As unconventional ponzi scheme implodes, Are Encana’s greedy law violations taking the company down?

Encana’s greed was cutting jobs long before oil’s price crash

2013: Isn’t frac’ing supposed to create massive prosperity and jobs? Encana proves it isn’t so!

2014: Encana debt about $7.1-billion end 2013, 2.5 times its adjusted earnings before interest, taxes, depreciation, amortization

2015: Art Berman: Shale Plays Have Years, Not Decades & The way of greed: Oil and gas companies face their creditors as Fracking Bubble Bursts (FUNNY!)

Cenovus (split from Encana) looking to cut jobs, slashing dividend by 40 per cent by Darshana Sankaraman, July 30, 2015, The Globe and Mail

Cenovus Energy Inc slashed its quarterly dividend by 40 per cent and said it would cut 300 to 400 more jobs as the company looks to reduce costs after a slump in crude prices.

Canada’s No.2 independent oil producer had said in February that it would cut 800 jobs.

Cenovus said on Thursday that it expected to reduce its workforce by about 15 per cent by the end of 2015 and planned to slash more jobs in early 2016. [But, fracing was promised to make everyone rich and provide masses of high paying excellent jobs.  Where did the jobs go? Just more lies to con the greedy?]
The company, which has about 4,600 employees including contractors, also raised its cost reduction target for 2015 by 40 per cent to $280-million. [Leaks are already a debilitating problem in the patch. How much will these enormous greedy cuts increase leaks and other harms?]

Crude prices have plunged about 55 per cent in the past year, forcing many oil producers including TransCanada Corp and Encana Corp to reduce their workforce.

Cenovus said it would focus on expanding existing oil sands projects, but at a more moderate pace. The company will also focus on oil sands drilling projects with relatively low risk and short production cycles. Cenovus currently has two producing oil sands projects – Christina Lake and Foster Creek – both of which are 50 per cent owned by ConocoPhillips.

Cenovus said it would wait until 2016 to invest in expansion projects that were deferred this year. However, the company does not plan to invest in refining operations, unless they offer “compelling value and strategic fit,” it said.

The company reduced its quarterly dividend to 16 cents per share from 26.62 cents.

Cash flow, a measure of Cenovus’s ability to fund new projects, dropped 60 per cent to $477-million in the quarter ended June 30.

Net income fell to $126-million, or 15 cents per share, from $615-million, or 81 cents per share, a year earlier.

Operating profit fell 68.1 per cent to $151-million, or 18 cents per share, but beat the average analyst estimate of 9 cents per share, according to Thomson Reuters I/B/E/S.

Cenovus shares rose about 3 per cent to $19.16 in early trading on the Toronto Stock Exchange. Up to Wednesday’s close, the stock had fallen nearly 24 per cent this year. [Emphasis added]

Encana Cuts About 200 Jobs In July by Reuters, July 24, 2015, epmag
Encana Corp, Canada’s No.1 natural gas producer, said it had laid off about 200 employees this month, joining a growing list of oil producers cutting jobs to cope with a steep fall in crude prices.

Encana’s shares fell 10 percent to a 13-year low of C$10.10 after the company reported a bigger-than-expected quarterly loss due to weak production.

The company’s U.S.-listed shares fell 10 percent to $7.73, their lowest since December 2002.

Encana cut about 1,200 jobs in 2013 as part of a strategic shift away from low-value natural gas production. The company, which has been increasing oil and natural gas liquids production under Chief Executive Doug Suttles, had 3,129 employees as of Dec. 31.

“Our costs will continue to come down, and they need to, because the price of our product has dropped,” Suttles said on a media call.

Still, Encana’s capital expenditure of $743 million in the second quarter ended June 30 was well ahead of analysts’ average estimate of $560 million.

“(Encana’s) cost structure still does not strike us as particularly strong,” Barclays analysts wrote in a note, noting that the company continued to outspend cash flow. [Good times rolling for the execs? Or lots of bribing, gagging and settling going on?]

Encana’s cash flow, an indicator of its ability to pay for new assets and drilling, fell 72.4 percent to $181 million in the quarter.

Encana said July 24 it expects to focus its remaining 2015 capital budget on its core operations in the Permian, Eagle Ford, Duvernay and Montney shale fields.

The company expects the fields to account for about 65 percent of production in the fourth quarter, up from 57 percent currently.

Encana spent about $9 billion last year to add assets in the oil-rich Eagle Ford and Permian Basin in Texas but those acquisitions backfired, with global crude prices halving since June 2014.

