Encana Corp. reached an agreement to sell its Gordondale assets in northwestern Alberta to Birchcliff Energy Ltd. for CA$625 million total cash consideration, the company said June 21.

The sale includes about 54,200 net acres of land and associated infrastructure. In addition, through the transfer of current and future obligations, Encana is reducing midstream and downstream commitments by more than CA$100 million on an undiscounted basis.

No drilling or completions capital has been spent or was planned for the area in 2016, the company said, noting there are many high-quality potential drilling locations in the play.

Following this sale, Encana's Montney play will comprise more than 9,000 potential drilling locations with two-thirds of those wells located in the condensate-rich area.

Doug Suttles, president and CEO, said the company plans to increase liquids production to 50,000 barrels per day (bbl/d) by the end of 2018.

Encana's Gordondale assets produced an average of 25,200 barrels of oil equivalent per day on a net after-royalty basis during the first quarter of 2016–65% natural gas and 35% liquids. Based on development plan at year-end 2015, estimated proved reserves were about 50 MMboe on a net after-royalty basis.

Subject to regulatory approvals, closing conditions and post-closing adjustments, the transaction will close in the summer. Its effective date is Jan. 1.

RBC Capital Markets was Calgary, Alberta-based Encana’s adviser.