Encana announces plan to buy oil play in Texas for US$3.1B
Buying 45,500 acres of land in south Texas, roughly doubling company's oil production
CALGARY—Encana Corp. is spending US$3.1 billion to buy 45,500 acres of land in south Texas, roughly doubling the company’s oil production.
The deal with Freeport-McMoRan Copper & Gold Inc. will see Encana’s American subsidiary acquire the massive propert in the Eagle Ford resource play that produced roughly 53,000 barrels of oil equivalent per day in the first quarter of this year.
“Gaining a position in a world class, oil-rich resource play like the Eagle Ford accelerates the transition of our portfolio and underscores our investment focus on high margin assets,” Encana president and chief executive Doug Suttles said in a release.
The deal comes about a week after the Calgary-based company announced it was selling 90,000 acres of natural gas land in Texas, and just over a month after it sold more than 124,000 acres of natural gas lands in Wyoming for US$1.8 billion.
“With this transaction, combined with our announced divestments of Jonah and properties in east Texas, we’re replacing natural gas production with high margin oil and liquids production,” Suttles said.
Last year, Encana said it was cutting about 20 per cent of its workforce as it reorganized.
“Overall, this acquisition fully aligns with our strategy announced last November; it will significantly boost our oil and liquids output, improve our ability to generate cash flow and enhance our portfolio of world class resource plays,” Suttles continued.
The deal adds a sixth core asset to Encana’s portfolio.
The company said it expects the deal to close by the end of the second quarter of 2014, subject to regulatory approvals.