CALGARY (Reuters) - Encana Corp (ECA.TO) said on Tuesday it reached an agreement to sell its Gordondale oil and gas assets in northwestern Alberta to Birchcliff Energy Ltd (BIR.TO) for C$625 million ($487.98 million).
The sale, which includes some 54,200 net acres of land and associated infrastructure, is set to close in the summer of 2016 with an effective date of Jan. 1, 2016, pending regulatory approvals.
Encana’s sale of the Gordondale assets, which produced an average of 25,200 barrels of oil equivalent per day in the first quarter, comprises 65 percent natural gas and 35 percent liquids. Estimated proved reserves are some 50 million barrels of oil equivalent.
Encana said it is reducing midstream and downstream commitments by more than C$100 million on an undiscounted basis. No drilling or completions capital was planned for the area in 2016, it said.
Following the sale, Encana’s Montney play will comprise of over 9,000 potential drilling locations with two-thirds of those wells located in the condensate-rich part of the play, it added.
“We are tightening our portfolio and sharpening our focus in the Montney where we expect to grow liquids production to 50,000 barrels per day by the end of 2018,” Doug Suttles, the company’s president and chief executive, said in a statement.
RBC Capital Markets advised Encana on the transaction, it said.
Reporting by Catherine Ngai; Editing by Tom Brown