09/05/2012 05:04 EDT | Updated 11/05/2012 05:12 EST

Encana Says Internal Probe Found No Evidence Of Land Sale Collusion


CALGARY - Encana said Wednesday its board of directors has found no evidence the company colluded with a U.S. rival to suppress land prices in Michigan.

The company launched an internal probe in June after allegations surfaced that Encana (TSX:ECA) and Chesapeake Energy discussed ways to avoid bidding against one another for land leases 2010.

"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 a release.

"We hope that the results of this thorough and independent investigation will help to assure our shareholders, staff and the public that they can continue to place their confidence in Encana. We want to reiterate that Encana remains committed to acting ethically and in compliance with laws in all that we do."

Encana said it has received a subpoena from the antitrust division of the U.S. Department of Justice as well as a civil investigatory demand from Michigan's attorney general.

The company says it will continue to fully co-operate with both of those investigations.

Encana hired outside legal counsel in Canada and the United states to undertake the investigation, which it says was done independent of company management.

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.

During the second quarter, it posted a loss of US$1.48 billion, compared to a profit of $383 million a year earlier.

Oklahoma-based Chesapeake was dogged by governance concerns in the months leading up to the collusion allegations.

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 slightly at $21.36 on the Toronto Stock Exchange Wednesday.