EnCana, PetroChina end C$5.4 billion Canada shale deal
By Scott Haggett
CALGARY, Alberta (Reuters) - China's biggest North American energy deal was called off on Tuesday, as Encana Corp and PetroChina failed to reach terms for a C$5.4 billion ($5.6 billion) joint venture to develop a Canadian shale gas field.
Encana, Canada's No. 1 natural gas producer, said the two companies could not find common ground, despite a year of negotiations, and walked away from a deal that would have seen PetroChina take a one-half stake in Encana's massive Cutbank Ridge field in northern British Columbia.
"We just reached the point where we determined we just couldn't go forward" said Alan Boras, a spokesman for Encana.
The deal would have been the largest in a string of investments by Asian companies in North America's prolific shale gas discoveries, while Encana investors were counting on the cash to shore up a balance sheet battered by more than two years of weak natural gas prices.
No details were offered on what led to the collapse of the talks. Encana said confidentiality agreements prevented further disclosure and PetroChina saying only that the deal's demise did not affect its strategy.
"The call-off of the deal is because we didn't reach agreement during the negotiation. It won't affect PetroChina's overseas strategy and development planning in North America," said a PetroChina official who declined to be identified.
Encana was expected to use the PetroChina investment to speed development of its massive unconventional natural gas reserves, despite weak North American prices for the fuel, as well as cut debt and buy back shares with the proceeds.
"They would have had room to buy back C$2 billion to C$3 billion in stock," said Andrew Potter, an analyst at CIBC World Markets, "It would have been a nice vote of confidence in how they saw their own value and a nice support for their share price." Continued...