Encana, Centrica sell gas assets worth total of $1.7B

A pair of natural gas deals CALGARY worth a combined $1.7 billion were struck Friday and experts say more acquisitions and divestitures are expected in the sector as companies move to refocus their portfolios.

The Friday deals will see Calgary-based Encana Corp. exit a play in Colorado and U.K.-based Centrica plc offload its operations in Canada.

Other companies, including major producers like Shell Canada Ltd. and Cenovus Energy Inc., are known to be marketing natural gas assets in Western Canada and more deals are expected in the subsector.

“These deals don’t happen quickly or suddenly in response to a change in commodity price,” Sayer Energy Advisors president Alan Tambosso said in an email, noting that additional deals are in the works.

Both Encana and Centrica were looking to refocus their production spending in fewer geographical areas.

Encana will sell 3,100 natural gas wells and 550,000 acres of land in Colorado to Caerus Oil and Gas LLC for US$735 million. The company said the deal would also reduce its pipeline obligations by another US$430 million.

The company’s shares rose nearly 5 per cent to close at $12.63 in Toronto.

Raymond James analyst Chris Cox said in a research note “the market has been waiting for a divestiture” in the area for a long time, “so today’s news is unlikely to come as a significant surprise, while the headline price tag is also likely to be met with somewhat muted enthusiasm.”

The assets produced an average of 42,000 barrels of oil equivalent per day, comprised 95 per cent of natural gas, but were not located in the formations Encana has said are its focus areas for future growth.