In a $757 million deal to transform into a majority oil company, Bill Barrett Corp. has agreed to sell the majority of its acreage in the Powder River Basin (PRB) and its remaining position in the Piceance Basin, in exchange for additional acreage in the Wattenberg Field, the company said Tuesday.

Under the terms of the deal, the Denver-based company will sell 46,510 net acres in the PRB with net production that averaged 1,479 boe/d during 2Q2014 and held proved reserves of 4.2 million boe at the end of 2013. Bill Barrett will also sell 12,000 net acres in the Piceance Basin that averaged 80 Mcfe/d of net production during 2Q2014 and held proved reserves of 438 Bcfe at the end of 2013. The latter was the company’s remaining interest in its Gibson Gulch natural gas program.

In exchange for the PRB acreage, Bill Barrett will acquire 7,856 net acres within the southern block of its operated Northeast Wattenberg area. The acquired acreage had 390 boe/d of net production. The company said it plans to sell its remaining PRB assets, which after the deal closes will amount to 17,649 net acres and 170 boe/d of production, based on 2Q2014 results.

Bill Barrett said the $757 million deal includes $568 million in cash proceeds, prior to customary closing conditions; $69 million of estimated value for assets acquired in an exchange; $36 million for the assumption by a purchaser of a lease financing obligation; and $84 million in future commitments assumed by a purchaser for natural gas firm gathering and transportation obligations.

Although Bill Barrett did not identify any of the purchasers, Houston-based Vanguard Natural Resources LLC Tuesday said it was purchasing the Piceance assets for $525 million.

The deal is subject to customary conditions and is expected to close in 3Q2014.

“These transactions are significant steps in meeting strategic objectives to simplify our portfolio, focus on our highest-return assets, and strengthen the balance sheet,” CEO Scot Woodall said, adding that the Northeast Wattenberg acquisition would boost the company’s position there by about 20% through increased working interests. “This positions us to have greater operating control and enables us to accelerate drilling and extract more value from this core area.”

According to the latest Bill Barrett presentation, the deal would cut the company’s pro forma debt by more than half, from $1.06 billion at the end of 2Q2014 to $456 million, with pro forma liquidity of at least $575 million.

The deal paves the way for the company to have a capital expenditure (capex) program 100% directed at oil growth. In revised guidance for the full-year 2014, Bill Barrett said it would devote $525-550 million on capex, “narrowed to the upper end of previous estimates, primarily as a result of an increased well count in the Uinta Oil Program, due to faster drilling times, and the increased working interest acquired in the Northeast Wattenberg.”

Bill Barrett said total production for the full-year 2014 is projected to be 9.4-9.8 million boe, down about 1.4 million boe from previous guidance as a result of the assets to be sold. The 2014 exit rate is expected to be 21,000 boe/d, while 3Q2014 production is expected to be 2.6-2.7 million boe.

In a note Tuesday, David Tameron, senior analyst for Wells Fargo Securities LLC, said the $525 million Vanguard put up for the Piceance assets was close to his firm’s net asset valuation, but that Wall Street was not likely to provide Bill Barrett with full credit for the asset.

“We had asked about a potential Piceance monetization on the 2Q2014 call, with management responding that the asset did not compete for investment opportunities with its Wattenberg or East Bluebell positions,” Tameron wrote. “Monetization was eventually likely, but again, timing ahead of our expectations.”

Tameron added that the other party involved in the acreage swap was a mystery. “Based on recent [Bill Barrett] commentary, most had been expecting a PRB monetization in several steps — further, some had anticipated a swap into the Wattenberg.”