The emergence of Canadian gas divestments: Part Three

Recently completed Canadian gas divestment transactions are as follows:

Devon Energy Canada

Devon Energy Corp. shed its Canadian conventional assets to Canadian Natural Resource Ltd. for US$ 3.1 billion on 1 April 2014.

The company retained its thermal heavy oil, Lloydminster and Horn River assets. The deal should generate net proceeds of US$ 2.7 billion after taxes, including US levies for repatriating the funds to the US. Devon plans to use the money to repay debt from its Eagle Ford acquisition that closed in February. Most transactions involving the company’s South Texas, East Oklahoma, Arkoma Basin and Rockies gas assets are on the horizon, according to Devon’s CEO.

Suncor Energy

In April 2014, Suncor agreed a US$ 1 billion asset sale to Centrica and Qatar Petroleum. The sale of the Wildcat Hills property, northwest of Calgary, brings Suncor’s total divesture tally to US$ 2.8 billion since its union with Petro-Canada. Suncor reported the closure of its previously announced divestment of a major portion of its Western Canada-based conventional natural gas assets. The properties were sold to CQ Energy Canada Partnership, a joint venture between Qatar Petroleum International and the UK’s Centrica plc. The deal falls in line with Suncor’s increased focus on core oil sands operations. The company is planning to use net proceeds to invest in projects with high growth potentials, repurchase shares and pay dividends, according to EY.

Crew Energy

In April 2014, Crew Energy Inc. announced an agreement to sell certain petroleum and natural gas assets (75% natural gas), primarily in the Deep Basin of Alberta, in exchange for approximately US$ 222 million in cash.

The gas divestment includes current production of 7000 bbls of oil equivalent (boe) per day (75% natural gas) based on field estimates. The divestment involves total proved reserves of 34.1 million boe (71% natural gas), total proved and probable reserves of 60.4 million boe (71% natural gas) and 254 000 net acres of land.

Encana

Encana announced that it would sell its Jonah Field Operations in Wyoming to an affiliate of TPG Capital for US$ 1.8 billion.

President and CEO Doug Suttles commented: “This transaction is consistent with our strategy. With the divestment of Jonah, we are unlocking value from a mature, high quality asset and allowing our teams to focus on our five core growth areas and continue with execution of our new strategy”.

Encana’s Jonah field comprises a total productive area of approximately 24 000 acres and more than 1500 active wells. The transaction also includes more than 100 000 acres of undeveloped land adjacent to Jonah, known as NPL.

Talisman Energy

In March 2014, Talisman Energy completed the divestment of part of its Montney assets, in northeast British Columbia, to progress Energy Canada Ltd. The sale of approximately 127 000 net acres, resulted in a cash payment of US$ 1.5 billion. Completion of this transaction, along with other recently closed deals, has resulted in more than US$ 2 billion of divestments for Talisman Energy in the past 12 months. Further streamlining of the company portfolio is expected as Talisman Energy intends to sell long dated, capital intensive assets worth US$ 2 billion in the coming 18 months. Management stated that the funds generated from these divestments would be used to strengthen the company’s balance sheet.

Adapted from a report by Emma McAleavey.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/04092014/canadian-gas-divestments-1235/