Encana Corporation announced on Monday that its wholly-owned subsidiary, Encana Oil & Gas (USA) Inc., has reached an agreement with an affiliate of TPG Capital (TPG) to sell certain natural gas properties in the Jonah field located in Sublette County, Wyoming, for a purchase price of approximately US$1.8 billion.
Doug Suttles, Encana President & CEO, said:
"This transaction is consistent with our strategy. With the divestment of Jonah, we are unlocking value from a mature, high-quality asset and allowing our teams to focus on our five core growth areas and continue with execution of our new strategy."
Encana's Jonah field comprises a total productive area of about 24,000 acres and over 1,500 active wells. Estimated year-end 2013 proved reserves for Jonah totaled approximately 1,493 billion cubic feet equivalent (Bcfe). The transaction also includes over 100,000 undeveloped acres adjacent to Jonah known as the Normally Pressured Lance (NPL) area.
Tom Hart, CEO of the new oil and gas platform formed by TPG to pursue this investment, said:
"The Jonah field is a world-class, low-risk resource with long reserve life and future drilling opportunities that will be a strong platform to continue to grow a portfolio of cash flow-producing assets."
Craig Manaugh, President and COO of the new TPG oil and gas platform, said:
"We look forward to working with the talented Encana team that has made Jonah a successful operation for many years. We are also pleased to announce that we will be maintaining the Jonah field office near Pinedale, Wyoming and opening a Denver office as a result of the transaction."
This sale of Encana's Jonah assets is subject to satisfaction of normal closing conditions, as well as regulatory approvals, and is expected to close in the second quarter of 2014 with an effective date of December 1, 2013. Evercore and Davis Graham & Stubbs LLP advised Encana on this transaction. Vinson & Elkins LLP advised TPG on the transaction.
TPG is a leading global private investment firm founded in 1992 with over $59 billion of assets under management. TPG's new oil and gas platform will be led by a board that includes Dan Allen Hughes, Jr., President and CEO of the Dan A. Hughes Company and TPG partners Michael MacDougall and Christopher Ortega, in addition to Mssrs. Hart and Manaugh.