Encana Shares Drop on Report of Collusion with Chesapeake

CALGARY - Encana Corp. shares slid more than 5% Monday following a report alleging the Canadian company colluded with a rival to lower the price of U.S. shale-gas lands up for auction.

Shares of the Calgary-based natural-gas producer, the second- largest in North America after Exxon Mobil Corp., dropped as much as 5.5% on the New York Stock Exchange after Reuters reported that, in email exchanges, executives at Encana and rival Chesapeake Energy Corp. discussed ways to avoid competing against each other for shale-gas land in Michigan.

The report alleged that Encana and Chesapeake agreed to split up shale-gas lands between them before a public auction to avoid creating a bidding war that would drive up the price. If the allegations are true, the report suggested Encana and Chesapeake could be in violation of U.S. anti-trust laws.

"An investigation of this matter was immediately initiated," Encana Chairman David O'Brien said in a statement. "Encana therefore will not provide any further information at this time."

The report comes at an inconvenient time for Encana, which is trying to rapidly expand its liquids-rich natural-gas production and offset the low price of natural gas by selling partnership stakes in its shale-gas plays.

"To have one of the major plays that is in your [partnership] package to now be scrutinized, that obviously reduces the marketability of those assets," Morningstar analyst Robert Bellinski said.

Encana shares were down 4.6% to $18.94 in recent trading. Shares of Chesapeake Energy, the third-largest natural gas producer in North America, were down 8.4% to $17.04.

Copyright (c) 2012 Dow Jones & Company, Inc.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
pat obrien | Jun. 26, 2012
as a property owner in Timmins, Ontario, we are worried that so called acq-uirers are hiding behind real estate brokers and even timber companies to save on land acquisitions. Although this isnt a new phenomenon, we still are knowledgeable about our more than 50 acres value, and would like some direction. Is there any exploration in Northern Ontario/Cochrane/ Timmins area. If so, does heavy timber discourage companies to acquire properties? Obviously it does but what options are there? We are also wondering if mineral rights apply to us, we would prefer renting to an operator. Thank you, and we love the website. pat obrien- 312-498-9740

Related Companies

Our Privacy Pledge

Most Popular Articles

Brent Crude Oil : $50.79/BBL 1.30%
Light Crude Oil : $49.96/BBL 1.10%
Natural Gas : $2.77/MMBtu 2.12%
Updated in last 24 hours