The new friendly, 11th-hour deal between the two Calgary-based companies, announced on last Tuesday, was also spurred by the resurgence in crude oil and energy stock prices that began just as Alberta Energy launched its original hostile bid.

"We always knew there was more value in it than the first bid from AEC would give us," Pacalta chief executive John Wright said after addressing Alberta Energy's annual meeting.

"The bottom line is, for us, we had a very fair bidding process -- we received some very competitive numbers."

A day before its first bid was to expire, Alberta Energy upped the ante by C$225 million from its original bid by boosting the share exchange ratio and kicking in about C$70 million in cash. The new deal, valued at about C$700million, was approved by Pacalta's board.

Alberta Energy has its sights set on Pacalta's oil properties in the City Block of Ecuador's prolific Oriente Basin and hopes to use the assets as the base of its expanding Latin American operations.

Wright would not say which other oil companies proposed deals, only that they included some of the world oil industry's major players. Sources speculated that four proposed offers.

Alberta Energy's chief executive Gwyn Morgan stressed he was not paying too much for Pacalta, which produces about 40,000 barrels of oil a day but has the capacity for 80,000.

About a third of the increase in value represented the jump in its own stock price since it launched the offer as oil-industry conditions improved, Morgan said.

"All ships were rising, and that was one impact," he said. "Beyond that, the margins on their production since we made the offer increased tremendously."

Alberta Energy also recognised more potential in reserves and exploration prospects after it wasallowed to view Pacalta's confidential financial and operating data, he said. "We see it as a growing base and we bought it as an anchor for what we think will be a lot of low-cost growth for the company."

Under the richer deal, Alberta Energy will offer 0.275 of one of its shares for each Pacalta share, up from 0.235 in its previous bid. It also threw in C$1.25 a share in cash.

If successful in its new offer as expected, Alberta Energy's oil production in 2000, currently forecast at up to 80,000 barrels a day, will rise by a projected 60,000 barrels a day, Morgan said. Its Canadian gas production for that year is forecast at over one billion cubic feet a day.

Wright, whose company's stock price had suffered during the oil-industry downturn amid problems exporting its crude because of pipeline constraints, said he felt vindicated by the results of the auction process.

"We have been victims of bad timing in the past and good timing now," he said. "I would have hoped to have a higher production leveland maybe another year to grow our reserves. But Gwyn is a very opportunistic guy and he knew when to jump."

Pacalta shares closed up C$0.95 to C$11.95 on turnover of more than 13 million in Wednesday Toronto Stock Exchange trade. Alberta Energy shed C$0.40 to finish the session at C$39.60.