Encana Corp. on Tuesday said it had agreed to sell all of its Haynesville natural-gas assets in northern Louisiana for $850 million, to a joint venture formed by GeoSouthern Haynesville LP and funds managed by GSO Capital Partners LP.

The Calgary, Alberta-based oil and gas company said it would use the proceeds to pay down debt.

The sale comes as sharply lower oil prices weigh heavily on companies in Canada's oil patch. Many have repeatedly cut capital spending plans and reduced or suspended their dividends to bolster their balance sheets.

Encana said the sale would also enable it to reduce its gathering and midstream commitments by about $480 million on an undiscounted basis.

"This is another step in advancing our strategy. By further focusing our portfolio, we are making Encana more efficient as we proceed through the second half of 2015 and into 2016," Encana Chief Executive Doug Suttles said in a statement.

During the first half of 2015, Encana's Haynesville assets contributed about 9% to total production and less than 2.5% to Encana's first-half operating cash flow, excluding hedges, Encana said.

Under the deal announced Tuesday, Encana will transport and market the buyer's production on a fee-for-service basis for the next five years.

Encana said it remains focused on expanding its high-margin production. It plans to focus more than 80% of its 2015 capital spending on its four most strategic assets in the Permian, Eagle Ford, Duvernay and Montney formations.

Write to Carolyn King at carolyn.m.king@wsj.com

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(END) Dow Jones Newswires

August 25, 2015 07:45 ET (11:45 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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