Encana targets Tuscaloosa Shale play

The Tuscaloosa Marine shale play, which covers approximately 2.7 million acres across central Louisiana and southwest Mississippi, could emerge as the next big shale play. In west-central Louisiana, the target shale in this new play is referred to as the Louisiana Eagle Ford by some industry peers, who note that it is similar in age and lithology to the highly productive, liquids-rich Cretaceous-age Eagle Ford interval in Texas. Continue reading here..

Connacher, Birchcliff Energy, EnCana and Talisman lead $14 billion worth Canadian Deals In Play

Derrick recorded nearly $14 billion worth Canadian packages put for sale by Connacher Oil & Gas, ConocoPhillips, Talisman, Birchcliff Energy, EnCana and Cenovus Energy. The $14 billion includes only the large packages estimated at greater than $1 billion. For more visit us:

EnCana seeks JV partner for development of unconventional gas in British Columbia

Encana Corporation has engaged RBC Capital Markets and Jefferies & Company Inc as its exclusive agents in connection with the proposed sale and/or joint venture of selected interests of the company in Northeast British Columbia. The company’s Greater Sierra area has been divided into two areas of opportunity - an asset sale and a joint venture. A portion of the company’s holdings are also being offered for joint venture.

Greater Sierra: The acquisition area for sale includes all lands, production and related infrastructure. The joint venture area is available for partnering with Encana on its existing production and infrastructure and future development plans.

Acquisition area:
-- Jean Marie: 1,500 net sections of land (95% WI)
-- 73 MMcfe/d (97% gas) - sales October 2010
-- 593 undrilled booked locations
-- Shale Gas: 35 net sections of land (93% WI)
-- 36 Horizontal locations in Muskwa, Otter Park and Evie.

Joint venture area:
-- Jean Marie: 1,281 net sections of land (90% WI)
-- 129 MMcfe/d (96% gas) - sales October 2010
-- 856 undrilled locations (575 booked + 281 unbooked).

Horn River: Offered for joint venture
-- 52 net sections of land (100% WI)
-- 120 Horizontal locations in Muskwa, Otter Park and Evie.

Earlier on 9-Feb-2011, PetroChina and Encana have signed a Co-operation agreement, that PetroChina would acquire a 50% interest in Encana’s Cutbank Ridge business assets in British Columbia and Alberta at a consideration of C$5.4 billion (US$5.451 billion). Under the Co-operation agreement, the two companies would establish a 50/50 Joint Venture (JV) that would ambitiously grow natural gas production from the Cutbank Ridge lands for years ahead.

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Encana acquires liquids-rich Duvernay Shale acreage for C$1,600/acre.. Encana turns focus to gas liquids as low natural gas prices persist.

In recent months, Encana has assembled about 190,000 net acres in the Simonette and Kaybob areas of the Duvernay shale in Alberta, which it acquired for about $300 million or an average cost of about C$1,600 per acre. This exciting new play has the potential to add significant liquids production to the Canadian division and is a promising complement to the company’s liquids rich acreage in the Montney where it has 495,000 acres of land with liquids potential on it, in addition to 380,000 net acres in the Alberta Deep Basin area.

Michael Graham from Encana said, “The Duvernay play seems similar to the Eagle Ford and that there we could go from sort of a dry gas window into a liquids-rich window. Bulk of our acreage, probably 2/3 of our acreage, we think certainly will be in the liquids-rich area.” Encana plans to drill 3 or 4 horizontal wells into it and then the company may consider joint venture partners for Duvernay Shale. Recently, Encana struck a C$5.4 million JV with PetroChina on its Cutbank Ridge project. The snapshot of this deal is as follows:

Source: Derrick Petroleum E&P Transactions Database


Encana shifts focus to gas liquids!!
Encana delivered solid cash flow and grew natural gas production by 4% per share in the first quarter of 2011. Cash flow was US$955 million, or $1.29 per share – down 17% largely due to lower natural gas prices compared to the first quarter of 2010.


It’s part of a strategic shift that will see Encana focus on gas deposits with a higher proportion of condensates and light oil. Because natural gas liquids receive premium prices compared to crude, companies like Encana are using the dollars to offset the lower gas price and continue with ambitious unconventional gas drilling.


“By bringing on more oil and NGL production and stripping out more NGLs from our natural gas stream, we expect to significantly increase the weighting of liquids in our portfolio, capturing more value and enhancing returns,” CEO Randy Eresman said on a conference call.