Encana booked an impairment charge of $1.33 billion in the second quarter due to weak oil and gas prices. The company had booked a $1.22 billion charge in the first quarter.

The company’s realized liquids prices fell by more than a third in the second quarter, while realized natural gas prices fell 14 percent.

Encana’s quarterly production fell 10 percent to 389,000 barrels of oil equivalent per day (boepd) from the first quarter, missing analysts’ average estimate of 403,000 boepd.

Calgary-based Encana’s operating loss, which excludes most one-time items, was 20 cents per share. Analysts on average had expected 16 cents, according to Thomson Reuters

Encana Corp plunges deep into the red on 1.3 Billion Charge; Shares sink to 13-year low as oil slump spurs another 200 layoffs by National Post Wire Services, July 24, 2015, Financial Post
Even without the charge, Encana Corp, Canada’s largest natural gas producer is losing money due to increased production while oil and gas prices remain weak

Encana Corp., the Canadian natural gas producer switching its focus to oil, fell to a 13-year low after second-quarter earnings missed analysts’ estimates.

Encana fell 8.7 per cent to $10.25 at 10:31 a.m. in Toronto, after earlier dropping 10 per cent to the lowest since July 2002. The company said it cut about 200 jobs in the past month.

The additional job cuts signal the worst isn’t over for energy workers in a market slump that has U.S. crude trading at less than half its 2014 high. Encana’s stock has come under more pressure than its peers because investors have been skeptical that the company will meet production targets, according to GMP Securities LP.

“We believe investors will be disappointed with the results,” Randy Ollenberger, an analyst at BMO Capital Markets in Calgary, wrote in a note Friday. Encana’s full-year production outlook looks unachievable and will probably be adjusted lower despite that the company has maintained the forecast, he said.

Excluding one-time items, the per-share operating loss of 20 cents missed the average loss of 13 cents expected by the average of 17 analysts’ estimates. The company reported a net loss of $1.6 billion, or $1.91 per share.

The company has eliminated 1,400 jobs, or about one-third of its workforce, since announcing a new strategy in late 2013, Chief Executive Officer Doug Suttles said on a conference call Friday. Almost 1,000 positions were initially cut when the business plan was outlined.

Encana reported a bigger-than-expected quarterly loss as a rise in liquids production failed to make up for a fall in natural gas output.

Encana’s total production fell 10 pe rcent to 389,000 barrels of oil equivalent per day (boepd) in the second quarter ended June 30 from the preceding quarter, falling short of analysts’ average estimate of 403,000 boepd.

The company, which is increasing oil and natural gas liquids production under Chief Executive Doug Suttles, did not report a comparable figure for the year-ago quarter.

Weak oil and gas prices also weighed on results, with Encana recording an impairment charge of $1.33 billion in the quarter. The company had booked a $1.22 billion charge in the first quarter.

Encana had spent about $9 billion last year to add assets in the oil-rich Eagle Ford and Permian Basin shale fields in Texas to lower its exposure to weak natural gas prices.

But those acquisitions came just ahead of a fall in global crude prices, which are down about 50 per cent since June last year.

Encana said on Friday it expects to accelerate oil and natural gas liquids growth through the second half of the year.

…  Shares of the company are down 36 per cent this year in Toronto, compared with a 16 per cent decline for the Standard & Poor’s/TSX Energy Index. Compiled with files from, Reuters

Encana cuts jobs as oil drop boosts loss by Jeff Lewis, July 24, 2015, The Globe and Mail

Encana Corp. cut more jobs and booked a major writedown on the value of its oil and natural gas reserves, as the sharp drop in commodity prices begins to eat away at the energy industry’s foundations.

Calgary-based Encana’s second-quarter loss swelled to $1.6-billion (U.S.) from a $271-million profit last year mostly on a non-cash $1.3-billion after-tax impairment attributed to the company’s U.S. operations.

An additional 200 jobs were eliminated in the past month, the company confirmed on Friday, bringing to 1,400 the total number of layoffs since Doug Suttles took over as chief executive officer more than two years ago. The shares tumbled nearly 9 per cent to close at $10.26 (Canadian) on the Toronto Stock Exchange.

The moves are the latest signs of distress in an industry struggling to adjust to dramatically lower crude prices.

[But, the industry promised that fracing would make everyone, even the poor, super rich with rubles beyond heaven!

