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Chinese group buys Ecuador oil assets
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. "We knew, based on the experience of seeing other dispositions of this nature, that it would be a longer term disposition process," Jeff Wojahn, president of EnCana's Canadian plains division, told reporters at an energy conference in Toronto. Proceeds from the sale will be used to cut debt and buy back shares. Wojahn said Ecuadorean government approval for the sale could take three to six months. EnCana shares were down 27 Canadian cents at C$58.25 on the Toronto Stock Exchange, and down 2 cents at $49.43 in New York.
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