EnCana's days of flux may be nearing end

Mon May 12, 2008 3:59pm EDT
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By Jeffrey Jones - Analysis

CALGARY, Alberta (Reuters) - EnCana Corp could be nearing the end of its own permanent revolution.

EnCana has been in flux since even before it was created in early 2002 as Canada's global energy flagship. Now, by breaking its remaining businesses in two, it may be headed for some unfamiliar stability.

"I'd like to think that this is the end game," Blackmont Capital analyst Menno Hulshof said. "I can't speak to what the companies are going to look like five years out, but I don't see any major changes any time soon."

After this next one, that is.

EnCana made waves in the energy sector on Sunday with its plans to split into a natural gas producer, concentrating on hard-to-access unconventional reserves in Canada and the United States, and an oil sands production and refining entity in a partnership with Houston-based ConocoPhillips.

Based on Monday's stock price the gas firm could be worth more than $45 billion and the integrated oil firm more than $20 billion.

Chief Executive Randy Eresman aims to erase a discount he said the company has suffered in the market compared with competing "pure play" gas or oil producers, even as oil and natural gas prices have surged.

Investors appeared to agree on Monday, bidding the stock up 6 percent and adding nearly $5 billion to EnCana's market worth.   Continued...

<p>EnCana President and Chief Executive Officer Randy Eresman announces that EnCana, Canada's largest energy company, will be split into two energy companies in Calgary May 11, 2008. EnCana Corp said on Sunday it plans to split into two separate oil and natural gas firms in an effort to wring out more value with crude prices at record highs. EnCana, a $65 billion producer formed in a merger six years ago, said the new oil firm will operate its Alberta oil sands and U.S. refining assets, which it runs as part of a joint venture with ConocoPhillips. It will also encompass Canadian plains natural gas assets. REUTERS/Todd Korol</p>