CPPIB-led group to acquire 51,000-acre Colorado property
CALGARY—The weak oil oil price environment continues to spur asset sales. Encana Corp. has announced its subsidiary, Encana Oil & Gas Inc. will sell its Denver Julesburg Basin assets to a Canada Pension Plan Investment Board-led group for approximately US$900 million.
The deal includes Encana’s entire DJ Basin holding in Colorado, a 51,000 acre asset that produced an average of 52 million cubic feet of natural gas and 14,800 barrels of crude per day in the first half of 2015. The site has estimated proven reserves of 96.8 million barrels of oil equivalent, comprised of 40 per cent natural gas.
“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,” Doug Suttles, Encana president and CEO, said. “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.”
Encana plans to use cash generated by the deal to strengthen its balance sheet and create greater flexibility in the challenging market environment. The company has divested a range of assets so far in 2015, accruing $2.7 billion in cash so far this year. Encana said it expects to have reduced its net debt by approximately $3 billion by the end of the year.
The deal is subject to customary conditions and is expected to close in the fourth quarter of 2015.