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Why Montney Is Encana’s Core Resource Play

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Encana’s Montney presentation

In this part of the series, we’ll take a close look at Encana’s (ECA) presentation on its Montney Resource Play in Canada and why it’s important for the natural gas producer.

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Where does Montney fit into Encana’s strategy?

In November 2013, Encana launched its strategy to transform the company. This strategy is based on four key fundamental points:

  • focus in North America
  • focus on unconventional oil and gas
  • focus on becoming an oil and gas company opposed to just a natural gas company
  • focus on a limited number of plays, but those plays need to have true scale to drive efficiency

Encana has been active in Montney since 2003. Montney satisfies all of the above criteria, and Encana thus considers it one of its core plays along with the Eagle Ford Shale and the Permian Basin in the United States and Duvernay in Canada.

Encana’s Montney assets

Montney is well connected to the East Coast and West Coast by piped access. Encana has ~10,000 Montney locations (525,000 acres) across British Columbia and Alberta. About 6,500 of these are in the condensate-rich or super-rich window of the play. Encana’s condensate-rich assets are producing 10–100 barrels of condensate per MMcf (million cubic feet) of natural gas. Super-rich assets are producing more than 100 barrels of condensate per MMcf of natural gas. Due to high liquids content in Montney, Encana was able to deliver returns in excess of 35%, even in a low gas price environment.

Other upstream companies, including Murphy Oil (MUR), ConocoPhillips (COP), Canadian Natural Resources (CNQ), and NuVista Energy (NVA.TO), are also active in Montney. Murphy Oil (MUR) and ConocoPhillips (COP) are part of the S&P 500 (SPY). Encana is the largest producer in Montney.

In the next part, we’ll see what Encana said about its future plans for the Montney Resource Play in Canada.

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