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David Bonderman’s private equity firm TPG Capital is buying Canadian energy company, Encana Corp’s producing natural gas assets in Wyoming’s Jonah field, for about US$1.8 billion.
The sale of one of the largest producing natural gas fields in the United States is part of Calgary-based Encana’s strategy to shed some assets, in order to focus on liquids-rich natural gas and oil. These have been selling at higher prices than their dry gas counterparts.
Encana’s Jonah field has a productive area of about 24, 000 acres with over 1, 500 active wells. At the end of 2013 proven reserves for Jonah totaled approximately 1, 493 billion cubic feet equivalent (Bcfe). The deal with TPG also includes over 100, 000 undeveloped adjacent acres, known as the “Normally Pressured Lance” (NPL) area.
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The natural gas field in Wyoming’s Jonah field
TPG has sent up an new investment platform to pursue this investment and Tom Hart, its CEO said “The Jonah field is a world-class, low-risk resource with long reserve life and future drilling opportunities that will be a strong platform to continue to grow a portfolio of cash flow-producing assets”
Meanwhile beauty is very much in the eye of the beholder and Encana is clearly now happy to be gone, with Doug Suttles, the Encana President & CEO saying “This transaction is consistent with our strategy, ” adding, “With the divestment of Jonah, we are unlocking value from a mature, high-quality asset and allowing our teams to focus on our core growth areas and continue with execution of our new strategy.”
TPG intends to keep all the employees currently working in connection with the Jonah field and will continue to invest in the field and its adjacent acreage, all of which will assist in supporting local employment in the area.
“We look forward to working with the talented Encana team that has made Jonah a successful operation for many years, ” says Craig Manaugh, President and COO of the new TPG oil and gas platform. “We are also pleased to announce that we will be maintaining the Jonah field office near Pinedale, Wyoming and opening a new Denver office as well as a result of the transaction.”
The Wall Street Journal also reports Encana nearly sold the Jonah fields to the Carlyle Group and NGP Energy Capital Management but the deal stalled just two weeks ago. “We weren’t able to reach an agreement with Carlyle and NGP, so we moved on with another party and are looking forward to closing the deal, ” Encana spokesman Doug Hock said to the WSJ.
The sale of Encana’s Jonah assets is still subject to satisfaction of normal closing conditions, as well as regulatory approvals, but is expected to close in the second quarter of 2014 with an effective date being “as of” December 1, 2013 for agreement and, perhaps also, tax purposes.
About TPG
TPG is a leading global private investment firm founded in 1992 by David Bonderman, James Coulter and William Price and based in Texas. With over US$59 billion of assets under management the firm has offices in San Francisco, Houston, Fort Worth, Austin, Beijing, Chongqing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, Sao Paulo, Shanghai, Singapore and Tokyo.
TPG has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings.
TPG’s new oil and gas platform will be governed by a Board of Directors that includes, Dan Allen Hughes, Jr., President and CEO of the Dan A. Hughes Company and, as well, TPG partners Michael MacDougall and Christopher Ortega, in addition to Tom Hart and Craig Manaugh.
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