Canadian energy giant EnCana Corp.’s blockbuster, $2.1-billion US sale of its promising British North Sea operations to hometown rival Nexen Inc. shows contrasting visions over the future of the global oilpatch.

Along with the North Sea asset sale, EnCana, of Calgary, announced plans last week to dispose of the rest of its international operations, namely its oil properties in Ecuador and offshore Gulf of Mexico to focus on becoming North America’s largest natural gas producer.

“We are a large, growing company, but this should make it clear to all that it’s not about size – it’s about value,” said Gwyn Morgan, EnCana’s president and chief executive.

“We have developed a high level of confidence in our ability to produce predictable, reliable and profitable growth from our unconventional (gas) plays,” he told analysts. “It’s what we know best and it’s what we are best at.”

The North Sea assets include a 43.2-per-cent operating stake in the Buzzard oilfield – the biggest discovery in that energy basin in the last decade and one of the biggest deposits found anywhere in the world in recent years. It is estimated to hold about 1.2 billion barrels of oil.

The deal also includes large stakes in two producing North Sea oilfields, called Scott and Telford, as well as other satellite discoveries and exploration licences covering nearly 300,000 hectares.

EnCana’s British operations had proved reserves of 129 million barrels of oil equivalent (boe) production at the end of 2003 and averaged 23,200 barrels of oil output a day this year.

EnCana (TSX:ECA) said it would use the proceeds of the North Sea sale to buy back shares and pay down debt that soared earlier this year when the company paid $2.7 billion US to buy Denver-based Tom Brown Inc., a major gas producer in the U.S. Rocky Mountain region.

Once EnCana has sold all of its international operations, the company’s production mix will be 80 per cent natural gas and liquids. The rest will be oil from its growing operations in the northern Alberta oilsands.

In an opposite tack, Nexen will use its newly acquired North Sea operations to strengthen its international portfolio – replacing declining production from its key Yemen oilfields – and further diversify its oil and gas production.

“We are excited by this opportunity to enter the U.K. sector of the North Sea in a material way,” said Charlie Fischer, Nexen’s president and chief executive.

The deal makes Nexen an instant player in the North Sea and gives the company a platform in which to expand and add further assets in the future.

“High-quality core assets, a good land position and an outstanding operating team form a strong foundation from which to pursue additional opportunities in the basin,” said Fischer.

Over the last year, Nexen has provoked the ire of investors by lowering its production and reserve forecasts while focusing on longer-term projects such as the development of its $3.4 billion Long Lake oilsands project in northern Alberta.

To help pay for the North Sea acquisition, Nexen said it will sell about $1.5 billion of “mature assets.”

The exponential growth of income trusts in the Canadian oilpatch has pushed up the values of producing energy properties. As a result, almost all of the large energy companies, from EnCana to ChevronTexaco, have taken the opportunity to sell conventional and declining oil and gas fields in Western Canada recently.

Analysts worried that the deal would put undue pressure on Nexen’s debt levels.

“The company is certainly going to be spending more than its cash flow for 2005 and 2006, before these projects come on,” said Bob Maxwell of the Dominion Bond Rating Service.

While maintaining its ratings for the company, the Toronto-based bond rater lowered its trend for Nexen to negative from stable.

Together with expected output from its new oilsands project, Nexen’s production could double within a three-year timeframe, Maxwell said.

Before the deal, EnCana was starting to develop the Buzzard project, valued at about $2 billion US.

EnCana said its employees working on Buzzard would be transferred to Nexen, which expects to spend about $650 million US to develop the deposit into a producing well.