Encana to Divest Natural Gas Focused Clearwater Assets

Canadian energy explorer Encana Corporation ECA declared that it has entered into a deal with the natural gas producer, Ember Resources Inc., to sell a major portion of its Clearwater assets. The deal is valued at about C$605 million and is likely to close in the first quarter of next year.

The assets under sale, located in southern and central Alberta, are spread across 1.2 million net acres. The acreage comprises 6,800 wells currently under production. In the last reported quarter, the assets yielded about 180 million cubic feet equivalent of natural gas per day.

Notably, Encana will continue to hold about 1.1 million net acres in Clearwater. The retained acreage will include 480,000 net acres in the Horseshoe Canyon Fairway.

Encana added that the sale is in accordance with its strategy of reducing natural gas assets and shifting focus on liquid-linked acreage. The company has a significant position in the promising Montney and the Duvernay plays in Canada, and the Eagle Ford shale in the U.S.

Moreover, with the latest Athlon Energy Inc. ATHL deal, Encana is expected to have a strong presence in the Permian as well by the year end. (Read: Encana to Move into the Permian with $7B Athlon Acquisition). The Permian region is expected to play an important role in the company's growth plans, contributing significantly to Encana's 2017 anticipated liquid-production plan of 250,000 barrels per day.

Calgary, Alberta-based Encana, the second largest gas producer in North America, currently carries a Zacks Rank #2 (Buy).

One could also consider other players from the oil and gas exploration and production industry like Northern Oil and Gas, Inc. NOG and Magnum Hunter Resources Corporation MHR. Both these stocks sport a Zacks Rank #1 (Strong Buy).