As the biggest players in the oilpatch gear up to release another round of strong quarterly results, emphasis appears to be drifting away from blockbuster acquisitions and on to internal growth, says the chief executive of Canada's largest energy company.

"It seems as though a lot of companies seem to be more content to execute their own particular business plans," EnCana Corp.'s Gwyn Morgan said recently. Although there have been numerous small and medium-sized deals this year, they have tended to be in the growing royalty trust sector, where income funds do little exploration and need acquisitions to maintain their reserve levels.

EnCana revealed last month that it has been aggressively growing its natural gas business, spending about $500 million in the past year to acquire land rights in northeastern British Columbia and northwestern Alberta.

"From time to time we reach out, through internal actions like the land sale, to build," said Morgan.

"I think investors today aren't interested in growth for growth's sake or consolidation for consolidation's sake; there has to be a value-creating element," he said.

"And managements have gotten that message quite clearly."

Thanks to oil and natural gas prices which have remained high throughout the year, the oilpatch is expecting strong third-quarter profits. The numbers should be particularly high for companies heavily weighted in natural gas, whose price has increased 87 per cent over the same quarter in 2002.

Like EnCana, other large Canadian energy companies have been expanding internally and focusing on megaprojects.

Calgary-based Nexen Inc., which starts off the earnings parade Thursday, has been expanding its international holdings in the Gulf of Mexico and the Middle Eastern country of Yemen.

But the company, formerly known as Canadian Occidental Petroleum, is also on the verge of deciding whether to go ahead with a $3-billion oilsands project in northern Alberta called Long Lake, in which it holds a 50 per cent stake.

Greg Stringham, vice-president at the Canadian Association of Petroleum Producers, said all member companies, not just the largest ones, are now looking at international opportunities.

"They're not just reinvesting for the sake of it," said Stringham. "They're really trying to look for where the most economic value is - and some of that has gone outside of Canada."

Petro-Canada (TSX:PCA) announced last week that it has used some of its profits over the past year to pay down half of the $2.1-billion debt it took on to gain a large international portfolio in early 2002 when it bought assets of Germany's Veba Oil & Gas for $3.2 billion.

The company has said that it will continue to hunt for more international assets while keeping investors happy by contemplating a boost to its dividend.

Bob Maxwell, vice-president at Dominion Bond Rating Service in Toronto, said his firm prefers to see companies take advantage of high commodity prices to get their debt levels down.

"Most of the companies have completed a lot of acquisition activity in the last few years," he said.

"Some of them have used their balance sheets to do those acquisitions, so some of them are still working on getting their balance sheets in order from that."

Maxwell also said companies that are developing major projects should be getting their balance sheets ready to take on the higher debt loads that will be required.

This includes Calgary-based Canadian Natural Resources, which is applying for regulatory approval for its proposed $8.5-billion Horizon oilsands plant. A go-ahead decision is expected sometime in 2004.

"They're a company who you'd want to see continue to whittle their debt down," said Maxwell, "so that when they go into that project they're in reasonably good financial position that they can take on some of those expenditures."