Encana Corp. has announced that its wholly owned subsidiary, Encana Oil & Gas (USA) Inc., has reached an agreement to sell its Denver Julesburg (DJ) Basin assets in Colorado to a new entity 95% owned by Canada Pension Plan Investment Board and 5 percent by The Broe Group. Total consideration to Encana under the transaction is approximately US$900 million.
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 previously announced asset sales, cash proceeds from divestitures in 2015 will total approximately US$2.7 billion. The company anticipates to have reduced its net debt in 2015 by approximately US$3 billion by year-end.
"As we advance our strategy we continue to focus our portfolio and capital on our four most strategic assets, the Permian, Eagle Ford, Duvernay and Montney," said Doug Suttles, Encana President and CEO. "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."
The transaction includes all of Encana's DJ Basin acreage comprising 51 000 net acres. During the first half of 2015, Encana's DJ Basin assets produced an average of 52 million ft3/d of natural gas and 14 800 bpd of crude oil and natural gas liquids. Based on Encana's development plan at year-end 2014, estimated proved reserves were 96.8 million boe (over 40% natural gas).
The sale of Encana's DJ Basin assets is subject to satisfaction of normal closing conditions, regulatory approvals and post-closing and other adjustments. The transaction is expected to close in the 4Q15, with an effective date of 1 April 2015.
Edited from press release by Angharad Lock
Read the article online at: https://www.oilfieldtechnology.com/exploration/09102015/encana-to-sell-its-dj-basin-assets-for-us900-million-1391/