Encana buys big in Texas’ Eagle Ford play; doubles oil production
Encana Corp. doubled its oil production — and signaled the Canadian company was serious about its move into the oil patch — with a $3.1 billion purchase of about 45,500 acres in Eagle Ford[5] oil play in southern Texas.
Encana (NYSE: ECA) is buying the acreage, via Denver-based subsidiary Encana Oil & Gas[6] (USA) Inc., from the Phoenix-based oil, gas and minerals company Freeport-McMoRan[7].
The acreage has produced about 53,000 barrels of oil per day during the first quarter, and the two companies believe the land has more than 400 sites for new oil and gas wells.
Encana said the deal is expected to close by the end of the second quarter 2014 with an effective date of April 1, 2014. Scotia Waterous advised Encana, based in Calgary, Alberta, Canada, on the transaction.
The area in the three counties of Karnes, Wilson[8] and Atascosa, “is widely known as being in the heart of the oil-rich Eagle Ford[9] resource play,” Encana said in its announcement Wednesday.
“Gaining a position in a world class, oil-rich resource play like the Eagle Ford[10] accelerates the transition of our portfolio and underscores our investment focus on high margin assets,” said Doug Suttles[11], Encana’s president and CEO in a statement.
“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.
Encana said in November it planned to refocus the company[12] on oil production, rather than natural gas.
Suttles said in December the company would pare its assets and focus on five major plays — including Colorado’s Niobrara oil play — that are rich in oil and natural gas liquids.
Cathy Proctor covers energy, the environment, transportation and construction for the Denver Business Journal and edits the weekly "Energy Inc." newsletter. Phone: 303-803-9233. Subscribe to the Energy Inc. newsletter[13]
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