And the industry with its corrupt enablers (regulators and corrupt politicians and parties, eg Harper government, Alberta Tory government, etc etc etc) promised endless jobs jobs jobs. They are still lying and promising that, as companies slash and burn everywhere]

Energy companies have already shed thousands of jobs and pared spending levels sharply to cope with oil’s swoon to less than $50 (U.S.) a barrel from more than $100 last year.

Now, weak prices are eroding the overall value of oil and gas reserves they hold in the ground, reducing companies’ worth as more deposits are rendered uneconomic.

Encana said it has recorded $2.6-billion in after-tax impairments this year after testing its reserves against lower prices. Last year, the company spent about $9-billion on acquisitions, primarily in U.S. shale-oil plays. On Friday, its entire market capitalization stood at roughly $6.6-billion.

“It’s clearly trying to find its feet,” Mr. Suttles told reporters. “The real question is: Does it work itself out over six months or does it take a couple of years? And I don’t know the answer to that.”

2015 07 11 Dilbert on truth and the ceo

Encana under Mr. Suttles has jettisoned assets and narrowed its focus to a handful of producing zones as part of a broader shift away from natural gas to oil.

In the quarter, production of natural gas liquids jumped 87 per cent from levels a year ago, to 127,300 barrels a day.

Cash flow, an indication of the company’s ability to fund future development, fell to $181-million from $656-million a year ago.

[Moving it’s cash elsewhere to escape lawsuits and consequences of criminal activities?

Happy Encanada Days: 12 Year Anniversary Encana Violating Ernst’s Legal Right to Quiet Enjoyment of Home and Land

Rosebud included? Brookfield Capital Partner’s Ember Resources buys most of Encana’s “fee-lands” (royalty-free) in Alberta’s Horseshoe Canyon play; Ember will be one of Prairie Sky’s biggest payees, paying 5 percent overriding royalty

Encana spinoff PrairieSky Royalty Ltd. surges in Toronto Stock Exchange debut

Encana Readies Spinoff of Clearwater Alberta Properties into PrairieSky, estimated to be worth $2.5 billion or more

Cenovus Energy sells royalty lands for $3.3 billion in cash after illegally fracturing Rosebud’s drinking water aquifers (then Encana), and getting away with it ]

Despite soggy prices, the company expects to pump about 270,000 barrels of oil equivalent per day, or 65 per cent of total production, from four main shale zones by year-end.

Currently, 57 per cent of its output comes from the Permian and Eagle Ford regions in Texas, as well as Alberta’s Duvernay Formation and the Montney in B.C. – where the company has reduced activity to a standstill.

In the quarter, Encana said natural gas production fell 38 per cent from a year ago, to roughly 1.56 billion cubic feet a day. Production was down 16 per cent from the previous quarter in part because of outages on TransCanada Corp.’s B.C. gas system, the company said.

Encana has so far spent about $1.5-billion of its targeted $2-billion budget, with roughly two-thirds earmarked for Texas shale plays.

It’s Happening: Debt Is Tearing up the Fracking Revolution by Wolf Richter, July 21, 2015, Wolf Street

The shares of Chesapeake Energy, second largest natural-gas driller in the US, crashed nearly 10% today, to $9.29, the lowest price since August 2003, down nearly 70% since oil began to plunge a year ago. The company’s $1.1 billion of 5.75% notes fell to an all-time low of 84.88 cents on the dollar. And its 4.875% notes dropped to 81.25 cents on the dollar, from 86 last week, according to S&P Capital IQ LCD.

All this in the wake of its announcement that it would suspend its dividend for the first time in 14 years. It’s trying to conserve cash, and that dividend costs $240 million a year. It’s dumping assets as fast as it can, including some Oklahoma fields that will save it another $75 million a year in preferred dividends. It’s cutting operating costs and capital expenditures. It’s trying to stay alive.

It has been cash-flow negative in 22 of the past 24 years, according to Bloomberg.

The only thing surprising is that it took so long, that Wall Street kept funding its cash-flow negative operations and dividends for all these years.

Chesapeake used to be mostly a natural gas producer. But the price of natural gas plunged over five years ago and has remained below the cost of production for most wells for much of that time. The only saving grace was that these wells also produced natural-gas liquids and oil, which sold for much higher prices. As its natural-gas business model collapsed, Chesapeake began chasing after oil-rich plays. But a year ago, the price of oil collapsed.

Among natural gas drillers, Chesapeake isn’t in the worst shape. Much smaller Quicksilver Resources filed for Chapter 11 bankruptcy in March. It listed $2.35 billion in debts and $1.21 billion in assets. The difference has been forever drilled into the ground. Stockholders got wiped out. Creditors are fighting over the scraps.

