GEP Haynesville is a joint venture between GeoSouthern Haynesville and GSO Capital Partners, which is owned by the Blackstone Group (BX). The company said it remains focused on growing high margin production and that over 80 per cent of 2015 capital will be invested in the company’s four most strategic assets in the Permian, Eagle Ford, Duvernay and Montney.
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Encana operates about 300 wells in the area and total proved reserves were 720 billion cubic feet equivalent of natural gas at the end of 2014.
During the first half of 2015, Encana’s Haynesville assets produced an average 217 MMcf/d, making up 9% of companywide production and less than 2.5% of first-half operating cash flow, excluding hedges.
“This is another step in advancing our strategy”, Encana president and CEO Doug Suttles said in a statement.
Bloomberg reported in April that Encana was considering selling its natural gas assets in Haynesville Shale basin.
The sale of the pure fuel belongings is predicted to shut within the fourth quarter, Encana stated. “In addition, it eliminates our midstream commitments in the Haynesville and captures ongoing revenue upside through a gas marketing arrangement”.
Oil Search Ltd said it is looking for acquisitions in Papua New Guinea, where it holds the bulk of its assets, but Managing Director Peter Botten said deals may take some time as buyer and seller expectations remain wide apart. “With no debt outstanding at closing, aside from an undrawn revolver, the company’s strong balance sheet and liquidity position enable the funding of growth investments and anticipated capital expenditures”. In 2008, Encana purchased Texas and Louisiana Haynesville shale acreage for more than $1 billion.
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The deal is a positive for Encana, said analysts with Tudor, Pickering, Holt & Co. The company says it will see a quick infusion of cash from the sale, as well as about $480 million in savings through 2020.
