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China oil firm buys EnCana assets in Ecuador
The oil fields' proved reserves are pegged at 143 million barrels. The price was close to investors' expectations, given Ecuador's recent political turmoil and EnCana's occasionally strained relations with some government departments, said Wilf Gobert, analyst with Peters & Co. Ltd. "Ecuador is a tough economic jurisdiction. There has been recurring issues regarding taxation and government take," Gobert said. Last month, violent demonstrations curtailed oil exports from Ecuador, the second-largest South American supplier to the United States after Venezuela. Protesters demanded oil companies invest more in the communities where they drill. The protests ended as foreign firms promised to invest more in local development projects, something EnCana has said it has always done since entering the country in 1999. Before the protests, EnCana had been in a dispute over an interest in one concession that the government said was acquired without its approval. EnCana Chief Executive Gwyn Morgan had said state-owned oil companies were logical buyers for the assets, partly due to their higher tolerance for political risk. The company first announced it was selling the assets and other international holdings last year as part of a plan to focus on U.S. and Canadian natural gas and oil sands. It says it is concentrating on "resource plays," in which reserves are large but require busy drilling and recovery technology to boost output steadily. Encana has since jettisoned its North Sea and U.S. Gulf coast holdings and a host of conventional Canadian properties. Still to be sold are North American gas storage and Canadian gas liquids businesses. Sales proceeds in 2005 are expected to top $5 billion. A senior EnCana executive said the company never expected the disposition to
be quick and stressed the sale reflected its own operating strategy rather than
its view of Ecuador.
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