Encana May Divest Canadian Shale Assets Amid Weak Crude
Zacks Investment Research | May 10, 2016 10:18PM ET
Encana Corporation (NYSE:ECA) is planning to divest some Canadian shale properties amid weak commodity prices going by Bloomberg.
The sale of Gordondale resources which is situated in the Montney basin could fetch the company as much as C$1 billion. This divestment will eventually help Encana to strengthen its balance sheet especially when the business scenario is not in favor.
It is to be noted that the Gordondale properties are now in the premature phase of development unlike the Cutbank Ridge Montney assets. The Cutbank Ridge is being developed by Encana in collaboration with Japan’s Mitsubishi Corp, a global integrated business enterprise.
The divestiture step that Encana might take is pretty common in this era of persistent weak oil and gas pricing environment. Many energy players are selling their assets to bolster their financials. In detail, since the companies are not generating sufficient cash flows after selling weak crude, divesting assets is one of the ways to improve cash balance and reduce debt. Chevron Corporation (NYSE:CVX) , Royal Dutch Shell (LON:RDSa) plc Zacks Investment Research
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