Encana Reaches Agreement to Sell Its DJ Basin Assets for US$900 Million
Encana will use the cash proceeds to further strengthen its balance sheet and create greater flexibility in this market environment. When combined with net proceeds from previously announced asset sales, cash proceeds from divestitures in 2015 will total approximately $2.7 billion. The company expects to have reduced its net debt in 2015 by approximately $3 billion by year-end.
"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," said Doug Suttles, Encana President & CEO. "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."
The transaction includes all of Encana'sDJ Basin acreage comprising 51,000 net acres. During the first half of 2015, Encana'sDJ Basin 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. Based on Encana's development plan at year-end 2014, estimated proved reserves were 96.8 million barrels of oil equivalent (over 40 percent natural gas).
The sale of Encana'sDJ Basin assets is subject to satisfaction of normal closing conditions, regulatory approvals and post-closing and other adjustments. The transaction is expected to close in the fourth quarter of 2015, with an effective date of April 1, 2015.
Encana is a leading North American energy producer that is focused on developing its strong portfolio of resource plays, held directly and indirectly through its subsidiaries, producing natural gas, oil and natural gas liquids (NGLs). By partnering with employees, community organizations and other businesses, Encana contributes to the strength and sustainability of the communities where it operates. Encana common shares trade on the Toronto and New York stock exchanges under the symbol ECA.
ADVISORY REGARDING OIL AND GAS INFORMATION
Reserves are the estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on: analysis of drilling, geological, geophysical and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable. Proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
The conversion of natural gas volumes to barrels of oil equivalent ("BOE") is at a ratio of six thousand cubic feet to one barrel. A BOE is based on a generic energy equivalency conversion method primarily applicable at the burner tip and does not represent economic value equivalency at the well head. Readers are cautioned that BOEs may be misleading, particularly if used in isolation.