Encana Oil & Gas (US), the wholly-owned subsidiary of Canada-based Encana has signed an agreement to sell its Denver Julesburg (DJ) basin assets in Colorado for $900m.
A new entity will own the assets which will be 95% owned by Canada Pension Plan Investment Board while the remaining 5% will be owned by the Broe Group.
The sale proceeds will be used by Encana to further bolster its balance sheet in addition to creating better flexibility in the market environment.
According to Encana, cash proceeds from divestitures during the year, when combined with net proceeds from previously announced asset sales, will total about $2.7bn.
By the end of this year, the company hopes to cut down its net debt by about $3bn.
Encana president and CEO Doug Suttles said: “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.
“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.”
As part of the transaction, Encana will sell all its DJ Basin acreage comprising 51,000 net acres.
The assets produced an average of 52 million cubic feet per day (MMcf/d) of natural gas and 14,800 barrels per day of crude oil and natural gas liquids during the first half.
Encana said that the sale is subject to satisfaction of normal closing conditions, regulatory approvals as well as post-closing and other adjustments.
The transaction is slated for completion in the fourth quarter.