A $5.4-billion deal between Encana and PetroChina to develop natural gas resources in northeast B.C. has fallen apart, as the two sides failed to reach agreement on items still up for negotiation.
Last February, Encana announced it had signed a co-operation agreement with PetroChina that would see PetroChina pay $5.4 billion to acquire a 50 per cent interest in Encana's Cutbank Ridge assets, part of the Montney natural gas play in northeastern B.C.
The two companies were in the midst of negotiating an operating agreement, a key component of the transaction, when the deal fell apart.
"This decision today was for business reasons. There were significant gaps in what the parties wanted to achieve, and as a result it was determined that at this point we would end negotiations," said Encana spokesman Alan Boras.
The collapse of the deal has no effect on Encana's recently-acquired ownership stake in a planned liquified natural gas plant in Kitimat, and plans to export natural gas to Asian markets, said Boras.
"We are continuing on to pursue that because of all the opportunity we have to supply those foreign markets at prices that are quite attractive," said Boras.
In March, Encana reached an agreement to buy a 30 per cent stake in Kitimat LNG's $3-billion terminal and the associated $1.1-billion Pacific Trails Pipeline. The 463-kilometre pipeline would link to existing natural gas pipeline infrastructure at Summit Lake, just north of Prince George.
Apache owns a 40 per cent stake of the project, and EOG Resources holds the other 30 per cent. Both companies, whose parent companies are headquartered in the U.S., also have natural gas resources in northeastern B.C.
