Tuesday, August 25, 2015

So Long, Encana

At long last, Encana has sold its stake in the Haynesville Shale.  Encana sold out to GEP Haynesville, LLC, a joint venture of GeoSouthern Haynesville, LLC and GSO Capital Partners, LP for $850 million.  Additionally, the company transferred its gathering and midstream commitments, which eliminated a $480 million five year future cost.  Encana will also transport the GEP gas to market for a fee for the next five years.  The transaction includes 112,000 net acres, approximately 300 operating wells and 720 Bcfe of 2014 proved reserves.  The deal is expected to close in the fourth quarter of 2015.

I have to admit that I'm a bit nostalgic about the sale since Encana completed the first Haynesville wells (no matter what Chesapeake says).  They were also first (by my count at least) to set up drilling sites for pad operations (a.k.a. "gas factories") and were first to push through long cross-unit laterals.

GeoSouthern is privately held and guarded about publicity, but here is an article from when the company sold its Eagle Ford interest to Devon last year for $6 billion.  GSO is a subsidary of the Blackstone Group, which is the backer behind Vine Oil and Gas, which bought out Shell, Encana's former JV partner.  It all makes a lot of sense, doesn't it?  But it looks like the second deal was better for the buyer since Shell sold its 107,000 net acres for $1.2 billion.

Unfortunately, as another chunk of Haynesville acreage goes into private hands, it will go dark from an information visibility perspective.  Before 2010, nearly all of the active Haynesville acreage was held by publicly traded independents eager to share news of their successes.  Now most of the acreage is either privately held (i.e. Vine, former Encana acreage), controlled by producers that have lost interest in the play (i.e. QEP) or buried in a behemoth company (XTO/Exxon, Petrohawk/BHP).  There are a few independents left (Chesapeake, Comstock, EXCO), but the total amount of information sadly is slowing to a trickle.

For fun, here are a few old slides talking about strides that Encana brought to the Haynesville. (Cue music to reminisce by...)

From 2009:

From 2010:

From 2012:

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