encana’s total production and 2.5% to its cash flows during the same period.
The deal would result in reduced commitments worth $450 million for Encana by transferring its current and future obligations. Additionally, the company would transport and market the joint venture’s Haynesville production for the next five years on a fee-for-service basis. This gas marketing arrangement, therefore, brings additional revenue potential for Encana.
The company added that the funds received from the sale would be utilized to reduce borrowings and strengthen financials. The deal is expected to close in the fourth quarter of this year, subject to regulatory approvals and other adjustments. The transaction will have an effective date of Jan 1, 2015.
Encana reiterated plans to focus on its four strategic assets in the Permian, Eagle Ford, Duvernay and Montney. Over 80% of Encana’s full-year capex guidance of $2–$2.2 billion will be used for the development of these assets.
Encana has one of the largest natural gas resource portfolios in North America. The company provides a diverse and high quality inventory of reserves. However, being a firm in the upstream industry, its financials are affected by the weakness in commodity prices.
Currently, Encana carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader energy sector are Alon USA Energy, Inc. ALJ, Alon USA Partners, LP ALDW and Braskem S.A. BAK. All these stocks sport a Zacks Rank #1 (Strong Buy).
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Encana Corporation
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EXPLORATION STAGE |
CODE : ECA.TO |
ISIN : CA2925051047 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Encana is a oil and natural gas producing company based in Canada. Encana holds various exploration projects in Canada. Its main exploration property is BUFFALO HILLS in Canada. Encana is listed in Canada and in Germany. Its market capitalisation is CA$ 4.8 billions as of today (US$ 3.7 billions, € 3.3 billions). Its stock quote reached its highest recent level on November 23, 2018 at CA$ 9.99, and its lowest recent point on January 24, 2020 at CA$ 4.96. Encana has 973 120 000 shares outstanding. |