CALGARY, Alberta, Oct. 8 (UPI) -- Canadian energy company Encana said it would use proceeds from the sale of its Colorado shale acreage to add flexibility during the downturn in the oil economy.
"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.
Encana gets about $900 million in exchange for the sale of assets in the Denver-Julesburg shale basin in Colorado to an entity controlled in part by Canada Pension Plan Investment Board. The company in August sold its natural gas assets in the Haynesville shale basin in Louisiana for $850 million.
Combined with previous sell-offs totaling $2.7 billion, the company said it should end the year with a debt burden reduction of around $3 billion after offloading the Colorado shale.
Data from oil field services company Baker Hughes show Colorado's upstream energy sector, as reflected in the number of drilling rigs in service, is relatively stable but showing signs of weakness. The 30 rigs across the state for the week ending Oct. 2 was down about 10 percent from the previous week.
Encana in February said it was reducing its capital investment plans for the year by $700 million to about $2.1 billion. About 80 percent of new spending would target four key U.S. shale basins outside of Colorado and Louisiana
"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," Suttles said.
Second quarter production for Encana increased more than 5 percent from the previous quarter, driven in large part by the Permian and Eagle Ford basins in Texas.