19 July 2014, News Wires – Encana is preparing to sell its Deep Panuke project off Nova Scotia later this year, according to a report, as Canada’s largest natural gas producer shifts production towards more oil.
Encana is working with financial advisers as it explores a sale, which may raise $1 billion to $2 billion, people familiar with the matter told Bloomberg.
The Calgary-based company could begin a formal process in the coming months, with a transaction expected before the end of the year, the news wire reported.
There is no guarantee a sale will occur at this point.
“We only provide comment on transactions once they’ve been confirmed,” Encana said in a statement.
Encana is selling off assets and purchasing new ones in an effort to rebalance its portfolio in higher-priced oil and gas liquids. The company has announced $7.3 billion in deals since the start of the year, according to data compiled by Bloomberg.
SBM Offshore, which operates Deep Panuke on behalf of Encana, started production at the project in December after three years of delays.
Gas produced from Deep Panuke about 250 kilometres south-east of Halifax on the Scotian shelf is processed offshore and transported through a subsea pipeline to Goldboro, Nova Scotia, where is connects with the Maritimes and Northeast Pipeline that supplies the US Northeast.
Deep Panuke contributed more than 30% of Encana’s operating cash flow of about $1.1 billion in the first three months of the year.
The project delivered about 253 million cubic feet of gas a day in the first quarter, or about 9% of Encana’s total production.
It is Encana’s only offshore asset and also does not produce the oil or higher-value gas liquids that Encana is seeking.
Deep Panuke, “doesn’t really fit in our portfolio,” chief financial officer Sherri Brillon told an investor conference in January.
Encana said in June it agreed to sell its Bighorn natural gas assets in Alberta for $1.8 billion to Apollo Global Management’s Jupiter Resources.
It also acquired Freeport-McMoRan Copper & Gold’s Eagle Ford shale assets for $3.1 billion, doubling its crude output.