Canadian-based Encana Corporation has agreed to purchase 45,500 net Eagle Ford acres from Freeport-McMoRan for $3.1 billion the companies announced in early May of 2014. The acreage is located in Karnes, Wilson and Atascosa counties.
In the first quarter of this year, the acreage produced approximately 53,000 boe/d. Encana estimates inventory of more than 400 drilling locations.
In recent months, the company has been looking for ways to broaden its portfolio to include oil and shift its focus from natural gas. With this acquisition, Encana expects to double its current rate of oil production. Recently, the company announced it will divest its assets in Wyoming's Jonah resource play and properties in East Texas, where the focus has been on natural gas.
“In addition to the near term growth potential of this asset, we believe there are many opportunities to enhance the value of this world class position by applying our proven resource play expertise.” Overall, this acquisition fully aligns with our strategy announced last November; it will significantly boost our oil and liquids output, improve our ability to generate cash flow and enhance our portfolio of world class resource plays.”
Freeport McMoran is expected to clear $2.5 billion from the deal. The company says it will pay down debt, and re-invest the money in its deepwater assets in the Gulf of Mexico. No gain or loss is expected to be reached on the transaction.
Through the second half of this year, Encana plans to start ramping up its activity in the Eagle Ford and exit 2014 with at least four drilling rigs running. The transaction is expected to close at the end of the second quarter.
Read more at encana.com