PetroChina to acquire 50-% stake in gas assets of Canada's Encana for $5.46 billion

PetroChina, the world's second-most valuable oil and gas company, yesterday said that it would acquire a 50-per cent stake in Canada's biggest natural gas producer Encana Corp's gas assets for C$5.4 billion ($5.46 billion).

State owned PetroChina, the country's largest oil company is buying a 50-per cent interest in Encana's Cutbank Ridge natural gas assets in British Columbia and Alberta, that cover 1.3 million acres of land, approximately 700 mmcf/day processing capacity, 3,400km of pipelines and an underground gas storage.

Beijing-based PetroChina is paying around $8,500 per net acre or about 20-per cent more than the US benchmark gas price.

Separately, the two companies will invest 50 per cent each into a joint venture, in proportion to their equal investment, to increase natural gas production.

Calgary-based 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.

The business assets in this planned joint venture include the majority of Encana's Montney, Cadomin and other natural gas assets on a portion of the company's British Columbia and Alberta lands.