BLOOMBERG: EnCana Shares Soar on Speculation of Possible Shell Takeover: “Royal Dutch might be attracted by EnCana's growing gas production in North America…”: Posted 20 October 2005

Oct. 19 (Bloomberg) -- Shares of EnCana Corp., North America's largest natural gas producer, had their biggest gain in more than three years amid speculation the company might be acquired by Royal Dutch Shell Group or another buyer seeking to capitalize on surging fuel prices.

Calgary-based EnCana, Canada's second-largest company by market value, jumped C$5.34, or 9.8 percent, to C$61.50 ($52.34) on the Toronto Stock Exchange. It was biggest one-day gain since July 24, 2002. Some 7.6 million shares traded in Toronto, more than double the average of the past three months.

Royal Dutch might be attracted by EnCana's growing gas production in North America, where prices are near all-time highs, said Jim Hall, a partner at Calgary-based Mawer Investment Management. EnCana's gas production grew 5.9 percent to 3.18 billion cubic feet a day in the second quarter.

North American natural gas production is ``a hole in their portfolio'' for Shell, Hall said today in a telephone interview. ``EnCana also has a pretty good cash flow,'' he said. ``It would be an excellent fit.''

A sale of EnCana, with a market value of about $45 billion, would be the largest takeover in Canada's history, according to Bloomberg data. Encana's long-term debt at June 30 was $6.85 billion. Royal Bank of Canada is the largest Canadian company.

``We don't comment on market speculation,'' EnCana spokesman Al Boras said today in a telephone interview. A call after regular business hours to Shell spokesman Andy Corrigan in London was not immediately returned.

North American Gas

EnCana has sold or agreed to sell more than $5 billion of international oil and gas assets in the past year to focus on large gas deposits in North America that were considered too difficult and expensive to tap before fuel prices soared in the past few years.

Gas futures in New York have jumped 79 percent from a year earlier on rising demand and disruptions by hurricanes to output in the U.S. Gulf of Mexico, the source of about 25 percent of U.S. gas production.

EnCana has sold or agreed to sell assets in Ecuador, the U.K. and the Gulf of Mexico in the past year as Chief Executive Gwyn Morgan, 59, concentrated on what he calls ``resource plays.'' The company is drilling thousands of wells in Texas, Colorado, Wyoming and British Columbia, in some cases fracturing hundreds of feet of rock.

Advances in technology and high prices made such projects viable. Gas for November delivery gained 12.8 cents, or 1 percent, to $13.549 per million British thermal units on the New York Mercantile Exchange.

About two-thirds of the EnCana's s gas production comes from Canada and the remainder from the U.S., according to the company's Web site.

Shares of The Hague-based Royal Dutch Shell fell 41 pence to 1,683 in London.

Irving, Texas-based Exxon Mobil Corp. is the largest publicly traded oil company, followed by London-based BP Plc.

To contact the reporter on this story:

Ian McKinnon in Calgary at imckinnon1@bloomberg.net.

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