ENCANA PROCEEDS WITH PLAN TO SPLIT INTO TWO DISTINCT AND INDEPENDENT ENERGY COMPANIES - Reuters, Sept. 10 , 2009 7:00 PM
Article excerpt:
EnCana (GasCo) - a pure-play natural gas company growing high-potential North
American resource plays
"Our natural gas business is very strong and the properties designated for
EnCana (GasCo) are extremely well positioned to grow at anticipated double-digit
rates. We have a diversified portfolio of unconventional natural gas assets
across North America and hold a highly competitive land and resource position in
a number of the continent`s most promising shale and tight gas resource plays,
including Haynesville in the U.S. and Horn River and the Montney in Canada. Our
natural gas exploration and development teams have been industry leaders in
applying long-reach horizontal drilling and multi-stage fracing - revolutionary
innovations that are the foundation for our continued pursuit of the lowest
production costs and maximized margins. These transformative technologies have
unlocked an enormous new inventory of natural gas supply in North America -
clean burning natural gas that is abundant, affordable and readily available to
supply consumers` growing transportation and power needs while reducing the
continent`s environmental footprint," Eresman said.
Strong gas growth potential ahead
"Over the next five years we will be targeting a compound annual production
growth rate of about 10 percent. Our properties have a proven track record of
strong and sustainable growth. From 2006 to 2008, natural gas production from
our Canadian Foothills and USA divisions grew by 12 percent. Despite the more
moderate approach we have chosen to take for this year when gas prices are very
low, these assets are capable of delivering strong growth for years ahead,"
Eresman said.
"EnCana`s (GasCo) portfolio of prolific gas resource plays will include our
Coalbed Methane in central and southern Alberta, the Bighorn Deep Basin play in
Western Alberta, Cutbank Ridge and Greater Sierra plays in British Columbia,
Jonah play in Wyoming, significant Piceance basin plays in Colorado, the Barnett
shale play in Fort Worth and Deep Bossier play in East Texas. In addition to
these established resource plays, our teams have recently achieved some
promising exploration results in a number of North American shale plays, such as
Horn River in British Columbia and Haynesville in Louisiana. These and other
emerging plays have the potential to add significant depth to the company`s
strong portfolio of natural gas assets," said Eresman, who will continue as
EnCana`s (GasCo) President & Chief Executive Officer.
"With about 16 million net acres, 12.4 trillion cubic feet equivalent of proved
gas reserves and 3 billion cubic feet per day (Bcf/d) of natural gas production,
EnCana (GasCo) is expected to retain its standing as a leading North American
natural gas producer with strong growth potential," Eresman said.
About half of expected 2010 natural gas production hedged at more than $6 per
thousand cubic feet
EnCana has hedged two-thirds of expected 2009 natural gas production, about 2.6
Bcf/d, through October of this year at an average NYMEX equivalent price of
$9.13 per thousand cubic feet (Mcf). EnCana has also extended its risk
management program through 2010. As of September 8, 2009, EnCana had established
fixed price hedges on about half of expected 2010 natural gas production - or
about 2 Bcf/d - at an average NYMEX equivalent price of $6.08 per Mcf for the
gas year, which runs from November 1, 2009 to October 31, 2010. EnCana also has
27,000 bbls/d of expected 2010 oil production hedged at an average fixed price
of WTI $76.89 per barrel. EnCana plans to split the 2010 hedges between the two
companies based on their current proportion of production volumes for oil and
natural gas. The company`s price hedging strategy increases certainty in cash
flow to help ensure that EnCana can meet its capital and dividend requirements
without substantially adding to debt. EnCana continually assesses its hedging
needs and the opportunities available prior to establishing its capital program
for the upcoming year.
EnCana (GasCo) - a pure-play natural gas company growing high-potential North
American resource plays
"Our natural gas business is very strong and the properties designated for
EnCana (GasCo) are extremely well positioned to grow at anticipated double-digit
rates. We have a diversified portfolio of unconventional natural gas assets
across North America and hold a highly competitive land and resource position in
a number of the continent`s most promising shale and tight gas resource plays,
including Haynesville in the U.S. and Horn River and the Montney in Canada. Our
natural gas exploration and development teams have been industry leaders in
applying long-reach horizontal drilling and multi-stage fracing - revolutionary
innovations that are the foundation for our continued pursuit of the lowest
production costs and maximized margins. These transformative technologies have
unlocked an enormous new inventory of natural gas supply in North America -
clean burning natural gas that is abundant, affordable and readily available to
supply consumers` growing transportation and power needs while reducing the
continent`s environmental footprint," Eresman said.
Strong gas growth potential ahead
"Over the next five years we will be targeting a compound annual production
growth rate of about 10 percent. Our properties have a proven track record of
strong and sustainable growth. From 2006 to 2008, natural gas production from
our Canadian Foothills and USA divisions grew by 12 percent. Despite the more
moderate approach we have chosen to take for this year when gas prices are very
low, these assets are capable of delivering strong growth for years ahead,"
Eresman said.
