Encana Corp. (ECA,ECA.TO) reached an agreement with Mitsubishi Corp. that would see the Japanese global integrated business enterprise invest nearly C$2.9 billion for a 40 percent interest in the Cutbank Ridge Partnership. The Partnership holds about 409,000 net acres of Encana's undeveloped Montney-formation natural gas lands in the company's Cutbank Ridge resource play in northeast British Columbia. As part of the Cutbank Ridge Partnership, Encana and Mitsubishi intend to create long-term shareholder value by jointly developing production capacity to deliver abundant natural gas to markets for decades ahead.
Pursuant to the deal, Encana would own 60 percent and Mitsubishi would own 40 percent of the Cutbank Ridge Partnership. Mitsubishi would pay C$1.45 billion on closing, which may occur later this month, and Mitsubishi would invest C$1.45 billion in addition to its 40 percent of the Partnership's future capital investment for a commitment period, which is expected to be about five years, thereby reducing Encana's capital funding commitments to 30 percent of the total expected capital investment over that period.
Randy Eresman, Encana's President & Chief Executive, said, Despite an increased capital spending profile on these natural gas assets resulting from this transaction, Encana plans to more than offset the near term impact on North American natural gas production oversupply by capital spending reductions elsewhere in its natural gas portfolio."
by RTT Staff Writer
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