Encana agrees to sell Piceance natural gas midstream assets in Colorado for US$590 million

abarrelfullabarrelfull wrote on 08 Sep 2011 07:06
Tags: deals encana gas pipeline usa

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Encana Oil & Gas (USA) Inc. (Encana USA), a subsidiary of Encana Corporation (Encana) (TSX, NYSE: ECA), has agreed to sell a portion of its Piceance natural gas midstream assets in Colorado to a private midstream company for approximately US$590 million.

"Following our Fort Lupton gas plant divestiture earlier this year, this Piceance divestiture represents our second successful step in capturing significant unrecognized value from our midstream assets. We have a strong track record of leading the construction of midstream facilities, which gives us the competitive advantage of being a first mover in the development of natural gas resource plays. Once built and operating, the assets may be sold to premium midstream operators, freeing up capital for Encana to redeploy investment into its core business of growing natural gas and liquids production. As part of our midstream divestiture approach, we enter into competitive, long-term gathering and processing fee agreements with top-tier midstream firms - on terms that provide cost stability for our ongoing natural gas developments and help us efficiently deliver natural gas and liquids to market. The market for midstream assets in the U.S. and Canada is very competitive as midstream investors are able to realize strong valuations that are not recognized when the same assets are contained inside larger, more diversified energy firms. We have additional divestiture processes underway as we continue to entertain considerable interest from prospective purchasers of our Cabin Gas Plant in Horn River and Cutbank Ridge midstream assets in Canada. We look forward to completing those divestitures and establishing long-term business relationships with industry-leading midstream companies," said Renee Zemljak, Encana’s Executive Vice-President Midstream, Marketing & Fundamentals.

These Piceance basin midstream assets, built in the past decade, serve Encana’s Mamm Creek, Orchard and South Parachute production in the area around Rifle, Colorado, about 180 miles west of Denver. They gather and transport about 500 million cubic feet per day (MMcf/d), and include about 260 miles of pipeline and 90,000 horsepower of compression facilities. The sale of the Piceance basin midstream assets is subject to certain regulatory approvals and customary closing conditions and is expected to close in the fourth quarter of 2011.

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