Per media reports, exploration and production company,
) plans to sell its Wyoming assets. The company is in advanced
talks with the private equity firms,
The Carlyle Group LP
) and NGP Energy Capital Management LLC, about the sale for a
consideration of approximately $2 billion.
Encana has been planning to sell its stake in the Jonah field,
located in southwest Wyoming's Green River Basin, according to
the report. This is in accordance with the company's strategy to
shift focus from weakly priced natural gas to the more lucrative
The Jonah resource play is one of the largest gas fields in North
America. In 2013, Encana produced 323 million cubic feet per day
of natural gas and 4.7 thousand barrels of oil per day from the
field. While oil production was higher than the 2012 level,
natural gas output declined substantially. The company stated
that the negative result was due to lower capital investment and
natural field declines.
This move by Encana may not come as a surprise as many big names
are reducing their natural gas exposure to tackle the suppressed
natural gas pricing environment. In 2012,
) also sold its Jonah holding for about $1.03 billion to
Linn Energy, LLC
Encana has one of the largest natural gas resource portfolios in
North America, providing a diverse and high quality inventory of
reserves. The company has a solid long-term future as demand for
natural gas improves, spurred by its cost effectiveness and
abundant supply in North America. However, at the same time,
Encana's sizeable exposure to volatile
remains a key area of concern.
Encana currently holds a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity
market over the next 1 to 3 months. Carlyle Group, BP and Linn
Energy also carry the same Zacks Rank as that of Encana.
BP PLC (BP): Free Stock Analysis Report
CARLYLE GROUP (CG): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
LINN ENERGY LLC (LINE): Free Stock Analysis
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