Encana completes sale of Haynesville natural gas assets in US for $850m

Encana Oil & Gas (US), the wholly-owned subsidiary of Canada-based Encana, has completed the previously announced sale of its Haynesville natural gas assets in northern Louisiana, US for $850m.

The assets were sold to GEP Haynesville (GeoSouthern), a joint venture formed by GeoSouthern Haynesville and funds managed by GSO Capital Partners.

The company is also reducing its gathering and midstream commitments by $480m on an undiscounted basis through the transfer of existing and future obligations.

According to Encana, the transaction has an effective date of 1 January and includes 112,000 net acres of leasehold, plus additional fee mineral lands.

Encana plans to use the proceeds to reduce its net debt and further bolster its balance sheet.

The Haynesville assets produced an average 217 mmcf/d and contributed about 9% to company wide production during the first half.

Encana president and CEO Doug Suttles said: "By further focusing our portfolio, we are making Encana more efficient as we proceed through the second half of 2015 and into 2016.

"This transaction delivers significant proceeds that we’ll use to strengthen our balance sheet. In addition, it eliminates our midstream commitments in the Haynesville and captures ongoing revenue upside through a gas marketing arrangement."

The assets collectively represent Encana’s total position in northern Louisiana where the company operates about 300 wells.