UPDATE 2-Bonavista snaps up EnCana gas assets for C$694 mln

* Deal boosts production 22 pct, reserves by 29 pct

* Assets include pipelines, gas plant

* Plans C$388 mln bought deal financing

* Sale makes up most of EnCana's 2009 divestiture target

* Units up 1.8 percent, at C$17.80 (Adds details from EnCana)

CALGARY, Alberta, July 16 (Reuters) - Bonavista Energy Trust (BNP_u.TO) said on Thursday it is buying natural gas-producing properties from EnCana Corp (ECA.TO) for C$694 million ($620 million) to boost its output by 22 percent at a time of depressed gas prices.

Bonavista, a mid-sized income trust, said it would finance the acquisition of the central Alberta assets with bank debt and a C$388 million bought deal offering of subscription receipts.

The properties comprise an extensive 492,000 acre (199,100 hectare) area west of Red Deer, Alberta, extending from Caroline to Pigeon Lake, south of Edmonton.

The assets produce 11,400 barrels of oil equivalent a day, including 53.2 million cubic feet of natural gas.

That would boost Bonavista's production to 63,000 barrels of oil equivalent a day at a time when gas prices are about 30 percent of what they were a year ago.

Calgary-based Bonavista said the assets produce from several geological zones and that it believes it can increase output by as much as 50 percent.

It has identified 165 horizontal drilling locations on the lands, it said.

The purchase will boost its proved plus probable reserves by 29 percent to 247 million barrels of oil equivalent, it said.

EnCana, Canada's largest gas producer, said it was selling the assets to concentrate on its highest-return properties in North America. But it will retain a lessor royalty on most of the lands.

The divestiture makes up much of the company's targeted sales this year of up to US$1 billion, EnCana Chief Executive Randy Eresman said in a statement.

EnCana is investing much of its efforts on large shale gas holdings in plays such as Haynesville in Louisiana and Horn River in British Columbia.