Alberta-based Encana agreed Thursday to sell its assets in Colorado’s Denver Julesburg (DJ) Basin to an investor group for $900 million.
The sale was made by the company’s U.S. subsidiary, Encana Oil & Gas, to a new entity that is 95 percent owned by the Canada Pension Plan Investment Board with the Broe Group holding the remaining 5 percent stake.
The transaction includes all of Encana’s DJ Basin acreage that is comprised of 51,000 net acres.
During the first half of 2015, the assets produced an average of 52 million cubic feet per day of natural gas and 14,800 barrels per day of crude oil and natural gas liquids.
Based on Encana’s development plan at the end of 2014, estimated proved reserves at its DJ Basin assets were 96.8 million barrels of oil equivalent, with natural gas accounting for over 40 percent of those reserves.
The sale is subject to the satisfaction of normal closing conditions, regulatory approvals and post-closing and other adjustments.
The transaction is expected to close in the fourth quarter of 2015, with an effective date of April 1, 2015.
Encana will use the cash proceeds to further strengthen its balance sheet and “create greater flexibility in this market environment.”
When combined with net proceeds from Encana’s previously announced asset sales, cash proceeds from the company’s 2015 divestitures will total about $2.7 billion.
The company expects to have reduced its net debt by $3 billion by the end of 2015.
Encana president and CEO Doug Suttles said the company will continue to focus its portfolio and capital on its four most strategic assets: the Permian, Eagle Ford, Duvernay and Montney basins.
“Our efforts to transform our portfolio, improve efficiency and grow margins are increasing returns and strengthening our balance sheet, positioning Encana for success throughout the commodity cycle. The new entity is acquiring a quality asset along with a highly talented team,” Suttles added.