Encana Corp explores sale of more non-core assets worth around $1 bn to reduce debt
09 March 2016
Canadian oil and gas major Encana Corp is exploring the sale of more non-core assets in the US and Canada worth around $1 billion in order to reduce debt, Reuters yesterday reported, citing two sources familiar with the matter.
The sale would help Encana to further reduce its $5.4 billion debt, the report said.
At 31 December 2015, the company's fixed and revolving debt totaled approximately $5.1 billion. This comprises $5.4 billion of fixed and revolving debt, net of $271 million cash and cash equivalents.
Encana currently has $4.7 billion of unsecured, long-term, fixed rate debt with no maturities until May 2019 when $500 million is due.
Last month, Moody's downgraded Encana's rating on its debt to junk grade Ba2 from an investment grade Baa2, noting it expects a "material decline in Encana's cash flow" in 2016 and 2017, potentially affecting its leverage metrics, the report added.
Its latest move comes a year after the Calgary-based company sold shares worth $1.08 billion and signed agreements to sell assets worth around $2.8 billion in order to strengthen its balance sheet.
The assets to be sold in this round could be its non-core assets like the Deep Panuke offshore gas field in Nova Scotia, its Horn River and Wheatland assets in western Canada, natural gas assets in the Piceance basin in northwest Colorado, its San Juan assets in New Mexico, and its Tuscaloosa Marine Shale assets in Mississippi and Louisiana, the report said.
Encana is a leading North American energy producer with assets in Canada and in the US. It gas assets are located in key basins of northeast British Columbia, east Texas, Colorado, Wyoming and Louisiana.
Badly hit by plunging oil prices, the company has been selling assets and streamlining its portfolio to bolster its balance sheet.