On Jan 15, Canadian energy explorer Encana Corporation (ECA) announced that it has concluded the sale of its previously announced Clearwater assets. The company closed the deal with Ember Resources Inc. for a price of C$605 million.
The assets, located in southern and central Alberta, are spread across 1.2 million net acres. The acreage comprises 6,800 wells that are currently under production. In the last reported quarter, the assets yielded about 180 million cubic feet equivalent of natural gas per day.
Encana added that it will continue to hold about 1.1 million net acres in Clearwater. The retained acreage will include 480,000 net acres in the Horseshoe Canyon Fairway.
The sale supports Encana’s strategy of reducing natural gas assets and shifting focus on liquid-linked acreage. The company has a significant position in the promising Montney and the Duvernay plays in Canada, and the Eagle Ford Shale in the U.S.
Encana stated that it plans to maintain the strength of its balance sheet in 2015 and will not increase any debt. Moreover, the proceeds from this sale along with its previously announced midstream assets sale would be used to support the company in this weakened pricing market.
Encana is a focused pure-play natural gas exploration and production company. It is the second largest gas producer in North America, and holds a highly competitive land and resource position in some of the most promising shale and tight gas resource plays of the region.
However, Encana’s earnings in the past few quarters have failed to impress and have missed the Zacks Consensus Estimate. The trend is likely to continue in the upcoming results – expected to release on Feb 25 –as several brokerage firms have lowered estimates for the company in the past few weeks.
Currently, Encana carries a Zacks Rank #5 (Strong Sell).
Better-ranked players from the energy sector include Cheniere Energy Partners LP. (CQP), Spectra Energy Partners, LP (SEP) and Seadrill Partners LLC (SDLP). All these stocks sport a Zacks Rank #1 (Strong Buy).
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