Encana is a leading North American natural gas producer that is focused on growing its strong portfolio of prolific shale and other unconventional natural gas developments, called resource plays, in key basins from northeast British Columbia to east Texas and Louisiana. A pure-play natural gas company, Encana applies advanced technology and operational innovation to reduce costs and maximize margins.
Encana, Chesapeake allegedly colluded on land deal - report
Canada's Encana (TSE:ECA)(NYSE:ECA) is alleged to have colluded with rival Chesapeake (NYSE:CHK) to lower the price of U.S. shale-gas lands up for auction, according to Reuters.
Shares of Encana and Chesapeake slid 4.83 per cent and 8.81 per cent respectively Monday.
Reuters reported that in email exchanges, executives at Encana and rival Chesapeake discussed ways to avoid competing against each other for the shale-gas land in Michigan two years ago.
The report went on to allege that the two companies agreed to split up the lands between them to avoid creating a bidding war that would drive up the price.
According to Reuters, if the allegations were true the emails "could provide evidence that the two companies violated federal and state laws by seeking to keep land prices down."
Monday afternoon, Encana's chairman David O’Brien commented: "In accordance with Encana's policies, an investigation of this matter was immediately initiated. Encana therefore will not provide any further information at this time."
The allegations come after Encana announced last week it was planning to invest an additional $600 million during the remainder of 2012 to take advantage of "positive initial results" achieved in a number of oil and liquids rich natural gas plays.
The natural gas producer also raised its estimated production of gas liquids and oil by seven per cent to 30,000 barrels per day, rising to as much as 70,000 barrels per day in 2013. The company added that it wants to diversify its production away from low-value natural gas.
Encana CEO Randy Eresman said the company was encouraged with the success it had seen so far this year in its oil and liquids rich natural gas plays.
The company is also planning on developing a more diversified production portfolio.
Chesapeake is one of the largest producers of natural gas in the US.
Most recently the company announced a management shakeup, the appointment of five new independent directors to its reconstituted nine-member board of directors.
Earlier this month, the company announced plans to sell pipelines and related infrastructure in three separate transactions totaling more than $4 billion in cash.
The natural-gas company said selling the midstream assets will reduce previously budgeted capital expenses by around $3 billion over the next three years.