Then there’s natural gas driller Samson Resources. It was acquired by a group of private equity firms, led by KKR, in 2011 for $7.2 billion. Since then, Samson has lost over $3 billion. When Moody’s downgraded Samson to Caa3 in March, it pointed at, among other things, “chronically low natural gas prices” and invoked “a high risk of default.” Samson warned it might have to resort to bankruptcy to restructure its debt.

At the time, a JPMorgan-led group, which holds a $1 billion revolving line of credit, granted Samson a waiver for an expected covenant breach to avert default. But the group reduced the size of the revolver. Last year, the same group had already reduced the credit line from $1.8 billion to $1 billion and had also waived a covenant breach.

“Liquidity death spiral,” is what S&P Capital IQ called this principle by lenders to whittle down the size of the loan as the company runs deeper into trouble, as I wrote at the time. It eventually ends in bankruptcy.

On August 15, Samson has to make an interest payment of $110 million on a $2.25 billion junk-bond issue. That date is coming up in a hurry. And its debt “continued to wallow around record lows today after press reports circulated about restructuring negotiations along two different paths,” S&P Capital IQ LCD’s reported today.

The loan investor group want to find new money to get the company through a Chapter 11 bankruptcy. The bondholder group wants to find new money to fund an out-of-court restructuring via a debt swap.

Samson’s covenant-lite second-lien term loan due 2018 was quoted at 31.5/33.5 cents on the dollar. Its 9.75% notes due 2020 were “essentially worthless.”

And more bloodletting among energy credits today: California Resources’ 6% notes fell to 77 cents on the dollar, a record low, according to S&P Capital IQ, “amid a repricing of the energy sector and more broadly a sell-off in commodities credits this week as oil and precious metals probe lower levels.”

Time and again, despite the collapsed prices of oil and gas, the players in the shale revolution have gotten more funding from Wall Street, whose ZIRP-blinded clients kept gobbling up the newly issued junk bonds, leveraged loans, and shares, taking on huge risks and hoping to make a little extra money in a Fed-laid minefield where all decent assets are way overpriced.

During the first half of 2015, according to Bloomberg, deeply troubled shale drillers were able to sell $32 billion in new debt and $12 billion in equity, in total $44 billion, more than during any half-year period since the go-go days of 2007.

Exhibit A: Halcon Resources. Though it has been drilling cash into the ground at a breath-taking rate, it went on a money binge in April, including a debt-for-equity swap and junk-bond sale that left some prior investors seething. The company has become ruinous for investors. Yet it keeps getting new money.

Each new wave of investors hopes it won’t suffer the same fate prior investors suffered. Bloomberg put it this way:

Halcon Resources Corp. almost ran into trouble with its banks in June 2013. And again in March 2014. And in February 2015.

Each time, the shale driller came close to violating debt limits set by its lenders, endangering a credit line that provided as much as $1.05 billion in much-needed cash. Each time, Halcon’s banks, led by JPMorgan Chase & Co. and Wells Fargo & Co., loosened their restrictions, allowing Halcon to keep borrowing.

If there is a bankruptcy, Halcon’s unsecured bondholders might get, at most, 10% of the nearly $2.6 billion they’re owed, Standard & Poor’s estimates. Secured creditors such as banks will fare better. Many other investors, including stockholders, will be just about wiped out.

The Office of the Comptroller of the Currency has been warning the banks it regulates about these oil & gas loans. Their collateral has plunged with the price of oil and gas. And as banks begin to fret while investors lick their wounds, after all these years, a strange phenomenon in the world of ZIRP is showing up on the horizon: a cash crunch.

Devastating for the permanently cash-flow negative shale revolution.

Most drillers survived the last redetermination by their banks of their oil & gas credit lines. That was in April. These loans are backed by the value of the drillers’ reserves. [What if they grossly embellished?] But low oil and gas prices have knocked down that value, and drillers had to pay down their credit lines with money extracted from other investors. That’s where some of the new money went that drillers have raised.

The next redetermination cycle is in October. And hedges are now expiring which have partially protected drillers’ revenues from the oil price plunge. So it’s going to be tough. But turning off the money spigot will push these companies off the cliff. And banks would end up with the oilfields and have to get their hands dirty. So they’re not eager to pull the ripcord. But they can’t afford to play this “extend-and-pretend” charade for too long either, or else they’ll get sucked down too. [Emphasis added]

“Far Worse Than 1986”: The Oil Downturn Has No Parallel In Recorded History, Morgan Stanley Says by Tyler Durden,July 22, 2015, zerohedge

On Tuesday the market got yet another reminder of just how painful the “current commodity price environment” has been for producers when Chesapeake eliminated its common dividend in order to conserve cash.

