PetroChina pays $5.4 billion for Encana gas stake

Wed Feb 9, 2011 5:38pm EST
 
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CALGARY, Alberta (Reuters) - Encana Corp said on Wednesday it will sell half of a prolific British Columbia shale gas project to PetroChina for C$5.4 billion ($5.4 billion) in the largest Chinese investment in a Canadian energy asset yet.

After nine months of talks, Encana, one of the North America's largest gas producers, and state-owned PetroChina agreed to form a 50-50 joint venture to develop the Cutbank Ridge lands in northeastern B.C.

The deal's value surpasses Sinopec Corp's $4.65 billion acquisition of ConocoPhillips' stake in the Syncrude Canada oil sands venture last year as Chinese and other Asian energy companies intensified buying spree in Canada's oil patch.

Encana said the venture will let it accelerate development of its reserves while keeping a lid on capital investments at a time of weak natural gas prices.

Cutbank Ridge, comprising 635,000 net acres, currently produces 255 million cubic feet of gas a day from proved reserves of about 1 trillion cubic feet.

The deal is subject to approvals by the Canadian and Chinese governments, Encana said.

($1=$1 Canadian)

(Reporting by Jeffrey Jones; editing by Janet Guttsman)