CALGARY, Alberta, Feb 25 (Reuters) - Encana Corp, Canada's largest natural gas producer, has agreed to a joint venture at its Jonah natural gas field in Wyoming, its partner, Northwest Natural Gas Co, said on Friday.
Northwest Natural, natural gas distributor based in Portland, Oregon, said in a release that under the terms of the joint venture it will pay $45 million to $55 million per year over five years to cover the cost of drilling new wells in parts of the Jonah field. The total expected investment is $250 million.
In exchange for funding the drilling, the company will earn an interest in some sections of the field.
Encana and other natural gas producers have turned to joint ventures to speed up development of reserves that would otherwise sit idle, and to bring in additional capital at a time when low prices for the fuel are cutting into revenue.
'This is an agreement that will bring some additional capital to Jonah,' said Alan Boras, an Encana spokesman.
Earlier this month, Encana and PetroChina, Asia's largest oil and gas producer, agreed to a C$5.4 billion ($5.5 billion) joint venture to develop the Cutbank Ridge lands in the Canadian province of British Columbia over several years, the largest Chinese investment in a foreign gas asset to date.
Northwest Natural said gas from the new joint venture will supply 8 to 10 percent of its customers' annual needs over the first 10 years of the agreement.
The deal is expected to close on May 1.
Northwest Natural shares fell 64 cents to $44.88 by midday on the New York Stock Exchange, while Encana dropped 30 Canadian cents to C$31.20 in Toronto.
($1=$0.98 Canadian)
(Reporting by Scott Haggett; editing by Peter Galloway) Keywords: ENCANA/ (scott.haggett@thomsonreuters.com; Reuters Messaging: scott.haggett.reuters.com@reuters.net; +1 403 531-1622) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Northwest Natural, natural gas distributor based in Portland, Oregon, said in a release that under the terms of the joint venture it will pay $45 million to $55 million per year over five years to cover the cost of drilling new wells in parts of the Jonah field. The total expected investment is $250 million.
In exchange for funding the drilling, the company will earn an interest in some sections of the field.
Encana and other natural gas producers have turned to joint ventures to speed up development of reserves that would otherwise sit idle, and to bring in additional capital at a time when low prices for the fuel are cutting into revenue.
'This is an agreement that will bring some additional capital to Jonah,' said Alan Boras, an Encana spokesman.
Earlier this month, Encana and PetroChina, Asia's largest oil and gas producer, agreed to a C$5.4 billion ($5.5 billion) joint venture to develop the Cutbank Ridge lands in the Canadian province of British Columbia over several years, the largest Chinese investment in a foreign gas asset to date.
Northwest Natural said gas from the new joint venture will supply 8 to 10 percent of its customers' annual needs over the first 10 years of the agreement.
The deal is expected to close on May 1.
Northwest Natural shares fell 64 cents to $44.88 by midday on the New York Stock Exchange, while Encana dropped 30 Canadian cents to C$31.20 in Toronto.
($1=$0.98 Canadian)
(Reporting by Scott Haggett; editing by Peter Galloway) Keywords: ENCANA/ (scott.haggett@thomsonreuters.com; Reuters Messaging: scott.haggett.reuters.com@reuters.net; +1 403 531-1622) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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