Encana sells Colorado assets to Broe Group partnership for $900M
Encana Corp. agreed to sell oil and natural gas assets in Colorado to an entity 95-percent owned by Canada Pension Plan Investment Board for about $900 million.
The Broe Group, a Denver-based conglomerate, in partnership with the Canada Pension Plan Investment Board plans to acquire the entirety of Encana’s oil and gas assets in the Denver-Julesburg Basin in Colorado for $900 million reports the Denver post.
Encana’s assets in northeast Colorado span 51,000 net acres and include more than 1,600 wells. In the first half of the year, the site produced an average of site 52 million cubic feet per day of natural gas and 14,800 barrels of oil per day, officials said.
As part of the agreement, expected to close in the fourth quarter of this year, a newly formed entity of Broe and CPPIB will oversee the assets as a standalone business. Broe officials are assembling a management team, officials said Thursday.
“At nearly $1 billion in total value, this is a milestone transaction for The Broe Group and represents the kind of investment we are actively seeking,” Claude Pumilia, chief operating officer and chief financial officer of The Broe Group, said in a statement. “We are pleased to be partners with CPPIB to acquire an asset with significant proved reserves, strong production, and attractive well performance and returns. The combination of the management expertise of The Broe Group with the financial strength of CPPIB will drive the success of this new venture.”
Late last year, Encana’s operations in the town of Erie spurred noise complaints that eventually landed the energy firm in hot water with the state. After months-long back-and-forth, Encana and Erie reached a new agreement in August that involved the placement of noise limits and implementation of monthly leak inspections.
In a statement emailed Thursday, Encana officials said the buying entity plans to honor that operating agreement.
Encana also will continue to maintain its operations.
“Encana remains committed to Denver,” officials said. “We have a strong workforce here that continues to serve as the center for U.S. operations.”
As a private equity firm, the Broe Group has a multibillion-dollar portfolio of investments in real estate, rail and health care technology.