Encana Corp. said Friday it has secured a well-heeled unit of Toyota Tsusho Corp. to partner in its languishing Alberta coalbed methane (CBM) gas fields in the Horseshoe Canyon Fairway, agreeing to sell close to a one-third stake in the resource play, including natural gas production from 5,500 existing wells.

The C$602 million transaction, which was completed on Thursday with Toyota Tsusho Wheatland Inc., would give the subsidiary over a seven-year period a 32.5% royalty interest in production, as well as potential future drilling locations in southern Alberta.

“This investment from a global partner recognizes the significant value identified in Encana’s CBM lands, which rank among the company’s lowest-cost, lowest-risk assets, and signifies another step as Encana pursues a range of opportunities to manage its portfolio and enhance the long-term value creation of its vast inventory,” said CEO Randy Eresman.

Toyota Tsusho paid C$100 million at closing and would invest C$502 million over seven years to acquire the royalty interest, before deductions. In return the Japanese unit would acquire gas output from close to 4,000 existing wells and 1,500 potential future drilling locations.

The wells are in an area covering about 480,000 net acres held by Encana along the eastern edge of the Horseshoe Canyon fairway, which represents almost 24% of the Calgary producer’s total CBM net acreage. The existing wells currently produce a total estimated 120 MMcfe/d of gas. Encana engineers estimate that at the end of 2011 the area in the transaction contained about 480 Bcfe of proved plus probable reserves and 140 Bcfe of “best estimate economic contingent resources.”

“Encana’s CBM resources cover a great expanse that includes approximately 2.1 million net acres in the Horseshoe Canyon fairway,” said Eresman. The vast majority of this acreage is fee lands, where Encana holds the mineral rights in perpetuity, and are estimated to contain significant amounts of recoverable natural gas.”

Under the agreement Encana would operate the development while Toyota Tsusho and Encana have established a management committee to provide overall supervision and direction of development operations.

Encana’s relationship with Toyota Tsusho has “the potential to foster expanded business opportunities,” said the CEO. “Further, this agreement serves as a model for other investment opportunities and supplies capital investment to preserve the value and efficient development of Encana’s shallow gas lands in Alberta…”

The CBM partnership won’t be Encana’s last joint venture in North America, said Eresman. Earlier this month Contango Oil & Gas Co. and some financial partners agreed to invest up to $380 million over the next five years in Encana’s Jonah field (see Shale Daily, April 10). In particular Encana still is working to secure partners wants to secure partners for about 1.2 million net acres for holdings that include the Tuscaloosa Marine Shale, the Utica/Collingwood formations, the Eaglebine play, the Mississippian Lime and the Duvernay Shale.