Encana trims gas holdings
Encana Corp. is selling $1.8 billion worth of natural gas field assets in Wyoming but doesn’t appear to be looking to sell its holdings in western Colorado’s Piceance Basin.
The company said Monday it is selling its Jonah field holdings in the Pinedale area to the TPG Capital private investment firm as Encana continues its effort to achieve more balance between its natural gas and oil assets. The field covers about 24,000 acres with more than 1,500 active wells, and proved reserves of about 1.5 trillion cubic feet.
The sale also includes more than 100,000 undeveloped acres adjacent to the Jonah field, in what’s known geologically as the Normally Pressured Lance area.
The sale is expected to close during the second quarter of the year.
Encana last year reacted to low natural gas prices with 20 percent companywide layoffs and a decision to focus drilling on areas rich in oil and other liquids. That strategy included suspending its Piceance drilling, which is gas-based.
Company spokesman Doug Hock declined Monday to speak specifically to whether the company’s Piceance assets, which include more than 3,000 wells, are for sale. But he referred to Encana president and chief executive officer Doug Suttles’ recent comments to the Denver Business Journal. Suttles called the Piceance holdings world-class assets whose “day will arrive,” and said he expects Encana will own them when that time comes.
Hock said while Encana is testing the market on a number of different properties at any given time, its business strategy isn’t dependent on acquisitions and divestitures, and “the Piceance provides a good base cash flow for us.”
He also noted that the company isn’t shifting entirely to oil and liquids, but instead is trying to achieve a balance that gives it options as gas and oil prices fluctuate.
“Our fate is not tied to a single commodity. It provides us with more flexibility,” he said.
Don Simpson, vice president of business development for Ursa Resources Group II, which recently acquired Antero Resources’ Piceance holdings, said Ursa is not aware of Encana trying to sell anything in the Piceance.
If anything were for sale, “probably we’d be interested in looking at it to see if it works for us,” he said.
He said Ursa probably would know if any big block of Encana’s Piceance properties were for sale.
But he added that Ursa wouldn’t be interested in buying everything Encana owned locally due to the “gigantic” size involved.
“That would be way too big for us,” he said.
Encana has mineral interests in about 900,000 acres locally. For Encana, that size is one of the attractions for the Piceance, where Hock said Suttles likes to talk about having “a lot of running room.” It differs from the Jonas field, which is more mature in terms of development and has fewer remaining drilling locations, Hock said.
In the Piceance, “We’ve got a large acreage position and there’s a lot of potential there,” he said.
Also of interest to Encana locally is the emerging development in the Mancos/Niobrara formations, where initial drilling by Encana, WPX Energy and other companies has resulted in highly productive gas wells.