Privately held EnerVest Ltd. and related MLP EV Energy Partners LP, Houston, (Nasdaq: EVEP) plan to expand their interests in the Barnett shale in North Texas via two acquisitions totaling $1.2 billion in cash. Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corp., Calgary, (NYSE: ECA) will sell all of its North Texas natural gas producing properties to EnerVest for $975 million. The second deal involves an undisclosed private seller for $233 million.
EV Energy will acquire an approximate 31% interest in both acquisitions for a combined $372.3 million.
“These acquisitions are consistent with our stated strategy of establishing dominant positions in proven resource basins,” says EnerVest chairman and chief executive John Walker.
The assets include 82,000 net acres (25,000 net to EV Energy; 79% held by production) in the core and combo areas of the Barnett shale, deemed as “liquids rich” by the company, primarily in Montague, Wise, Denton, Parker and Tarrant counties. Current net daily production is approximately 43 million cu. ft. of gas equivalent (79% gas; 21% liquids) from 763 active wells (92% operated). The reserves-to-production ratio is 25.8 years. Upside includes more than 300 identified proved undeveloped drilling locations.
Estimated proved reserves net to EV Energy are approximately 405 billion cu. ft. equivalent (53% proved developed). EV Energy plans to initially finance its portion of the deals with debt.
The Encana deal involves production of 125 million cu. ft. equivalent (MMcfe) per day and includes associated gathering pipelines on about 50,000 net acres in the Fort Worth Basin.
With these deals, EV Energy and EnerVest will have acquired more than $2 billion of Barnett shale assets in the past year, making the group one of the largest producers in the basin, says Walker. “The Encana transaction also represents the largest acquisition we’ve ever done.”
Encana anticipates raising some $1.7 billion in net divestitures by year-end, within the company’s 2011 target of between $1 billion and $2 billion. Encana continues to market a joint-venture partnership on its undeveloped lands in its Cutbank Ridge resource play in British Columbia, and the sale of its Cutbank Ridge midstream assets in British Columbia and Alberta. The company recently completed the sale of a portion of its Piceance Basin midstream assets for approximately $590 million.
The deals are expected to close in December. The effective date is Nov. 1.
RBC Richardson Barr is advisor to EV Energy and EnerVest on the Encana acquisition. Scotia Waterous (USA) Inc. is advisor to Encana.
The Encana portion of the transaction implies a valuation of $7,800 per flowing thousand cu. ft. (Mcfe) equivalent, according to Global Hunter Securities analyst Michael Bodino, while the combined Encana and private portion of the transaction implies an $8,700 per flowing Mcfe valuation. The acreage trades at $14,732 per acre. “The deal metrics are in line with the sale of Range Resources’ assets in the Barnett earlier this year,” says Bodino, which were valued at $8,000 per flowing Mcfe and $17,308 per acre.
Recommended Reading
LNG, Data Centers, Winter Freeze Offer Promise for NatGas in ‘25
2025-02-06 - New LNG export capacity and new gas-fired power demand have prices for 2025 gas and beyond much higher than the early 2024 outlook expected. And kicking the year off: a 21-day freeze across the U.S.
Bernstein Expects $5/Mcf Through 2026 in ‘Coming US Gas Super-Cycle’
2025-01-16 - Bernstein Research’s team expects U.S. gas demand will grow from some 120 Bcf/d currently to 150 Bcf/d into 2030 as new AI data centers and LNG export trains come online.
Venture Global Plaquemines Plant on Track to Produce LNG
2024-12-13 - Venture Global LNG’s Plaquemines plant was on track to pull in about 0.16 Bcf/d of pipeline gas on Dec. 13, up from 0.10 Bcf/d on Dec. 12, according to LSEG data.
NatGas Prices, E&Ps Take a Hit from DeepSeeking Missile
2025-01-28 - E&Ps such as Expand Energy and EQT Corp. saw share prices drop on news of less power-intensive AI, but analysts predict the natural gas market will rebound as LNG exports and overall power demand continues to increase.
LNG Tanker Docks at Venture Global’s Plaquemines LNG Terminal
2024-11-18 - The FERC recently gave Venture Global’s Plaquemines LNG facility permission to use natural gas.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.