After noting the plunge in Chesapeake’s shares (to a 12-year low) we subsequently outlined why the US shale “revolution” is now running out of lifelines as hedges roll off and as the next round of credit line assessments looms in October.

A persistent theme here – as regular readers are no doubt aware – has been the extent to which an ultra-accommodative Fed has contributed to a deflationary supply glut by ensuring that beleaguered producers retain access to capital markets. In short, cash-strapped companies who would have otherwise gone out of business have been able to stay afloat thanks to the fact that Fed policy has herded investors into risk assets.

In a ZIRP world, there’s plenty of demand for new HY issuance and ill-fated secondaries, which means the digging, drilling, and pumping gets to continue indefinitely in what may end up being one of the most dramatic instances of malinvestment the market has ever seen.

Those who contend that the downturn simply cannot last much longer – that the supply/demand imbalance will soon even out, that the market will clear sooner rather than later, and that even if the weaker hands are shaken out, the pain for the majors will be relatively short-lived – are perhaps ignoring the underlying narrative that helps to explain why the situation looks like it does. At heart, this is a struggle between the Fed’s ZIRP and the Saudis, who appear set to outlast the easy money that’s kept US producers alive.

Against that backdrop, and amid Wednesday’s crude carnage, we turn to Morgan Stanley for more on why the current downturn will be “worse than 1986.”

From Morgan Stanley

Worse than 1986? Really?

We have been expecting the current downturn to be as severe as the one in 1986 – the worst for at least 45 years – but not worse than that. Still, if oil prices follow the path suggested by the forward curve, our thesis may yet prove too optimistic.

Our constructive stance on the majors is based on four factors: 1) supply – we expected production growth to moderate following large capex cuts and the sharp decline in the rig count; 2) demand – we anticipated that the fall in price would boost oil products demand; 3) cost and capex – we foresaw both falling sharply, similar to the industry’s response in 1986; and 4) valuation – relative DY and P/BV indicated 35-year lows.

So far this year, we can put a tick against three of them [but] our expectation on supply has not materialised: US tight oil production growth has started to roll over, but this has been more than offset by OPEC, which has added ~1.5 mb/d since February.

On current trajectory, this downturn could become worse than 1986: An additional +1.5 mb/d is roughly one year of oil demand growth. If sustained, this could delay the rebalancing of oil markets by a year as well. The forward curve has started to price this in: as the chart shows, the forward curve currently points towards a recovery in prices that is far worse than in 1986. This means the industrial downturn could also be worse. In that case, there would be little in analysable history that could be a guide to this cycle.

[There are] strong similarities between the current oil price downturn and the one that occurred in 1985/86. The trajectory of oil prices is similar on both occasions. There were also common reasons for the collapse.

A high and stable oil price in the preceding four years stimulated technological innovation and led to a high level of investment. This resulted in strong production growth outside OPEC, exceeding the rate of global demand growth. When it became clear that OPEC would no longer rein in production to balance the market (as it did during both the Nov 1985 and Nov 2014 OPEC meetings) the price collapsed.

And although MS notes that similar to 1986, costs and capex are likely to come in sharply while demand growth should materialize, the supply side of the equation is not cooperating thanks to increased output from OPEC.

Due to the sharp slowdown in drilling activity and the high decline rate of tight oil wells, we expected production in the US to flatline and start declining in 2H. This seems to be happening: according to the US Department of Energy, tight oil production in June was 94 kb/d below the April level, and it forecasts further falls of 90 kb/d in both July and August.

Now that capex is falling, we anticipated non-US production to be flat at best. Still, this has not yet been the case. At the time of our ‘Looking Beyond the Nadir’ report in February, OPEC production stood at ~30.2 mb/d. This increased substantially to 31.3 mb/d in May and 31.7 mb/d in June, i.e. OPEC has added 1.5 mb/d to global supply in the last four months alone.

Our commodity analyst Adam Longson argues that the oil market is currently ~800,000 b/d oversupplied. This suggests that the current oversupply in the oil market is fully due to OPEC’s production increase since February alone. We anticipated that OPEC would not cut, but we didn’t foresee such a sharp increase. In our view, this is the main reason why the rebalancing of oil markets had not yet gained momentum.

