Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, Feb. 11 -- PetroChina has agreed to pay $5.4 billion (Can.) for a 50% stake in Encana Corp.’s Cutbank Ridge business assets in British Columbia and Alberta.
The agreement, subject to Canadian and Chinese regulatory approvals, calls for a 50-50 joint venture to develop the Montney resource play, which currently produces 255 MMcfd of gas equivalent and covers 635,000 acres.
The planned JV infrastructure includes 700 MMcfd of processing capacity, 3,400 km of pipelines, and the Hythe natural gas storage facility.
Encana initially will operate the JV’s assets and market production. Following the completion of the transaction, the JV would operate under the direction of a joint management committee.
PetroChina’s acquisition is the latest in a string of purchases in Canada and the US in recent months, the latest being CNOOC's $1.3 billion agreement late last month with Chesapeake Energy Corp.—its second onshore US deal in 4 months.
David Hurd, oil and gas analyst at Deutsche Bank, explained the rationale behind the purchases, saying that Chinese oil and gas companies want the technology for developing unconventional resources, and they want to leverage that technology back into China.
Gordon Kwan, head of regional energy research for Mirae Asset Securities, agreed, saying that PetroChina has a lot of unconventional resources at home and, in an effort to boost its domestic production, wants to learn about the art of unconventional extraction overseas.
Contact Eric Watkins at [email protected].