Encana to Sell Colorado Oil and Gas Assets for $900 Million
Encana Corp. said Thursday that it had agreed to sell oil and gas assets in Colorado’s Denver Julesburg Basin for $900 million to a new joint venture majority owned by Canada’s biggest pension fund.
The Calgary-based oil and gas producer said it would use proceeds from the sale to bolster its balance sheet.
Encana has been streamlining its portfolio to focus on its four key oil-and-gas plays, which include the Eagle Ford and Permian shale-oil basins in Texas and the Duvernay and Montney basins, rich with natural gas liquids, in Western Canada.
“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,” Encana Chief Executive Doug Suttles said in a statement.
Encana said its DJ Basin assets produced an average of 52 million cubic feet a day of natural gas and 14,800 barrels of crude oil and natural gas liquids in the first half of 2015.
Lower oil prices have been causing major headwinds for company’s operating in Canada’s oil patch, causing many to pare back on spending and shed staff. Encana reported a steep second-quarter loss after recording a significant impairment charge in the wake of slumping oil and gas prices.
Encana said that, combined with previous asset sales, it has now raised about $2.7 billion this year. By year-end, it said it expects to have lowered its net debt by about $3 billion. The latest deal comes two months after the company agreed to sell natural-gas assets in northern Louisiana for $850 million.
Canada Pension Plan Investment Board said the acquisition offers attractive economics and aligns with its energy-sector strategy.
“The DJ Basin is one of the leading oil and natural-gas plays in North America, and Encana’s assets and operations have long been regarded as top-tier by industry standards,” said Avik Dey, CPPIB’s head of natural resources.
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- October 8, 2015
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