August 2, 2010

Encana negotiates with China National Petroleum

Encana Corp. is negotiating a joint-venture partnership with the China National Petroleum Corp. (CNPC) that aims to invest billions of dollars in the construction and development of natural gas projects in northern British Columbia.

The company announced that it signed a memorandum of understanding with CNPC that outlines a framework to negotiate the partnership.

The joint-venture would focus on the development of certain lands in Encana’s natural gas plays in Horn River, Greater Sierra (Jean Marie formation) and Cutbank Ridge (Montney formation).

The joint venture is expected to develop existing Encana lands at a rate that would be faster than would be achieved without the additional investment.

Encana is targeting annual joint-venture capital investments of between $1 billion and $2 billion in Canada and the U.S.

In northeast British Columbia, the Greater Sierra resource play holds about 275,000 net acres of land covering the Devonian shale formation in its Horn River play and about 1.7 million net acres covering the Jean Marie formation.

The Cutbank Ridge resource play holds about 720,000 net acres of land covering the Montney formation.

The companies expect that it will take several months to negotiate a potential joint venture.

“Under a potential joint venture, Encana would be the operator of all developments, meaning it would drill and complete the wells, build the processing facilities and pipelines and conduct all field work for the joint venture,” said Encana’s recent financial report.

Encana completed a corporate reorganization in November 2009, which involved the division of Encana into two independent publicly traded energy companies – Encana and Cenovus Energy Inc.

JOC News Service

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