"EnCana`s (GasCo) portfolio of prolific gas resource plays will include our
Coalbed Methane in central and southern Alberta, the Bighorn Deep Basin play in
Western Alberta, Cutbank Ridge and Greater Sierra plays in British Columbia,
Jonah play in Wyoming, significant Piceance basin plays in Colorado, the Barnett
shale play in Fort Worth and Deep Bossier play in East Texas. In addition to
these established resource plays, our teams have recently achieved some
promising exploration results in a number of North American shale plays, such as
Horn River in British Columbia and Haynesville in Louisiana. These and other
emerging plays have the potential to add significant depth to the company`s
strong portfolio of natural gas assets," said Eresman, who will continue as
EnCana`s (GasCo) President & Chief Executive Officer.
"With about 16 million net acres, 12.4 trillion cubic feet equivalent of proved
gas reserves and 3 billion cubic feet per day (Bcf/d) of natural gas production,
EnCana (GasCo) is expected to retain its standing as a leading North American
natural gas producer with strong growth potential," Eresman said.
About half of expected 2010 natural gas production hedged at more than $6 per
thousand cubic feet
EnCana has hedged two-thirds of expected 2009 natural gas production, about 2.6
Bcf/d, through October of this year at an average NYMEX equivalent price of
$9.13 per thousand cubic feet (Mcf). EnCana has also extended its risk
management program through 2010. As of September 8, 2009, EnCana had established
fixed price hedges on about half of expected 2010 natural gas production - or
about 2 Bcf/d - at an average NYMEX equivalent price of $6.08 per Mcf for the
gas year, which runs from November 1, 2009 to October 31, 2010. EnCana also has
27,000 bbls/d of expected 2010 oil production hedged at an average fixed price
of WTI $76.89 per barrel. EnCana plans to split the 2010 hedges between the two
companies based on their current proportion of production volumes for oil and
natural gas. The company`s price hedging strategy increases certainty in cash
flow to help ensure that EnCana can meet its capital and dividend requirements
without substantially adding to debt. EnCana continually assesses its hedging
needs and the opportunities available prior to establishing its capital program
for the upcoming year.
Views: 30
Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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Permalink Reply by Mattie on
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Skip,
I did not read your entire report, but there is a Platt's "Gas Daily" article today with Encana's CEO touting their Horn River shale project as having double the recovery factors of the other "best shale projects", including the Haynesville......claiming 10 Bcf per well & 350 bcf per square mile recoveries and 50% decline rate after Year One versus 5 bcf per well and 80-90% decline rate for Haynesville and others. They are using up to 20 frac stages per well and seeing significant success with this shale play. Apache and Devon are other big players, but Encana controls most of the prime acreage.
Only holdback, which is considerable at this date, is the proximity to markets and available infrastructure. Pricing expected to be $1.00 less than other supply basins in the area.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Mattie. Yes, the link to the full article includes more on the Horn River Shale Play (I didn't post it because it is lengthy). I think that Encana seeks to tout it because they do have a leading leasehold position. I have been attempting to read between the lines in Encana's quarterly reports and press releases since last fall (when the split was put on hold) as I thought that splitting the company might be a positive move for us Haynesville Shalers. And I have opined in several discussion threads over the last few months that Encana assuming operator status in SWEPI HA units was also a good sign especially for the southern region of the HS Play. I suspect, and hope, that in the near term Encana's focus will be on the HS and that they will be far more aggressive in pursuing development than SWEPI. Competition benefits mineral owners. And both Chesapeake and Encana seem to be especially active recently in unit apps and new "step out" well permits in far south DeSoto, north Sabine and extreme northwest Natchitoches.
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very true, Skip. I am well aware that SWEPI/Encana have retained some of their acreage in South DeSoto and Sabine Parishes - more checkerboard assignments than full acreage positions. In particular, our acreage was not assigned per checking with our landman with SWEPI. Encana does plan to drill/operate wells in this area soon. I prefer not to release our acreage location at this point, but will tell you that we were surrounded by leases that were assigned by CHK.
With regard to Horn River, I would expect Encana to pump up the play to help kick off their stock. Regardless, due to its proximity to HHub, and timing to get to market, it will hopefully not compete as heavily and immediately as all the other shale plays. We need prices to pick up for sure.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I agree, Mattie. The Horn River is being touted for future development. The checkerboard (nice analogy) is already beginning to be filled in by both CHK and ECA. A good indication of development to follow. And Encana seems to finally be getting serious about developing the King Hill and Gahagan Field areas. For those of us who have been aboard with Keith since the beginning, it's been a long time since we discussed the Messenger Well. A client sent me down to confirm that the rig was on site in July, 2008. Since that time the Messenger and surrounding area has had little activity to discuss. The King Hill Field is the only LOC designated "field" that I am aware of that only has three total wells. For those member who are SONRIS capable search by field and input 4894.
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Permalink Reply by Dion Warr, CPL on
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Skip:
Nearby Alpha FIeld (0063) has two wells.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Dion:
Then maybe it takes two wells to make a field! LOL!
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