EnCana to Sell Brazilian Concessions for $165 Million
EnCana Corporation has reached an agreement to sell all of its remaining interests in Brazil for cash proceeds of approximately US$165 million, before closing adjustments. Under the agreement, a consortium of two Indian companies based in Mumbai - Videocon Industries Limited and Bharat PetroResources Limited (a wholly owned subsidiary of Bharat Petroleum Corporation Limited) - will purchase all of the shares in EnCana's Brazil subsidiary - EnCana Brasil Petroleo Limitada.
"This sale reflects the continuation of our focus on North American unconventional natural gas and integrated oilsands resources. When added to our previous 2007 sales of exploration interests in Chad and Canada's Mackenzie Delta, this Brazil asset sale is expected to take this year's divestiture proceeds to more than $500 million, our 2007 target," said Randy Eresman, EnCana's President & Chief Executive Officer.
With this sale, which is expected to generate an estimated after-tax gain to net earnings of about $75 million, EnCana is exiting Brazil. In combination with the company's previous sale of its interest in the Chinook oil discovery in 2006, total Brazil divestiture proceeds are estimated to be about $530 million, resulting in an estimated after-tax gain to net earnings of about $330 million.
EnCana's Brazil interests in this sale include 10 offshore exploration blocks, including Espirito Santo, Sergipe-Alagoas, Potiguar and Campos Basin concessions. The sale has an effective date of January 1, 2007, is subject to normal closing conditions, regulatory approvals and pre-emptive rights associated with certain assets. It is expected to close in the first quarter of 2008. Jefferies Randall & Dewey acted as EnCana"s financial advisor for the sale.
With an enterprise value of approximately US$50 billion, EnCana is a leading North American unconventional natural gas and integrated oilsands company. By partnering with employees, community organizations and other businesses, EnCana contributes to the strength and sustainability of the communities where it operates. EnCana common shares trade on the Toronto and New York stock exchanges under the symbol ECA.
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