PetroChina, the country’s biggest energy producer, agreed to buy a 50 per cent stake in Encana’s Cutbank Ridge gas assets in Canada for $5.4 billion in its largest overseas acquisition.
The purchase is PetroChina’s first of gas assets in North America and takes energy acquisitions by Chinese companies to about $46 billion since the start of 2010 as they compete for global resources with South Korean and Indian rivals. State-controlled PetroChina is paying about 20 per cent more than the US benchmark gas price, analyst Gordon Kwan estimates.
“While some might view this valuation as rich, we believe the premium is justifiable given the asset quality,” said Kwan, head of regional energy research at Mirae Asset Securities in Hong Kong. The acquisition value equates to a long-term price of $4.80 per million cubic feet.
