Encana Corp. subsidiary Encana Oil & Gas USA Inc. has agreed to sell its Piceance natural gas assets in northwestern Colorado for $735 million in cash, according to a June 9 release.
Under the transaction, Caerus Oil and Gas LLC will acquire approximately 550,000 net acres of leasehold and approximately 3,100 operated wells, which produced an average 240 MMcf/d of natural gas and 2,178 barrels per day of liquids through the first quarter. Estimated proved reserves were 814 Bcfe as of the end of 2016.
Encana will reduce its midstream commitments by approximately $430 million and will market Caerus' production related to the assets. "This transaction advances our strategy, makes the company more efficient and delivers significant proceeds that we will use to further strengthen our balance sheet," said Doug Suttles, Encana president and CEO.
The deal has an effective date of Jan. 1 and is expected to close in third quarter, subject to regulatory approvals and other closing conditions.
BMO Capital Markets served as Encana's financial adviser for the transaction.