Trust snaps up EnCana gas assets

Bonavista Energy Trust has laid out US$632 million for 409,000 net acres of EnCana’s natural gas producing properties, taking advantage of depressed gas values.

The midsize income trust said it will acquire the central Alberta assets with bank debt and a $388 million bought deal offering of subscription receipts.

The properties currently produce 63,000 barrels of oil equivalent per day, including 53.2 million cubic feet per day of gas, lifting Bonavista’s total output by 22 percent to 63,000 boe per day.

The trust said the production comes from several geological formations, which it is confident can boost volumes by 50 percent. To date, Bonavista has identified 165 horizontal drilling locations. The deal will raise Bonavista’s proved plus probable reserves by 29 percent to 247 million boe.

In addition to the properties, Bonavista picks up almost 600 miles of pipelines and a 52 percent stake in a gas plant capable of handling 33 million cubic feet per day.

The trust said it may unload producing and royalty interest properties worth about $100 million and boost its hedge position, to shore up its balance sheet after the deal is concluded.

—Gary Park