Encana Corp. (NYSE: ECA) is selling its Piceance natural gas assets for $735 million in cash as it continues its four-basin strategy, the Calgary, Alberta-based company said June 9.

The sale to Denver’s Caerus Oil and Gas LLC marks Encana’s exit from the northwestern Colorado basin, where the company held roughly 550,000 net acres and 3,100 operated wells.

Production averaged 240 million cubic feet per day of gas and 2,178 barrels per day of liquids during first-quarter 2017. Estimated year-end 2016 proved reserves were 814 billion cubic feet equivalent, according to the company’s news release.

Tudor, Pickering, Holt & Co. (TPH) viewed Encana’s Piceance exit as a positive as the asset sale garners solid valuation, further cleans up the company’s portfolio and brings cash in the door.

“Monetization continues Encana’s positive track record of successful active portfolio management, and total transaction value looks favorable vs. our previous estimate of $500 million to $600 million for PDP value,” TPH said in a June 9 report.

In 2013, Encana launched a strategy to invest more in liquids and focus nearly all of its capital on four asset bases: the Permian, Eagle Ford, Duvernay and Montney.

Encana Portfolio Map

“Given massive inventory depth across Encana’s core four [assets bases], we don’t see a need for any offsetting acquisitions and we’d anticipate proceeds may be kept on the balance sheet for financial flexibility in a lower-for-longer scenario or Permian acceleration in a better commodity price environment,” TPH said.

In first-quarter 2017, Encana’s core assets produced 237,300 barrels of oil equivalent per day, making up 75% of total production. The company concluded the quarter with total liquidity of more than $5 billion, comprising cash and cash equivalents of $523 million and available credit facilities of $4.5 billion.

Currently, the company’s portfolio also includes holdings in New Mexico’s San Juan Basin, British Columbia’s Horn River Basin, Alberta’s Wheatland Play and Nova Scotia’s Deep Panuke Field.

The Piceance sale will additionally reduce Encana’s midstream commitments by about $430 million on an undiscounted basis. The company will market Caerus’ production related to the assets, according to the release.

Encana said it expects to complete the transaction during third-quarter 2017, subject to satisfaction of normal closing conditions, regulatory approvals, closing and other adjustments. BMO Capital Markets was Encana’s financial adviser for the transaction, which has an effective date of Jan. 1.

Emily Patsy can be reached at epatsy@hartenergy.com.