EnCana sells Ecuador oil and pipeline business to Andes Petroleum

Energy giant EnCana is selling all of its shares in subsidiaries that have oil and pipeline interests in Ecuador to Andes Petroleum, a joint venture of Chinese state-owned petroleum companies, for about $ 1.42 bn.
The sale is one of a series as Calgary-based EnCana, one of North America's leading natural gas producers, focuses more on its major holdings in the Rocky Mountains and the Alberta oilsands.

The firm said the Ecuador deal is expected to close before year-end, subject to approval by the government of Ecuador and other conditions.
"This planned sale marks essentially the final step in sharpening the focus on our unparalleled portfolio of unconventional natural gas and oil resources in North America," CEO Gwyn Morgan said. "It is also about concentrating our efforts and investment where we have clear competitive advantage. Since EnCana was formed in early 2002, we have reached agreements to divest of more than $ 10 bn in non-core assets."

Proceeds from the sale are expected to be directed to debt reduction and the continuation of EnCana's share buyback program.
The firm's Ecuador interests include:
-- 100 % interest in the Tarapoa Block, with production of about 38,000 barrels of oil a day;
-- A 40 % non-operated economic interest in Block 15, with production of about 30,000 barrels of oil per day;
-- Interests in three other blocks producing about 7,200 barrels of oil per day;
-- Proved reserves of 143 mm barrels as of Dec. 31, 2004.
-- And a 36.3 % interest in the OCP Pipeline, 500 km long and with a capacity of 450,000 barrels of oil per day.

EnCana, one of several spin-offs from the former Canadian Pacific conglomerate, also said it is continuing with the previously announced divestiture of its natural gas liquids business and its gas storage assets in North America, to be completed over the next six months.
In August, another Canada-China deal saw China National Petroleum Corp. make a $ 4.2-bn offer for PetroKazakhstan of Calgary.

In other major deals in recent years, EnCana:
-- Sold its Gulf of Mexico energy assets to Norway's Statoil for $ 2 bn last April;
-- Sold its promising Buzzard North Sea oil development to rival Nexen for $ 2.1 bn last autumn;
-- And sold some of its conventional oil and properties in Alberta to Harvest Energy Trust for about $ 526 mm in July 2004.