The latest deal comes two months after the company agreed to sell natural-gas assets in northern Louisiana for $850 million.
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The total cost of its DJ Assets, essentially all of which are in Weld County, is approximately $900 million.
“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”, Doug Suttles, Encana president and chief executive officer, said in a statement.
The D-J Basin sale continues Encana’s strategy of focusing almost all of its capital on four asset bases and investing more in liquids: “the Permian, Eagle Ford, Duvernay and Montney”.
Leo Mariani, a U.S.-based analyst for RBC Dominion Securities, said in a report the price reflects poorly on the valuation of neighbouring Colorado assets owned by other companies.
The deal is expected to close in the fourth quarter of 2015 and is still subject to regulatory approvals.
“Overall we view today’s divestiture as being positive”.
Encana long has been one of the DJ Basin’s top producers.
Canada Pension Plan Investment Board, the country’s largest pension fund, isn’t done shopping for energy assets after committing nearly $2 billion to the industry in the past two weeks.
In Toronto, Encana shares closed more than six per cent higher at $11.76.
“This is a milestone transaction for The Broe Group and represents the kind of investment we are actively seeking”, said Claude Pumilia, COO and CFO of The Broe Group, in a statement Thursday. The acquisition adds to a Broe portfolio that includes Great Western Oil & Gas, the Great Western Industrial Park in Windsor, a railroad and transportation affiliate OmniTRAX Inc., and Three Leaf Ventures, an investment affiliate focused on health-care technology startups.
Including the Denver Julesburg sale, cash proceeds from divestitures in 2015 will be about $2.7 billion, the company said.
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“The company is … relying on significant asset sale proceeds to fund cash flow and its $225 million dividend”, he said.