If oil prices follow the path suggested by the forward curve, and essentially remain rangebound around levels seen in the last 2-3 months, this downturn would be more severe than that in 1986. As there was no sharp downturn in the ~15 years before that, the current downturn could be the worst of the last 45+ years.

If this were to be the case, there would be nothing in our experience that would be a guide to the next phases of this cycle, especially over the relatively near term. In fact, there may be nothing in analysable history.

Needless to say, this does not bode well for everyone who has unwittingly thrown good money after bad on the assumption that the Saudis will cut production and trigger a rebound in crude.

In addition to the immense pressure from persistently low prices, US producers also face a Fed rate hike cycle and thus the beginning of the end for easy money.

Of course, the more expensive it is to fund money-losing producers, the less willing investors will be to perpetuate this delay-and-pray scheme, which brings us right back to what we’ve been saying for months: the expiration date for heavily indebted US drillers is fast approaching, and if Morgan Stanley thinks the oil downturn has no parallel in “analysable history,” wait until they see the carnage that will unfold in HY credit when a few high profile defaults in the oil patch send the retail crowd running for the junk bond ETF exits. [Emphasis added]

Encana takes a new look at oil by Nathan Vanderklippe, January 13, 2011, The Globe and Mail

Encana Corp. is turning some of its attention back to oil in a sign of how persistently low natural gas prices are reshaping the energy industry. The company, North America’s second-largest producer of natural gas, has signed a series of joint venture deals that give it a substantial interest in extracting oil from a series of lucrative new plays sweeping across Western Canada.

Encana split itself into two a little more a year ago, jettisoning most of its oil assets by carving out oil sands producer Cenovus Energy Inc. Although that strategy meant losing the benefits of diversification – and drew criticism from some quarters – Encana believed investors were better served with separate companies, each focused on a single commodity.

And it has continued its aggressive pursuit of natural gas growth. On Thursday, for instance, the company’s shares rose as much as 5.2 per cent amid market speculation that it is nearing completion of a major deal with China National Petroleum Corp. to speed development of its northeastern British Columbia gas holdings. A deal, Encana executive vice-president Mike Graham said this week, could be “an order of magnitude bigger” than a similar $565-million agreement with Kogas Canada Ltd.

But Encana is also quietly shifting back toward oil as the imbalance between low gas and high oil prices dramatically tilts the business of energy extraction.

… Even with such dramatic change afoot, Encana’s new openness toward crude is striking. In recent months, it has signed joint venture deals with a number of companies to explore for oil on more than 465,000 hectares in Alberta and Saskatchewan.

“It does give us a lot of oil exposure,” Stacy Knull, an Encana vice-president in charge of its southern Alberta operations, said in an interview. “But we’re not scared of oil.”

The joint ventures are a potentially major source of new revenue. They stem from a unique part of Encana’s land holdings. The company owns more than three million hectares of “fee lands,” on which it holds subsurface rights. In those areas, which were originally granted to the Canadian Pacific Railway in the late 1800s, Encana pays no royalty to the Crown.

Instead, it can charge royalties to other companies – a strategy it is now pursuing on lands that lie in some of Western Canada’s most prominent new oil plays, including the Viking, Cardium and Alberta Bakken. Encana has agreed to allow other companies to explore some of its lands in exchange for a royalty of anywhere between 30 and 38 per cent.

In the biggest deal, it gave Crescent Point Energy access to a 350,000-hectare swath along the Montana border in what is known as the Alberta Bakken; the play that has drawn immense attention in the past year, including from major companies such as Royal Dutch Shell PLC.

By some estimates, the Alberta Bakken contains as much oil as Saskatchewan’s Bakken play, or roughly five million barrels in place per 260-hectare section. With about 10 to 20 per cent of that recoverable, the Encana lands could contain a massive pool. Under the terms of its joint ventures, a company such as Crescent Point has access to the Encana land for a three- to five-year period, and must drill one section of land to earn an interest in it.

“They’d have to do a lot of drilling on that many sections to hold it all – and we encourage it because we make good royalties,” Mr. Knull said.

Encana also benefits by having someone else shoulder all the risk for finding oil. If it likes what it sees, it can then make a decision to drill for oil itself – an option it is open to, Mr. Knull said. “We’re definitely interested to see where this goes.”

