Energen Corp. (NYSE: EGN) will part with its natural gas assets in the San Juan Basin, a move that should cover the company’s overspend for 2015.

Energen said Feb. 12 that it has agreed to sell the majority of its San Juan assets to a private company for $395 million. Analysts expect Energen’s funding gap to be at least $300 million.

The assets include about 985 net operated wells on 205,000 net acres. The assets had proved, probable, and possible reserves of 244 million barrels of oil equivalent (MMboe) at year-end 2014, of which 84% was natural gas and 16% NGL.

In 2014, production totaled 6.6 MMboe.

Energen gave a strong 2015 outlook and upbeat operational update, said Gabriele Sorbara, analyst, Topeka Capital Markets.

Energen said 2015 capex was about $1 billion for organic annual growth of 15%, funded with internally generated cash flow and the asset sale.

“On the disappointing side, fourth-quarter 2014 production missed and first-quarter 2015 guided below expectations,” Sorbara said. “Given the weather impact that hit the Permian players, we believe EGN will receive a pass, especially considering the balance of the update was stellar.”

Mike Kelly, senior analyst, Global Hunter Securities, said Energen’s San Juan deal was struck at about 12% discount compared to initial expectations of about $450 million, though those expectations were set in a different commodity environment.

The company remains aggressive, with capex dropping by about $300 million from 2014 levels.

“The question will be whether investors think this is prudent at current commodity prices,” Kelley said in a Feb. 13 report.

James McManus, chairman and CEO, said the company’s Midland Basin assets can generate acceptable returns from its Wolfcamp development program and drive double-digit production growth, even in the current market.

“Making responsible capital allocation decisions in a declining commodity price environment is never easy and requires some tough decisions,” McManus said. “A solid hedge position, a clean balance sheet, and lower drilling and completion costs also are working to our advantage in 2015.”

The company also said that a third party liquids handling problem that emerged in late 2014 in the Delaware Basin will negatively affect first quarter production by 210 Mboe and calendar year production.

Overall the company reported a $141 million asset impairment charge.

Kelly said the company’s fourth quarter operations boiled down to improving results in Midland, mixed results in the Delaware where a portion of its acreage was written off, and a fair price garnered for the sale of its San Juan gas assets.