ECA Marcellus Trust I (OTCMKTS:ECTM) is a statutory trust formed in September 2010 by Encana Corporation to hold and monetize natural gas interests in the Marcellus Shale region of the Appalachian Basin. The trust owns a net profits interest—sometimes referred to as a royalty interest—in a portfolio of nearly 80 wells located primarily in Pennsylvania and West Virginia. Revenues generated from the sale of natural gas and natural gas liquids from these properties, after the deduction of operating expenses, are passed through to trust unitholders.
As a passive investment vehicle, ECA Marcellus Trust I does not engage directly in exploration, drilling or day-to-day field operations. Instead, Encana Production (USA) Inc. acts as the trust’s administrator, overseeing production reporting, marketing of gas volumes, collection of revenues and payment of operating and administrative costs. The net profits interest structure means that unitholders share in both the upside of production volumes and commodity price movements, while also absorbing the impact of any cost fluctuations.
The trust’s assets are concentrated in the core of the Marcellus play, one of North America’s largest and most active natural gas formations. Over its history, ECA Marcellus Trust I has delivered a relatively stable cash-flow profile, supported by established pipeline connections and third-party processing agreements that facilitate sales into major regional markets, including New York, New Jersey and domestic U.S. markets served via the Tennessee and Transco pipeline systems.
Governance of the trust is overseen by a board of trustees independent of Encana, with day-to-day administration provided by Encana Production (USA) Inc. While unit holders do not have direct influence over operational decisions, the trust structure offers investors exposure to a defined stream of royalty-style income from Appalachian natural gas production without the broader exploration risks associated with a conventional upstream company.
