Who will fellow E&P executives meet in line for assets in 2003, or read about having acquired jewel-type properties that were never publicly advertised? Calgary-based EnCana Corp. is in the best position among public, independent oil companies to buy assets with cash next year as ConocoPhillips, ChevronTexaco and other majors begin to restructure their upstream portfolios, and as integrated energy companies continue to sell assets to pay debt. This is according to a new report-"Treasure or Trash?"-from Morgan Stanley's upstream oil and gas analysts. That majors will begin divesting next year is based on actual statements by some-ConocoPhillips and ChevronTexaco representatives have said so publicly-or is the result of statements concerning their refocus on returns, at the risk of production growth. Also, integrated energy companies, such as El Paso Corp., will continue to sell upstream and other assets in 2003 to meet debt-payment deadlines, according to various sources, including Standard & Poor's. "With supermajors refocused on returns and integrated energy companies focusing on liquidity, upstream divestiture activity should accelerate in 2003, in our view," says Lloyd Byrne, analyst, Morgan Stanley. Independent oil companies will be the usual buyers. "Not all [independent E&P] companies will participate to the same extent, though, as the majors' best assets will likely go to those who can act quickly and have material capacity." Those who can act fast-with cash-are EnCana Corp., with $3.9 billion of buying power, and Apache Corp., with $2.2 billion. The latter has been absent from the acquisitions scene since the fall of 2000. (At press time, Apache announced a $260-million purchase of South Louisiana assets from a private company. The fat lady is, again, singing.) Other independents-from among those the Morgan Stanley analysts cover-with a good load of cash are Occidental Petroleum, with $1.5 billion; Anadarko Petroleum Corp., with $1.2 billion; and Talisman Energy, with nearly $1 billion. Companies the analysts cover but which don't have cash at a threshold of net debt to capitalization of 50% are Devon Energy, Kerr-McGee, Newfield Exploration, Chesapeake Energy, Comstock Resources, Noble Energy, Unocal, XTO Energy, Pioneer Natural Resources, Cabot Oil & Gas, The Houston Exploration Co., Nexen, Petro-Canada and Suncor. Sales by the majors would loosen what the Morgan Stanley analysts say has been the tightest acquisition market in years for upstream assets in North America. "And with the nature and intent of sellers-integrated oils and integrated power companies-today, cash and timing tend to be prerequisites," Byrne says. The list of cash-heavy independents may be handy reference if needing to quickly sell some assets in 2003. -Nissa Darbonne, Managing Editor