Encana Corp. is selling a major stake in its BC gas assets to Mitsubishi Corp. for $2.9 billion.
CALGARY: Encana Corp. is selling a major stake in its BC gas assets to Mitsubishi Corp., announcing the $2.9-billion deal on the same day on the same day it posted a net loss of almost $250 million in the fourth quarter.
The agreement will see the integrated Japanese global business enterprise take a 40% interest in the Cutbank Ridge Partnership.
The partnership holds about 409,000 net acres of Encana’s undeveloped Montney-formation natural gas lands in northeastern BC with proved undeveloped reserves of approximately 900 billion cubic feet of natural gas equivalent.
Mitsubishi is to pay $1.45 billion on closing, which is expected to occur later this month.
Encana says the Japanese concern will then invest a further $1.45 billion over the next five years, something that will reduce its capital investment commitment over the period to about 30% of the total.
“Encana plans to conserve most of the additional financial flexibility provided by this and previously announced transactions during this prolonged period of low natural gas prices,” said Encana president and CEO Randy Eresman.
“Our 2012 investment plan targets a balance between our cash flow, less dividends, and our expected capital investment before acquisition and divestiture activity.”
Eresman said the company’s capital spending is focused on expanding the exploration and development of oil and liquids-rich natural gas production while minimizing dry natural gas investments.
The Cutbank Ridge Partnership’s lands have proved undeveloped reserves of approximately 900 billion cubic feet of natural gas equivalent.
© 2012 The Canadian Press