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Global E&P transactions 2010 Review is available for free.. Last 7 days to avail it. If interested, do write to anitha.bharathi@derrickpetroleum.com

Encana Reports Positive Operational Results for Q1 2011 results; Plan to ramp up Development and Exploration activities in its extensive 1.7 million acres!!!

Encana reported average production of 3.34 Bcfepd for Q1 2011, up 2% over first quarter 2010. The company is on-track to meet 2011 year-end production guidance of between 3.475 Bcfepd and 3.525 Bcfepd for 2011. The company has accelarated oil and NGLs production from its extensive liquids-rich lands – now covering more than 1.7 million acres in Canada and the U.S.

Encana redirected a portion of our capital investment to oil and natural gas liquids development and exploration to build facilities to extract more liquids from our high energy-content natural gas streams. The company is drilling liquids-prone targets on our existing lands, expanding developments into liquids-rich areas, exploring for oil, and acquiring large and significant positions in highly-prospective liquids-rich lands. “The capital investment associated with these multiple initiatives is expected to represent about $1 billion in 2011,” Eresman, President & CEO, Encana said.

Encana has assembled about 190,000 net acres in the Simonette and Kaybob areas of the Duvernay shale in Alberta, adding to its existing 380,000 net acres of liquids-rich lands in the Alberta Deep Basin and 495,000 net acres in the Montney in Alberta and British Columbia. In Colorado, Encana holds about 240,000 net acres in the Piceance and Denver-Julesburg (DJ) basins where the company has identified liquids potential in the Niobrara and Mancos shales. In Michigan this year, Encana plans to expand evaluation drilling on its 425,000 net acres in the Collingwood shale.

Encana offers Horn River and Greater Sierra JV and acquisition opportunities in northeast B.C.

Encana’s joint-venture investment strategy is aimed at accelerating value recognition of the company’s resource potential. This new joint venture initiative builds on previous announcements of a farm-out agreement with Kogas Canada Ltd., a subsidiary of Korea Gas Corporation, in the Horn River and Montney formations and a planned joint venture and acquisition by PetroChina of a 50% interest in Encana’s Cutbank Ridge business assets. RBC Capital Markets and Jefferies & Company, Inc. have been retained by Encana to conduct the potential joint venture and divestiture processes on the Horn River and Greater Sierra assets.

Source: Derrick Petroleum E&P Transactions Database

Devon roping in partner for HRB resources... Is Asian NOCs the undeniable choice???

Devon Energy is considering establishing a joint venture (JV) to develop its Horn River shale gas assets in the Canadian province of British Columbia. The company had been approached by potential JV partners for BC's Kitimat liquefied natural gas export project. Interest in North American shale assets from foreign oil companies has heated up in recent months, with some paying top dollar for access to shale fields that hold vast amounts of natural gas. It is highly likely that an Asian NOC had been in discussions with Devon over a tie-up at Horn River. Such a development would boost the prospects for Kitimat LNG.

Following the recent Asians invasion into the Canadian Shales, it is not surprising that investors are attracted to a partnership with Devon at Horn River Basin. The BC shale play is the source of the gas that Apache intends to liquefy at the Kitimat project, which Devon is also eyeing as the route to market for its own Horn River gas.

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Devon going Encana way

Devon's stated openness to a JV comes less than two months after Canadian gas producer  Encana struck a landmark CAD5.4bn (US$5.5bn) deal with state-run PetroChina to develop its Cutback Ridge shale gas project in the Montney formation. Encana subsequently acquired a stake in Kitimat, strongly suggesting that Apache and Encana were keen to involve PetroChina in the development of Canada's first LNG export project.

Looks like Devon is attempting to emulate Encana's success in securing development cash for its unconventional gas play. Specifically, we think it is likely that Devon has been talking with Asian national oil companies. Not only is the lucrative Asia-Pacific market the likely destination for LNG cargoes to be exported from Kitimat, but Chinese and South Korean NOCs in particular are keen to develop their unconventional gas skills

Devon’s assets in HRB

Devon's largely undeveloped Horn River Basin position totals 688sq km, with estimated 'net risked resources' of 227.5bn cubic metres equivalent (bcme) as of February 2011. Much of this acreage is located in close proximity to Encana and Apache's Horn River positions, further supporting the possibility of a development tie-up, with Kitimat as a pipeline destination.

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With the increased natural gas demand and better LNG market conditions prevailing in Asia, Devon might end up signing a joint venture with Chinese, Koreans or other Asians.

Deal snapshot

Source: Derrick Petroleum E&P Transactions Database

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