TORON­TO-En­cana Corp an­nounced a US$2.9 bil­lion deal with Mit­subishi Corp yes­ter­day that in­volves the sale of a ma­jor stake in its ex­ten­sive gas as­set in British Co­lum­bia. It's aimed at shoring up En­cana's bal­ance sheet in the face of on­go­ing low nat­ur­al gas prices.

The an­nounce­ment - on the same day the Cal­gary, Al­ber­ta-based com­pa­ny post­ed an al­most US$250 mil­lion fourth-quar­ter loss on a big one-time charge - will see Japan-based Mit­subishi take a 40 per cent in­ter­est in the Cut­bank Ridge Part­ner­ship. The part­ner­ship holds about 409,000 acres (165,500 hectares) of En­cana's un­de­vel­oped Mont­ney-for­ma­tion nat­ur­al gas lands in north­east­ern BC with proved un­de­vel­oped re­serves of ap­prox­i­mate­ly 900 bil­lion cu­bic feet of nat­ur­al gas equiv­a­lent.

Mit­subishi, an in­te­grat­ed Japan­ese glob­al busi­ness en­ter­prise, is to pay US$1.45 bil­lion on clos­ing, which is ex­pect­ed to oc­cur lat­er this month. En­cana said Mit­subishi will then in­vest a fur­ther US$1.45 bil­lion over the next five years, some­thing that will re­duce En­cana's cap­i­tal in­vest­ment com­mit­ment over the pe­ri­od to about 30 per cent of the to­tal.

"En­cana plans to con­serve most of the ad­di­tion­al fi­nan­cial flex­i­bil­i­ty pro­vid­ed by this and pre­vi­ous­ly an­nounced trans­ac­tions dur­ing this pro­longed pe­ri­od of low nat­ur­al gas prices," pres­i­dent and CEO Randy Eres­man said in a re­lease. En­cana had been bank­ing on a US$5.4 bil­lion cash in­fu­sion from a joint-ven­ture deal with PetroChi­na cen­tered around as­sets in north­east­ern BC and Al­ber­ta. But that deal fell through last June when the two com­pa­nies couldn't reach an op­er­at­ing agree­ment.

En­cana has since been look­ing for oth­er part­ner­ships for its un­de­vel­oped Cut­bank Ridge lands, and has been un­der­tak­ing oth­er mea­sures to shore up its fi­nances. The com­pa­ny an­nounced US$3.5 bil­lion in as­set sales in 2011. En­cana is al­so a part­ner in a project to build a liq­ue­fied nat­ur­al gas ex­port ter­mi­nal in the north­ern West Coast port of Kiti­mat, British Co­lum­bia. US firms Apache Corp and EOG Re­sources are al­so in­volved.

At Kiti­mat, nat­ur­al gas piped in from north­east­ern British Co­lum­bia will be cooled in­to a liq­uid and loaded on­to tankers for ex­port to en­er­gy-hun­gry Asian mar­kets. Nat­ur­al gas fetch­es a dras­ti­cal­ly high­er price over­seas than it does in the over­sup­plied North Amer­i­can mar­ket. Ship­ments are tar­get­ed to be­gin in 2015.

AP