Is Encana Leaving the TMS?
Inquiring minds and Rumors abound when it comes to EnCana Corporation and the TMS, especially in Amite and eastern Wilkinson counties in Mississippi.
Is EnCana pulling out?
Will options be exercised (extension bonuses paid) by EnCana?
The answers would appear to be Yes and Yes.
Let me explain.
EnCana appears to be pulling out of the TMS for the near term. Why? Well, they have for the most part 3 years to drill out their leases and the TMS is NOT profitable at $50 oil.
But, EnCana is continuing to pay lease bonuses as they come due. Some of the oldest 3 year extensions started last fall. There are a few leases that may be up before late 2016, but not many. Most leases in the EnCana holdings appear to be set for expiration in 2017.
So, I perceive EnCana to be planning to let this hiccup of low oil prices pass and then to see them hit the ground running in early 2016, to build up rigs in the area as the year goes along and to be going very strong here in 2017, especially if oil prices have rebounded.
But, this is a guess on my part. Still. One subtle suggestion that EnCana still holds the TMS near and dear may be to go to the company home page. There (as of this writing) you will find 3 pictures rotating across the front. The picture of the rig is the Trinidad Rig # 124 drilling the Lewis 7-18H-1 in south central Amite County.
The picture was likely taken in April or May of 2014.
Now, I ask you, why would EnCana feature a rig in the TMS on its front page if it planned to abandon the play? Answer: They likely wouldn't.
Here is a link to Encana's home page: