TXCO C.C.
The tar sands will take a while to develop. They are going to get a third party valuation of the tar sands resource to show the world that there are "Biiyyyons" (texas speak) of barrels of heavy "Ohhhl" to be recovered.
The big news for me was the Deep Bossier trend that has big ngas potential at some 20,000+ feet. EnCana paid 2 Biiyyyon dollars yesterday (re-valued canadian loonies no less) to get a stake in this new deep zone. TXCO thinks they are sitting on the Bossier as well. TXCO said they are going to let the big boys at EnCana lead the way on these wells and they will follow based on what the big boys find.
All in all, this is going to be a nice long term hold/mold for us. Steady growth through the drill bit will give us a base, and the tar sands and EnCana J/V gas wells will supply ocasional bursts of rocket fuel.
I am employing the Bobwins "buy & mold" method with TXCO.
Here is the EnCana news from yesterday:
CALGARY, Alberta, Nov 5 (Reuters) - EnCana Corp (ECA.TO: Quote, Profile, Research) said on Monday it will pay $2.55 billion to acquire the remaining 50 percent stake in the prolific Amoruso natural gas field in Texas from partner Leor Energy, boosting production and cementing its control of a key new play in the state.
The move gives EnCana, Canada's biggest oil and gas exploration firm, sole ownership of the field 80 miles (130 km) northwest of Houston, which is home to two of the biggest gas wells drilled in the United States over the past five years.
"The Leor assets are located in one of the fastest-growing and highest-potential natural gas basins in North America," Randy Eresman, EnCana's chief executive, said on a conference call. "We believe the Amoruso field is the best emerging unconventional gas play in North America."
The price tag for Leor's stake has skyrocketed over the past two years as massive new reserves were found in the technically challenging field.
Two years ago, EnCana paid $80 million for a 30 percent stake in Amoruso from Leor, which is privately held. It added a further 20 percent last year for $250 million.
Over those two years, production at the field had ramped up to 215 million cubic feet a day and EnCana expects that to grow to as much as 355 million cubic feet a day next year.
"It's still a very early-stage development but it does seem to be gaining a lot of momentum," said Kyle Preston, an analyst with Salman Partners.
The company said two of the wells drilled into the field were among the most prolific onshore gas wells in the United States since 2002. The Bonnie Ann 1 and South McLean B1 wells produced more than 50 million cubic feet of gas a day while the last well drilled there, called Laxson, is producing 65 million cubic feet a day.
The latest acquisition will add Leor's output of 75 million cubic feet a day and 56,300 acres of exploration lands in east Texas. EnCana, which produced 3.63 billion cubic feet of gas a day in the third quarter, expects the deal to immediately add to cash flow and be neutral to earnings.
"It's a great outcome. I think they're buying the best property in North America," said Guma Aguiar, Leor's chief executive.
The deal puts an exclamation point on an old-fashioned wildcat play that is the biggest find in Houston geologist John Amoruso's career.
Amoruso theorized that 150 million years ago a river emptied into the sea in Robertson County and the result was gas 14,000 to 20,000 feet beneath the cow pastures of today.
The field is part of the Deep Bossier trend in east Texas, part of a play that produces about 1.4 billion cubic feet of gas a day. EnCana said production in the region is highly profitable because the play lies close to pipelines and gas trading hubs.
In total, EnCana expects the field to produce up to 3.3 trillion cubic feet, including the portion it already controls.
The acquisition is EnCana's largest purchase of gas assets since 2004, when it paid $2.7 billion for U.S. producer Tom Brown Inc.
As well, it's the first major deal the company has made since it threatened to cut $1 billion in spending in Alberta if the province raised royalty rates on oil and gas production.
Alberta did hike rates, but less than EnCana had feared, and Eresman said the purchase wasn't a response to the higher costs.
"It is a normal strategic event," he said. "This transaction has nothing to do with EnCana's future plans as they relate to the Alberta government's new royalty framework."
Shares of EnCana fell 79 Canadian cents, or 1.2 percent, to C$66.98 on the Toronto Stock Exchange amid a broad-based retreat by the market.
The acquisition is effective as of Oct. 1 and is expected to close by year-end.
Kipp
AI
