UPDATE: Encana Agrees to Sell Two Cutbank Ridge Natural Gas Processing Plants for C$920 Million

Encana Corporation ECA has reached an agreement to sell two natural gas processing plants servicing the Cutbank Ridge area to Veresen Inc. for approximately C$920 million. The sale includes Encana's 100 percent interest in its Steeprock plant in northeast British Columbia and its Hythe plant in northwest Alberta, along with compression and associated gathering pipelines. “This sale agreement marks the conclusion of the major components in our 2011 divestiture program, which, upon closing of all transactions, will result in proceeds of about US$3.5 billion. Although not all of our announced transactions will be completed this year, the expected proceeds will help us achieve our 2011 target range for net divestitures of between $1 billion and $2 billion. Further, the transactions that are expected to close after year-end will give us a solid start on our 2012 divestiture program, which will be part of our 2012 capital investment program announcement in the first quarter. Proceeds from these non-core asset sales are expected to supplement cash flow generation, strengthen the company's balance sheet and provide financial flexibility,” said Randy Eresman, Encana's President & Chief Executive Officer. Redirecting strong midstream asset valuations towards growing liquids production “This divestiture of two Cutbank Ridge natural gas processing plants unlocks midstream value that we can profitably reinvest in our core business of developing natural gas and growing liquids production. This year, we invested about $770 million in future growth opportunities, primarily aimed at building a strong portfolio of liquids-rich lands that now totals more than 2.1 million net acres in Alberta, Colorado, Mississippi, Louisiana and Michigan. We are exploring diversified geological opportunities by drilling about a dozen wells on these highly prospective liquids-rich lands. This ambitious exploration program will help us define and focus our organic liquids growth potential in a variety of Canadian and U.S. basins, and it goes well beyond our previously announced plan to grow natural gas liquids extraction to an estimated 80,000 barrels per day in 2015 from our established natural gas resource plays. Across our North American resource portfolio in 2012, we will continue to focus on our highest return projects and we plan to direct a greater portion of our capital investment to grow our oil and natural gas liquids production,” Eresman said.