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File photo of Doug Suttles, Encana chief executive officer. (Todd Korol/Reuters)
File photo of Doug Suttles, Encana chief executive officer. (Todd Korol/Reuters)

Another day, another deal as Encana sells gas field for $1.8-billion Add to ...

Merger and acquisitions in the oil patch continue to soar, with major companies involved in two new natural gas deals worth more than $2-billion.

Encana Corp. on Monday said it sold its Jonah natural gas field in Wyoming for about $1.8-billion (U.S) to TPG Capital, a global private equity firm. Meanwhile, Houston’s Apache Corp. sold $374-million worth of natural gas assets in the Deep Basin area in Alberta and British Columbia to Calgary’s Canadian Natural Resources Ltd.

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Big energy companies such as Encana and Talisman Energy Inc. made big bets on dry natural gas years ago, accumulating large positions of land in North America. The natural gas market, however, did not rebound as they expected, leaving them financially pinched and stuck with unpopular parcels of land. Some energy companies have since migrated away from dry natural gas plays, looking for land rich with oil and natural gas liquids (such as propane, butane and ethane), or property which could become part of proposed liquefied natural gas market.

Encana’s sale lines up with its strategy of narrowing its focus and further concentrating on plays containing oil and NGLs – a plan chief executive Doug Suttles laid out last year. But the deal comes as natural gas prices have become more attractive. Natural gas traded at $4.37 per million British thermal units on the New York Mercantile Exchange Monday.

The Jonah field, however, is not strictly dry natural gas, which may have made it more palatable to TPG. The play produced 323 million cubic feet per day of natural gas in 2013, down from 411 million cubic feet per day in 2012, according to Encana’s 2013 management’s discussion and analysis released at the end of December. Meanwhile, Encana said Jonah churned out 4,700 barrels of oil and liquids per day in 2013, up from 4,100 a year prior. The Canadian company attributed part of its overall increase in oil and natural gas liquids production to Jonah.

“Average oil and NGL production volumes during 2013 increased primarily due to successful drilling programs in the DJ Basin, Piceance and the San Juan Basin and new and renegotiated gathering and processing agreements which resulted in additional NGL volumes primarily in Piceance [play in northwest Colorado] and Jonah,” the document says.

TPG said in the press release that it intends to keep Encana’s employees, and plans to open an office in Denver as it expands into the oil and gas business. The private equity firm would not comment further on its strategy.

The deal’s price tag may have been “marginally lower than expected,” according to TD Securities analyst Menno Hulshof, but is a “long-term positive” for Encana because he expects the cash to go toward paying down debt.

Encana in November said it would concentrate on five plays: the Montney in northwest Alberta and into northeast British Columbia, the Duvernay in west central Alberta, its DJ basin in Colorado, the San Juan oil play in northwest New Mexico, and its slice of the Tuscaloosa marine shale in Mississippi and Louisiana

CNRL’s purchase comes one month after spent $3.1-billion to buy Devon Energy Corp.’s natural gas plays in Western Canada, making it a consolidator. CNRL confirmed it purchased Apache’s assets, and one analyst believes it may have bought them on the cheap. RBC Dominion Securities analyst Leo Mariani said the price Apache received is “slightly weak.”

Apache is not entirely abandoning the area.

“These producing assets were determined to have more value with another operator and divestment allows us to focus on other properties in the region,” Apache spokesman Patrick Cassidy said.

With files from Shawn McCarthy

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