GEP Haynesville has signed an agreement to acquire Haynesville natural gas assets in northern Louisiana, US from Encana Oil & Gas, a wholly-owned subsidiary of Encana, for $850m.
As per the deal, Encana will transport and market production from GeoSouthern’s Haynesville operations over the next five years.
Located primarily in DeSoto and Red River Parishes, Louisiana, the properties considered for the acquisition include approximately 112,000 net acres and 300 operated wells in the Haynesville Shale.
GSO Capital Partners senior managing director Dwight Scott said: "We are pleased to have the opportunity to partner with GeoSouthern as it develops assets in the core of the Haynesville play and further expands its business."
Proceeds from the transaction will be used by Encana to reduce net debt.
Encana president and CEO Doug Suttles said: "This is another step in advancing our strategy. By further focusing our portfolio, we are making Encana more efficient as we proceed through the second half of 2015 and into 2016.
"In addition, the transaction eliminates our midstream commitments in the Haynesville and captures ongoing revenue upside through a gas marketing arrangement."
Subject to regulatory approvals, the transaction is scheduled to be completed during the fourth quarter.
Encana said it is planning to primarily invest in its four most strategic assets in the Permian Basin, Eagle Ford, Duvernay and Montney.
The company intends to reduce investments by around $480m on gathering and midstream commitments through 2020.
GEP Haynesville is a joint venture of GeoSouthern Haynesville and funds managed by GSO Capital Partners.
Image: Encana operates assets in the Permian Basin, Eagle Ford, Duvernay and Montney. Photo: © Encana Corporation.