Workers on a rig within Encana’s position in the Duvernay, where the Calgary, Alberta-based company added assets through its acquisition of Newfield Exploration that closed earlier this year. (Source: Encana Corp.)
Encana Corp. is selling off its Arkoma Basin position as the Calgary, Alberta-based company continues to digest the slew of assets it acquired earlier this year from its multibillion-dollar deal for U.S. independent Newfield Exploration Co.
An undisclosed company agreed to buy the Arkoma assets, comprising roughly 140,000 net acres of leasehold in Oklahoma, Encana said in a July 8 release. Production from the assets is currently about 77 million cubic feet equivalent per day, 98% of which is natural gas. (Editor’s note: BMO Capital Markets listed NextEra Energy Inc. as the buyer in its weekly A&D market monitor on July 15.)
Encana said it will receive $165 million cash from the Arkoma exit, which is in line with estimates made by analysts with Tudor, Pickering, Holt & Co. (TPH) in a research note on July 8. The TPH analysts also noted that the Arkoma sale represents the second of Newfield’s legacy assets to go.
In early June, Encana said it will exit its China operations through an agreement with its partner the Chinese National Offshore Oil Corp. (CNOOC). The company had acquired the assets comprised of a production sharing contract offshore China from Newfield, which had been active in the South China Sea since 2005.
in the Anadarko Basin, Arkoma Basin, Uinta Basin
and Williston Basin. (Source: Encana Corp.
November 2018 Investor Presentation)
Encana’s purchase of Newfield that closed in February also included positions in the Uinta and Williston basins but most notably within the Stack and Scoop shale plays of the Anadarko Basin.
According to the company website, Encana’s core growth assets are the Anadarko, Permian Basin and Montney.
“Pre-deal leverage looks manageable [at TPH estimates 1.7x year-end 2020 ND/EBITDA] at current strip, and further improvement could come if the noncore Uinta and Williston are similarly monetized [TPH estimates about $1.4 billion to $1.5 billion], but we remain sidelined pending longer-term operational results from the Midcon,” TPH analysts wrote of Encana’s Arkoma sale.
Proceeds from the Arkoma sale will be directed to the company’s balance sheet, according to Doug Suttles, Encana’s president and CEO.
“Along with our recently announced agreement to exit China, this transaction shows our commitment to realize value from noncore assets,” Suttles said in a statement on July 8.
Encana expects to close the sale in third-quarter 2019. CIBC Griffis & Small provided advisory services to Encana for the transaction. Davis, Graham & Stubbs LLP was the company’s external legal counsel.
Emily Patsy can be reached at epatsy@hartenergy.com.
Recommended Reading
Geologist James Parr Joins Ring as EVP of Exploration, Geosciences
2024-11-26 - James Parr joins Ring Energy with over 30 years of experience as a petroleum geologist and leader in multiple energy organizations.
EON Enters Funding Arrangement for Permian Well Completions
2024-12-02 - EON Resources, formerly HNR Acquisition, is securing funds to develop 45 wells on its 13,700 leasehold acres in Eddy County, New Mexico.
BP Profit Falls On Weak Oil Prices, May Slow Share Buybacks
2024-10-30 - Despite a drop in profit due to weak oil prices, BP reported strong results from its U.S. shale segment and new momentum in the Gulf of Mexico.
SM Energy Adds Petroleum Engineer Ashwin Venkatraman to Board
2024-12-04 - SM Energy Co. has appointed Ashwin Venkatraman to its board of directors as an independent director and member of the audit committee.
Twenty Years Ago, Range Jumpstarted the Marcellus Boom
2024-11-06 - Range Resources launched the Appalachia shale rush, and rising domestic power and LNG demand can trigger it to boom again.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.