Encana Corp. announced the sale Monday of its Jonah field assets in Wyoming to the private equity firm TPG Capital. The company said the transaction was worth $1.8 billion.
The sale included 24,000 producing acres, over 1,500 active wells and an adjacent area known as the Normally Pressured Lance, an undeveloped 100,000-acre parcel where Encana had been pursuing plans to install 3,500 new wells.
The transaction underscored the Calgary-based oil and gas producer's focus away from natural gas and toward oil and liquid natural gas.
"This transaction is consistent with our strategy," said Encana President and CEO Doug Suttles in a statement. "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."
TPG said it expects to continue investment in the field and anticipates retaining the Encana employees working in the Jonah. The company said it will also maintain an office in Pinedale.
"The Jonah field is a world-class, low-risk resource with long reserve life and future drilling opportunities that will be a strong platform to continue to grow a portfolio of cash flow-producing assets," said Tom Hart, chief executive officer of what TPG said was a new oil and gas platform of its company.
A TPG spokesperson declined comment on the transaction.
The sale, expected to be completed in the second quarter this year, marked a turning point for Encana and Jonah field. The field was relatively small when Alberta Energy Co. purchased a share in the Jonah in 2000. Alberta Energy later merged with PanCanadian Energy Corp. Over the next 14 years, production increased and the Jonah became one of the largest natural gas fields in the United States, transforming Encana into a major player in North American energy production. At the end of 2013 the field has estimated proved reserves of the equivalent of nearly 1.5 billion cubic feet of gas.
But with natural gas prices in a rut, the company announced late last year it was turning its focus to oil and natural gas liquids, which command a better price.
Doug Hock, an Encana spokesman, said the transaction will help boost the company's efforts to develop the Tuscaloosa Marine Shale in Mississippi, the San Juan basin in New Mexico, the DJ Basin in northern Colorado and the Montney and Duvernay fields in Canada.
"It is difficult to sell an asset like Jonah," he said. "It really makes sense in terms of the strategy we’ve outlined."
The company plans to continue with the development of the Moneta Divide, a proposed 4,250 wells natural gas field some 60 miles west of Casper, he said. That project remains in the permitting stage.
The potential sale of the Jonah was first reported several weeks ago by the Wall Street Journal. The Carlyle Group and NGP Energy Capital Management LLC were said to be the interested buyers at the time.
Hock declined to discuss those companies but added "there are always numerous interested parties, especially with assets like this, which is a very good asset."