* Says deal to add a sixth focus area
* Assets being acquired produced 53,000 barrels of oil
equivalent/day in Q1
* Deal to add to Encana's 2014 cash flow
(Adds details on deal, restructuring in first six paragraphs;
By Euan Rocha
TORONTO, May 7 Encana Corp, Canada's
largest natural gas company, said on Wednesday it is buying
producing assets in the Eagle Ford shale field in Texas from
Freeport-McMoRan Copper & Gold for $3.1 billion, nearly
doubling its oil output and boosting its shares by as much as
The purchase adds another core region to the five shale
fields Encana is concentrating spending on as it restructures
its operations away from low-value natural gas to concentrate on
valuable crude and natural gas liquids.
"Gaining a position in a world class, oil-rich resource play
like the Eagle Ford accelerates the transition of our portfolio
and underscores our investment focus on high margin assets"
Encana Chief Executive Doug Suttles, said in a statement.
Encana shares were up C$1.14 to C$25.70 by early afternoon
on the Toronto Stock Exchange after earlier touching C$26.08.
The acquisition is Suttles' first major purchase since the
former BP Plc executive arrived at the Calgary-based
Encana last June with a mandate to reshape a company that had
endured a series of strategic missteps that had it relying on
natural gas from wide flung operations throughout North America.
Suttles has begun selling off surplus properties, shedding
its stake in Wyoming's Jonah gas field in March for $1.8 billion
and late last month selling east Texas gas lands for $530
Encana said the Eagle Ford assets offer a large contiguous
land position in the core of the play, fitting well with
Encana's technical expertise in developing resource plays.
Canaccord Genuity analyst Phil Skolnick said he views the
transaction as positive for Encana, as the deal will boost cash
flows for the company.
The deal will give Encana 45,500 net acres in Karnes, Wilson
and Atascosa counties in south Texas. The properties produced
the equivalent of about 53,000 barrels of oil per day in the
first quarter, the company said.
The acquisition is expected to close by the end of the
FREEPORT DEBT REDUCTION
Freeport said it expects net proceeds of about $2.5 billion,
roughly half of which would be used to repay debt and the rest
for investment in the deepwater Gulf of Mexico. The proceeds
would get the copper and gold miner more than halfway to its
stated goal of monetizing about $4 billion of its energy assets.
Freeport's debt levels spiked last year when it bought
energy companies Plains Exploration & Production Co and McMoRan
Exploration Co for $9 billion. At March 31, 2014, its
consolidated debt was $20.9 billion.
"This transaction represents an important step in our
ongoing debt reduction plan while providing additional capital
to enhance our portfolio of assets with superior margins and
growth characteristics," said Freeport's CEO James Moffett in a
Freeport shares were up 19 cents to $34.03 on the New York
(With additional reporting by Scott Haggett in Calgary and
Sayantani Ghosh and Swetha Gopinath in Bangalore; Editing by
Sriraj Kalluvila, Alden Bentley and Andrew Hay)