Similar deals on other lands have already proven desirable for the company. In 2009, Mr. Knull’s unit was Encana’s most profitable, in part because of a stream of royalty dollars equivalent to about 70 million cubic feet of daily production, or 6 per cent of Encana’s Canadian total. [Emphasis added]

[Refer also to:

2014: Moving-On-To-Greener-Frac-Pastures: After paying 5 times maximum fine to escape criminal charges and finding it “could not develop the necessary techniques to drill and complete Collingwood wells…to obtain a favorable rate of return,” Encana leaving Michigan

2014: After Encana agrees to pay $5Million fine in antitrust case, Michigan’s Attorney General dismisses second criminal charge against Encana

2014: Encana and Chesapeake Criminal Anti-trust Hearing in Michigan: Encana pleads “no contest” and buys its way out on the first day with $5 Million Settlement

2014: Attorney General Bill Schuette: Encana and Chesapeake Energy criminally charged with colluding to keep oil and gas lease prices artificially low in Michigan; Also face separate, federal antitrust investigation by Department of Justice

2013: New Encana head Doug Suttles [past senior BP executive who reportedly lied about the Gulf of Mexico Deepwater Horizon disaster] plays cards close to chest

2013: Michigan cites but does not fine Encana for frac fluid spill

2013: Fracking company Encana suspected of contaminating ground water at Pavillion Wyoming, buys control of investigation with 1.5 Million, EPA refuses to finalize study blaming fracking for water pollution

2013: Nabors Ducks Encana Subcontractor Claims In Appeals Court

Law360, Dallas – A Texas appeals court on Thursday said Nabors Drilling USA LP isn’t required to indemnify Encana Oil & Gas USA Inc. for settlements Encana subcontractors made with Nabors workers injured at a drilling site, reversing a trial judge’s interpretation of the contracts at issue.

The Second District Court of Appeals said a trial judge wrongly granted summary judgment to Encana and should instead have granted a summary judgment motion filed by Nabors, finding the drilling operator had assumed liability only for Encana directly, not for Encana’s…

2012: Drilling Violations Are Barely Punished, House Dems Say … December, finding that groundwater near an EnCana Corp. gas field in Pavillion, Wyo., contained chemicals…

Law360, New York — Oil and gas companies that violate safety and environmental policies while drilling on federal lands are rarely punished — and when they are, the resulting fines are little more than pocket change to the companies, Democratic lawmakers said in a report released Wednesday.

Only 6 percent of 2,025 safety and drilling violations issued by the U.S. Department of the Interior to 335 companies between February 1998 and February 2011 resulted in monetary fines, and the total amount of fines issued over that 13-year period was just…

Failure Investigation Report by the BC OGC: Failure of Piping at EnCana Swan Wellsite A5-7-77-14 L W6M

2012: $250,000 in community bribes buys Encana out of criminal charges following deadly sour gas leak

2011: Gibson Dunn Fights EnCana Suit Sanctions In 9th Circ.

Law360, New York — Gibson Dunn & Crutcher LLP urged the Ninth Circuit on Thursday to knock out a lower court’s sanctions against the firm stemming from alleged witness tampering in an antitrust suit accusing EnCana Corp. of conspiring to drive up the price of natural gas.

The firm, which is seeking to reverse an order by the U.S. District Court for the Eastern District of California imposing a $102,078.97 sanction against it, faced an uphill battle in oral arguments before the U.S. Court of Appeals for the Ninth Circuit,…

2011: The U.S. Securities and Exchange Commission (SEC) Wants Gas Drillers To Divulge Fracking Info …., Anadarko Petroleum Corp., EnCana Corp. and Range Resources Corp.

Law360, New York — The U.S. Securities and Exchange Commission has begun asking energy companies to turn over information about their use of hydraulic fracturing to extract natural gas from shale rock, it was reported Thursday.

The SEC is requesting information from oil and gas drillers on the types of chemicals they use in the process, commonly called fracking, as well as details about their efforts to minimize water use and environmental harm, according to the Wall Street Journal.

2010: EnCana Corporation facing criminal charges in British Columbia

2010: EnCana Wants Out Of $6M Xtreme Oil Rig Suit

Law360, New York — EnCana Oil & Gas USA Inc. has asked for summary judgment on Xtreme Coil Drilling Corp.’s claims that EnCana breached an oil contract, and still owes $4 million, after one of Xtreme’s rigs was damaged.

Encana notified Xtreme in writing several times that its operations failed to meet the contractual performance standards, EnCana said in the U.S. District Court for the District of Colorado on Tuesday.

Xtreme experienced a high rate of turnover of rig crews, its employees tested positive for using illegal drugs and, when…

2009: EnCana Settles With Gallo Winery In Antitrust Dispute

Law360, New York – EnCana Corp. has settled a long-running antitrust suit brought by E&J Gallo Winery alleging the Canadian energy giant conspired with other industry players to drive up the price of natural gas.

