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February 17, 2012 5:43 PM

Calgary Firms Take Lead on Encana's $2.9 Billion Mitsubishi Deal

Posted by Brian Baxter

The shale boom that has fueled the growth of the North American energy industry while generating a pile of work for outside lawyers in recent years appears set to spill into 2012.

The latest indication that the trend will continue: the announcement that Canadian natural gas exploration and production company Encana will sell a 40 percent stake in a shale project in British Colombia to Japanese conglomerate Mitsubishi.

The $2.9 billion deal—on which two top Calgary-based law firms have taken lead advisory roles—calls for Mitsubishi to pay Encana $1.45 billion when the transaction closes, an event expected to occur later this month. Mitsubishi has also agreed to invest another $1.45 billion in the Cutbank Ridge partnership over the next five years.

Alicia Quesnel, an energy and M&A partner at Calgary's Burnet, Duckworth & Palmer, is advising Encana on the proposed transaction. Also working on the matter from the firm are energy partner Mark Houston, energy and antitrust partner Jody Wivcharuk, and energy regulatory partner Carolyn Wright. Terry Hopwood serves as general counsel for Encana.

As reported by The American Lawyer in a 2011 feature story, Canadian firms and their natural resources industry clients have found themselves regularly entertaining offers from overseas buyers (many of those suitors, according to our previous reports, are based in Asia). Some Canadian firms—Calgary-based Macleod Dixon being one—have wound up being acquired by larger international rivals keen on capitalizing on Canada's natural resources boom.

Burnet Duckworth and Quesnel, for instance, advised Calgary-based Encana on its proposed $5.5 billion shale gas joint venture with Chinese state-owned PetroChina last year. That landmark deal, which would have been the largest Chinese investment ever in the Canadian energy sector, broke down last summer. In November, Quesnel provided regulatory counsel to Calgary-based Grande Cache Coal on its $967 million sale to a partnership between China’s Winsway Coking Coal and Japan’s Marubeni.

Calgary-based Bennett Jones is advising Mitsubishi on its agreement with Encana. Patrick Maguire, coleader of the firm's energy practice, is leading a team that includes fellow energy cohead Donald Greenfield, oil and gas partner Angus Mitchell, corporate partner Denise Bright, tax cochair Darcy Moch, IP partner James Swanson.

Bennett Jones previously advised Mitsubishi on its $850 million shale gas joint venture in British Colombia with Calgary-based Penn West Petroleum in 2010. The firm has also done work for Encana, advising the company almost four years ago on its split into two independent companies: the natural gas concern that kept the Encana name and integrated oil spin-off Cenovus Energy.

As for Mitsubishi, it has also been keeping its outside lawyers busy in recent months.

The Tokyo-based conglomerate turned to Baker Botts in November for counsel on a $17 billion natural gas joint venture with Royal Dutch Shell in Iraq. Clifford Chance advised Mitsubishi earlier that month on its $5.39 billion acquisition of a share of a Chilean copper business owned by mining giant Anglo American. And leading Australian firm Blake Dawson represented Mitsubishi in August on its joint $1.6 billion bid for Brisbane-based mining company Coal & Allied.

Hideyuki Nabeshima, a member of Mitsubishi's board of directors, serves as the company's chief compliance officer and head of legal affairs.

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