Encana Corp (USA) (NYSE:ECA) has announced that it successfully finalized the sale of its property portfolio in the Denver-Julesburg basin.
The firm sold 51,000 acres of land in the Colorado basin to a new oil and gas company known as CrestonePeak Resources (CPR). The Canada Pension plan owns 95% of CPR while the Broe Group owns the remaining 5% of the startup. CRP will now control future drilling operations as well as the existing wells on the massive piece of land. The deal was valued at $900 million and was revealed in October 2015. The two firms were expected to finalize the deal before the end of last year but they encountered some complications that pushed back the timeline.
The delay led to concerns that the sale would become another statistic in the list of oil and gas deals that have failed in the past. Encana managed to sell the property on April 1 though it has been actively managing the property since then. Encana spokesman Doug Hock revealed that the sale of the property will not result in any layoffs. Roughly 100 employees will be transferred to Crestone. The Denver-Julesburg property represents roughly 20% of the Denver-based firm’s property in the US. It also represents 2.4% of Encana’s acreage portfolio.
About 80% of the company’s entire acreage position are developed and are mostly located Southwest of Weld County. This is one of the areas that are well known for having a rich concentration of petroleum reserves. The deal highlights the end of the oil drilling and oil production operations that Encana has been undertaking in Colorado. It will, however, continue its natural gas operations in the Western Slope.
Hock stated that his company is trimming down its portfolio so that it can divert more focus to Montney where it expects to produce roughly 50,000 barrels on a daily basis by the end of 2018. Its assets in Gordondale produced an average25,200 barrels of oil per day.