Granting a joint motion from the parties, Judge Anthony Ishii of the U.S. District Court for the Eastern District of California on Tuesday dismissed the case with prejudice.

California-based Gallo sued EnCana in 2003, alleging that the energy company colluded with its competition to inflate natural gas prices. The case had been slated to go…

2009: Gibson Dunn Appeals Sanctions In EnCana Antitrust Suit

Law360, New York — Gibson Dunn & Crutcher LLP has decided to appeal $102,000 in sanctions incurred more than four years ago while defending Canadian energy giant EnCana Corp. in a long-running, now-settled antitrust suit brought by E&J Gallo Winery.

The law firm filed a notice of appeal Friday in the U.S. District Court for the Eastern District of California, questioning whether the magistrate judge and the district court erred in imposing the sanctions when there was no evidence to support a finding of bad faith.

2008: Judge Refuses To Toss Energy Price-Fixing Case … “some of their subsidiaries and EnCana Inc. A separate class action is pending in California state…”

Law360, New York — A group of energy companies at the center of an alleged conspiracy to fix wholesale natural gas prices suffered a blow on Tuesday when a federal judge denied its motion for summary judgment in order to give the plaintiffs the chance to conduct discovery.

Judge Philip Pro of the U.S. District Court for the District of Nevada rejected the companies’ motion to dismiss the case after finding that the plaintiffs had not had an opportunity to conduct discovery.

2007: EnCana Pays $20.5M To Settle State Class Action

Law360, New York — EnCana Corp. and its U.S.-based energy trading unit WD Energy Services Inc. have agreed to pay $20.5 million to put to rest a state court class action alleging the company conspired to artificially raise the price of natural gas in California from 1999 to 2002, the company said in a regulatory filing Thursday.

The state court settlement coincides with EnCana’s $2.4 million settlement payment ordered last month by the Judge Philip M. Pro of the U.S. District Court for the District of Nevada in a federal…

2007: Energy Firms Push For $11.3M Settlement

Law360, New York — Energy companies involved in a massive antitrust class action accusing them of artificially raising the price of natural gas in California, asked a federal judge Tuesday to sign off on a settlement deal that will see them shelling out a collective $11.3 million.

The defendants – Williams Companies Inc., EnCana Corp., Dynegy Inc., Coral Energy Resources LP and CMS Energy Resources Management Co. – said in court documents filed in the the U.S. District Court for the District of Nevada that the payment amount is within…

2007: Companies Approach $10M Natural Gas Settlement

Law360, New York — A group of energy companies accused of artificially raising the price of natural gas in California moved a step closer to a $10.3 million settlement Wednesday when a judge filed a proposed final settlement in a massive antitrust class action against them.

Five energy companies and their subsidiaries—Williams Companies Inc.; EnCana Corp.; Dynegy Inc.; Coral Energy Resources LP and CMS Energy Resources Management Co.—will pay $2.4 million each under the proposed settlement, except for CMS, which will pay $700,000. [That’s worth a lot of worker salaries]

2007: United States Court of Appeals, Ninth Circuit. E. & J. GALLO WINERY, Plaintiff-Appellee, v. ENCANA CORPORATION, formerly known as Pancanadian Energy Corporation;  WD Energy Services Inc., formerly known as EnCana Energy Services, Defendants-Appellants. No. 05-17352.

2007: EnCana faces California gas price-fixing trial

2000: RCMP [Royal Canadian Mounted Police] and Encana (then Alberta Energy Corporation) bombed oil site in ‘dirty tricks’ campaign

1999: Alberta Energy Corporation (became Encana) CEO Gwyn Morgan defends company conspiring with RCMP for staged bombing of a gas well

2015: Did Harper and the oil and gas industry order RCMP/CSIS/Snipers to attack innocent mothers and grandmothers, and set aflame stripped police cars in New Brunswick to discredit all Canadians concerned about frac harms and lay a red carpet for Harper’s Bill C-51?

2015: Ernst vs Encana in Top 10 Canadian Judicial Decisions in 2014 of Import to the Oil and Gas Industry

2014: Alberta Moves to Strike Down Ernst’s Fracking Lawsuit, Landmark case could spark a flood of litigation against the province, lawyer argues

“There could be millions or billions of dollars worth of damages,” argued Crown counsel Neil Boyle.

2014: Legal Advice by AER outside counsel Glenn Solomon

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