Encana, Canada's largest natural gas producer, will sell half of its Cutbank Ridge gas assets to a unit of PetroChina, China's largest oil producer, for $5.4 billion, the companies said. The deal, the latest move by a Chinese firm to get its hands on Canadian energy assets, must be approved by regulators in both countries.
Encana (ECA) has a previously existing deal with PetroChina (PTR) possibly develop shale gas properties in western Canada. The deal was announced today after the close of U.S. markets.
The transaction gives PetroChina daily production equivalent to 255 million cubic feet of gas on 635,000 acres in the Canadian provinces of Alberta and British Columbia, Bloomberg News reported. Encana, which delivers quarterly results on Thursday, said the stake at Cutbank Ridge includes both shale gas formations as well as conventional resources, Bloomberg reported.
Natural gas prices have lost almost two-thirds of their value since the July 2008 peak and some analysts say prices could trade as low as $3.50 per million British thermal units this year. Still, China's appetite for energy resources is not diminishing, prompting the country's energy producers to plan massive spending on mergers and acquisitions in the coming years.