Stockwatch – Encana To Shed Bighorn Assets In $1.8bn Deal

Stockwatch – Encana plans to purchase 45,500 net acres of Eagle Ford properties located south of Texas.

Stockwatch – Calgary-based energy major Encana Corporation (TSE:ECA, Mkt cap 18.24B, P/E 21.70, Div/yield 0.08/1.24,EPS 1.13, Shares 740.90M) will offload its Bighorn assets to domestic oil and gas exploration services company Jupiter Resources in a $1.8 billion deal that will allow it to focus on its strategic assets, the company said on Friday.

Stockwatch Encana Bighorn

Stockwatch – Encana To Shed Bighorn Assets In $1.8bn Deal

The transaction includes the sale of around 360,000 net acres of land and the company’s working interests in all pipelines, facilities and service arrangements related to the assets. The properties, located in the Alberta Deep Basin, have proven reserves of some 1,100 billion cubic feet equivalent (Bcfe), with roughly 75% being natural gas.

The sale of the assets still requires regulatory clearance in order to go through, Encana said. The divestment is also subject to standard closing conditions but is expected to be completed by September 2014.

While Bighorn is a high-quality asset, it has not been funded significantly in 2014, Encana’s president and chief executive Doug Suttles commented. He believes that it will serve as “an excellent foundational asset” for its new owner going forward.

The news of the divestment came a week after Encana wrapped up the purchase of some 45,500 net acres of Eagle Ford properties located south of Texas. The company paid around $3.1bn for the assets, which were bought through its US subsidiary from mineral explorer Freeport McMoRan Copper & Gold Inc. The assets had an output of 53,000 barrels of oil equivalent per day (boe/d) in the first three months of this year and their addition will double Encana’s current crude oil production.

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