Encana To Sell Bighorn Assets To Apollo Global's Jupiter Resources For $1.8 Bln

(RTTNews) - Canadian energy producer Encana Corp. (ECA.TO, ECA) Friday said it has reached an agreement with Calgary, Alberta-based Jupiter Resources to sell its Bighorn assets for approximately $1.8 billion or C$2.0 billion.

Jupiter Resources is a portfolio investment of funds managed by affiliates of alternative investment manager Apollo Global Management, LLC (APO).

The transaction is subject to satisfaction of normal closing conditions, as well as regulatory approvals. The deal is expected to close by the end of the third quarter with an effective date of May 1, 2014.

The sale includes about 360,000 net acres of land along with Encana's working interests in all pipelines, facilities and service arrangements. The company noted that the total net proved reserves at the end of 2013 were approximately 1,100 billion cubic feet equivalent or Bcfe, with about three quarters of those reserves being natural gas.

Doug Suttles, Encana President & CEO, said, "This transaction advances our strategy by unlocking value from our portfolio as we focus on developing our core growth plays and extracting additional value from our base assets. Bighorn is a high quality asset that has not been receiving significant investment in 2014."

In a statement, Jupiter Resources' CEO Simon Bregazzi said, "We are very excited about the opportunity to actively develop the Bighorn assets, one of North America's premier liquids-rich natural gas projects in an area that has generated some of Canada's most prolific well results in recent years."

In the transaction, RBC Capital Markets and Burnet, Duckworth & Palmer LLP acted as financial and legal advisors, respectively, to Encana.

In recent deals, Encana's unit Encana Oil & Gas (USA) Inc. in May completed its previously announced sale of certain natural gas properties in the Jonah field in Wyoming to an affiliate of TPG Capital, for about $1.8 billion. In April, Encana's U.S. unit agreed to sell certain properties located mainly in Leon and Robertson counties of East Texas for about $530 million.

Meanwhile, Encana in early March agreed to acquire Eagle Ford Shale assets from Mineral resource properties exploration company Freeport-McMoRan Copper & Gold, Inc.'s (FCX) oil and gas unit for $3.1 billion.

Further, Encana said today that it plans to update its 2014 guidance, which will consider the impact of all completed transactions to date, in conjunction with the announcement of its second quarter earnings on July 24.

While announcing first-quarter results in mid May, the company had said that it expects total fiscal 2014 production to be 2,850 Mmcfe/d to 3,100 Mmcfe/d, with natural gas production in the range of 2,450 Mmcf/d to 2,650 Mmcf/d. The company also projects total cash flow between $2.9 billion and $3 billion, or between $3.90 and $4.05 per share, and total capital investment to be in the range of $2.4 billion to $2.5 billion.

On the NYSE, Encana shares settled on Thursday at $23.91, down $0.22 or 0.91 percent.