Encana reaches agreement with Jupiter Resources
Encana has reached an agreement with Calgary, Alberta-based Jupiter Resources to sell its Bighorn assets for approximately US$1.8 billion (C$2.0 billion).
“This transaction advances our strategy by unlocking value from our portfolio as we focus on developing our core growth plays and extracting additional value from our base assets,” says Doug Suttles, Encana President & CEO. “Bighorn is a high quality asset that has not been receiving significant investment in 2014. Going forward, it should serve as an excellent foundational asset for Jupiter Resources.”
The sale includes approximately 360,000 net acres of land along with Encana’s working interests in all pipelines, facilities and service arrangements. Total net proved reserves at the end of 2013 (on an SEC basis) were approximately 1,100 billion cubic feet equivalent (Bcfe), with about three quarters of those reserves being natural gas.
The transaction is subject to satisfaction of normal closing conditions, as well as regulatory approvals, and is expected to close by the end of the third quarter of 2014 with an effective date of May 1, 2014. RBC Capital Markets and Burnet, Duckworth & Palmer LLP acted as financial and legal advisors, respectively, to Encana on this transaction.
Encana plans to update its 2014 guidance, which will consider the impact of all completed transactions to date, in conjunction with the announcement of its second quarter earnings on July 24, 2014.
Encana Corporation Encana is a leading North American energy producer that is focused on growing its strong portfolio of diverse resource plays, held directly and indirectly through its subsidiaries, producing natural gas, oil and natural gas liquids. 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 – Reserves are the estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on: analysis of drilling, geological, geophysical and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable. Proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
The estimates of various classes of reserves in this news release represent arithmetic sums of multiple estimates of such classes for different properties, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of reserves and appreciate the differing probabilities of recovery associated with each class.
In this news release, certain oil and 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. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.