PetroChina, China's largest oil company, and Canada's Encana have scrapped plans for a $5.4 billion shale-gas venture, the largest North American joint venture of its kind, after the two companies failed to reach an agreement on the deal should be structured.
Encana (ECA) and PetroChina (PTR) announced the deal in February that was to see the Chinese oil giant take a 50% stake in Encana's Cutbank Ridge assets in the Canadian provinces of Alberta and British Colombia.
The deal included associated pipelines, storage and processing facilities with a view to possibly exporting the supplies to Asian markets, according to Platts. Analysts said the deal, which implied PetroChina was paying $17,000 per acre, was ultimately viewed as too expensive for the Chinese company.
Sources also said PetroChina was deeply disappointed Encana significantly scaled back its production targets through 2015, Platts reported. In its first-quarter earnings statement, Encana lowered its annual production growth forecast to 10% from previous guidance of 14.4%.
Encana committed to the deal to raise much-needed cash, but Barclays said the company may now be underfunded by about $2 billion for the remainder of this year and next year, Platts reported.