PetroChina International Investment Company Limited, a subsidiary of PetroChina Company Limited and Encana Corporation signed a Co-operation Agreement , that PetroChina would acquire a 50 percent interest in Encana’s Cutbank Ridge business assets in British Columbia and Alberta, Canada at a consideration of C$5.4 billion. The assets cover 1.3 million acres of land, approximately 700 mmcf/day processing capacity, 3,400 km of pipelines and an underground gas storage.
Separately, the two companies will, in proportion to their investment, each invest 50% into a joint venture to increase natural gas production. Encana will continue to operate the joint venture’s assets and market all the production at first. The joint venture will be operated under the direction of a joint management committee.
“This agreement is the culmination of more than nine months of discussions between PetroChina and Encana and represents both a significant achievement and major milestone in the developing relationship of our two companies. By combining resources with PetroChina in this joint venture, we would expect to recognize additional value through accelerating our pace of development and by leveraging increased capital and operating efficiencies through further technical advancements and through greater certainty of the long-term development plan for the business assets,” said Randy Eresman, Encana’s President & Chief Executive Officer.
PetroChina International Investment Company Ltd. said that, PetroChina has outstanding overall advantages in petroleum exploration and production, engineering design and field operation services around the world, while Encana is a world leader in the development of unconventional natural gas business. Through this strong alliance, the joint venture is set to unlock greater value for our shareholders, and will strengthen the competitiveness of Canadian natural gas business while providing a boost to the economy and job market in Canada and China. PetroChina expects the joint venture to provide a platform for entering the major market in North America. For years, PetroChina has been looking for opportunities to work with major Canadian oil and gas companies in areas including LNG and oil sands in Canada, and projects in China.
The transaction is subject to due diligence, signing of the joint venture agreement, and approval by the Company’s Board of Directors as well as that by Canadian and Chinese authorities.
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Source: PetroChina, February 10, 2011;