Encana sells power assets to focus on oil
Last fall, Encana unveiled a new strategy that would see it focus on just a handful of regions, rather than dozens
CALGARY—Encana Corp. CEO Doug Suttles says the company has agreed to sell one gas-fired power plant it owns and operates in Alberta and the 50 per cent stake it holds in another.
The value of the deal and the buyer are not being disclosed.
“It’s not that these weren’t good businesses,” Suttles told reporters on the sidelines of a TD energy conference in Calgary.
“We’re not a power company. We’re an oil and gas company and this is about focus and consistent strategy. So it just made sense to do this and it was purchased by a power company, which makes complete sense.”
Suttles, a third-generation Texas oilman and former BP executive, has been at the helm at Encana for just over a year. Last fall, the energy company unveiled a new strategy that would see it focus on just a handful of regions, rather than dozens.
Earlier this year, Encana made an entry into the oil-rich Eagle Ford shale in Texas through a US$3.1-billion deal with Freeport-McMoRan.
Suttles told the conference that Encana strives to be a top North American oil and gas producer. So far, that’s included operations in Canada and the United States, but not Mexico.
Suttles said the company is watching Mexico closely, as the country looks to open up to foreign investment after 75 years of government control. Recently, a delegation of Mexican government officials came to Calgary in a bid to attract Canadian investment.
“I think it’s interesting to see what’s happening there. I would say from what I hear and what I’m being told, a lot of people are believing that these reforms are going to happen and that new opportunities will emerge and that risk capital will move to Mexico and probably generate some good value,” Suttles said.
“There are some unique issues in Mexico beyond the political reforms, because in many areas onshore where oil and gas potential exists, there are significant security concerns still today and the ability to operate and execute will be a challenge there. But it’s something we monitor.”