UPDATE: The Calgary Herald is reporting Encana Corp. has received a subpoena from the Antitrust Division of the U.S. Department of Justice in connection with alleged collusion with Chesapeake Energy Corp. on Michigan land deals in 2010.
This is the first time the Encana has addressed the issue since the June accusations.
Encana issued a press release Wednesday, outlining the details of the subpoena and the results of the internal investigation which took place over the summer.
“We have taken this matter very seriously and over the past 11 weeks have conducted a very rigorous investigation,” said chairman David O’Brien in the release.
Encana says the investigation showed no misconduct.
CALGARY -- Encana launched an investigation Monday into accusations it colluded with a U.S. rival in order to keep land prices low in Michigan.
"In accordance with Encana's policies, an investigation of this matter was immediately initiated,'' David O'Brien, chairman of Encana's board of directors, said in an emailed statement.
"Encana therefore will not provide any further information at this time.''
Shares in Canada's biggest natural gas producer dropped nearly four per cent Monday after a report by the Reuters news agency alleged Encana and Chesapeake Energy talked about ways to avoid bidding against one another for land leases in Michigan's promising Collingwood shale region, both at an auction two years ago and in at least nine prospective deals with private landowners.
The report quoted what it characterized as emails between employees of Encana (TSX:ECA) and Oklahoma-based Chesapeake.
The U.S. Justice Department declined to comment when reached by The Canadian Press on Monday. The Michigan Attorney General's office did not immediately respond to a request for comment.
Chesapeake spokesman Jim Gipson said Encana and Chesapeake discussed forming an ``area of mutual interest'' joint venture in Michigan, but no deal was reached.
In an email to The Canadian Press, he also said the two companies did not make any joint bids. He added the company has invested some $400 million to acquire leases in Michigan.
Encana spun off its oil assets in late 2009, making it focused almost exclusively on natural gas. The current period of stubbornly low natural gas prices has been particularly trying on Encana, and in order to cope, the company has been selling non-core assets, entering into joint-venture deals and focusing on more lucrative liquids-rich areas.
Encana said last week it would spend an additional $600 million this year to produce natural gas liquids, which more closely track oil prices than dry natural gas prices. Encana shares closed down nearly eight per cent on Thursday when it made that announcement.
Chesapeake, which has been dogged by governance concerns in recent months, saw it shares drop nearly nine per cent on the New York Stock Exchange to US$17.03.
CEO Aubrey McClendon was stripped of his title as chairman in May following shareholder complaints that his personal business interests could conflict with those of the company he runs.
As part of his compensation package, McClendon was allowed to purchase stakes in the oil and gas company's wells. Investors had long complained about the program and the freedom Chesapeake's board has allowed him to pursue his personal interests.
Those complaints intensified earlier in the spring following reports that McClendon took out more than $1 billion in loans to pay for his stake in the wells. He got the money from a group to which Chesapeake was negotiating to sell assets. That raised concerns that McClendon's private dealings with the group could have influenced Chesapeake's decision to sell those assets.
Encana shares closed down 76 cents at $19.61 on the Toronto Stock Exchange.