(By Balachander) EnCana Corp. (NYSE: ECA) agreed to sell a 49.9 percent stake in around 445,000 acres in the Duvernay lands in Alberta to a subsidiary of PetroChina (NYSE: PTR) for C$2.18 billion (US$2.2 billion).
The Canada-based energy producer entered into a joint venture with PetroChina's Phoenix Duvernay Gas unit to develop its Duvernay land holdings in west-central Alberta.
Encana said it expects to more than double its planned pace of development in the Duvernay play beginning early in 2013.
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Under the terms of the agreement, EnCana received C$1.18 billion at closing and C$1.0 billion is payable over the next four years in the form of a carry of half of Encana's share of development capital. The companies plans to invest a total of $4 billion during the period.
Encana estimates that the Duvernay joint venture lands contain about 9 billion barrels of oil equivalent petroleum initially-in-place.
"Phoenix's investment demonstrates the tremendous value that Encana has created in this early life liquids rich play, and enables us to accelerate the pace at which the full production potential of our Duvernay lands can be achieved," commented Encana CEO Randy Eresman.
The North American natural gas producer remains the operator of the joint venture with its 50.1 percent working interest.
Encana expects to end the year with cash balances in excess of US$3.0 billion, including proceeds from the Phoenix deal, well ahead of the targeted US$2.5 billion in June 2012.
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To date, Encana said it has increased its hedge position for 2013 to roughly 1.5 billion cubic feet per day (Bcf/d) at an average price of US$4.39 per million cubic feet (Mcf).
ECA shares rose 2.41 percent to trade at $21.25 on the NYSE on Thursday.