Colorado's DJ Basin Oil & Gas Assets Sold for $900M

Through a jointly formed entity, Canada Pension Plan Investment Board (CPPIB) and The Broe Group have signed an agreement to purchase ll of the Denver Julesberg (DJ) Basin oil and gas assets in Colorado from Encana Oil & Gas Inc., a subsidiary of Encana Corporation, for $900 million. The DJ Basin acreage comprises 51,000 net acres, which produced an average of 52 million cubic feet per day of natural gas and 14,800 barrels per day of crude oil and natural gas liquids for the first half of 2015. Through the joint entity, CPPIB will own a 95% interest and The Broe Group will own a 5% interest, according to a press release. Terms of the deal were not disclosed, but the transaction is expected to close in the fourth quarter of 2015, with an effective date of April 1, 2015, according to a Bloomberg report.

"The DJ Basin is one of the leading oil and natural gas plays in North America and Encana's assets and operations have long been regarded as top-tier by industry standards," said Avik Dey, Managing Director, Head of Natural Resources, CPPIB. "This investment offers attractive economics and aligns well with our strategy for the energy sector. We look forward to working with our partner to create value and grow the business."

"This is a milestone transaction for The Broe Group and represents the kind of investment we are actively seeking," added Claude Pumilia, COO & CFO of The Broe Group. "We are pleased to be partners with CPPIB to acquire valuable assets from Encana. The combination of the management expertise of The Broe Group with the financial strength of CPPIB will drive the success of this new venture."

Under Chief Executive Doug Suttles, Calgary-based Encana is transforming into a major oil producer by concentrating spending on regions rich in gas liquids and oil and selling off natural gas assets, according to a Reuters report. Encana also sold its Haynesville natural gas assets in northern Louisiana for $850 million to GEP Haynesville LLC in August. Including the Denver Julesburg sale, cash proceeds from divestitures in 2015 will be about $2.7 billion, the company said.

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