On Thursday, Encana (NYSE:ECA) announced it has formed a joint venture with PetroChina (NYSE:PTR) subsidiary Phoenix Duvernay Gas to explore and develop approximately 445,000 acres of Encana's undeveloped Duvernay land holdings in west-central Alberta, Canada. Encana, with a controlling 50.1% interest in the project, will act as project operator. Phoenix will pay $2.21 billion for a 49.9% interest in the joint venture.

Phoenix has already paid $1.2 billion upfront, with the balance of its investment payable toward development costs over the next four years. The partners plan to invest a further $4.06 billion, combined, in new drilling, completion, and processing facilities.

Encana has drilled nine wells into the Duvernay, has five producing wells, and two rigs actively drilling additional wells. With the formation of this joint venture, Encana expects to more than double its planned pace of development in the Duvernay play, beginning early in 2013. Encana estimates that the lands covered by the new JV contain about 9 billion barrels of "oil equivalent petroleum initially in-place."

In a statement, Encana asserted that:

Having entered into several joint venture transactions in 2012, these types of arrangements have become an important part of Encana''s business model. Joint ventures help the Company to achieve a highly efficient deployment of capital throughout its vast exploration and development asset base as Encana transitions to a more diversified portfolio of commodities.

Shares of Encana rose 1.6%, to close at $21.08, on the news. Shares of PetroChina declined 0.6%, to close at $137.95.