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EnCana to split into natural gas, integrated oil companies in 2009
By Lisa Kerner
Charlotte, N.C., May 12 - EnCana Corp.'s board of directors approved a plan to split the company along business lines, creating a natural gas company and an integrated oil company.
The transaction, slated for completion in early 2009, is designed to enhance long-term value for EnCana shareholders, a company news release said.
Under a plan of arrangement, EnCana will create a publicly traded integrated oil company initially known as IntegratedOilCo (IOCo).
EnCana's Canadian Foothills and USA divisions will form a pure-play natural gas company with the working name of GasCo.
According to the release, EnCana shareholders will receive one share in each of IOCo and GasCo.
Total cost to separate EnCana is expected to be less than $300 million.
The initial combined dividends of the two Calgary, Alta.-based companies are expected to be equivalent to EnCana's current dividend of $1.60 per share annually.
EnCana said it plans to continue recommending the board pay a $0.40-per-share quarterly dividend until the separation of the two companies is completed.
"With the creation of these two companies, each management team will focus more directly on the critical success factors in its respective businesses," EnCana president and chief executive officer Randy Eresman said in the release.
"They will be better equipped to direct their strategies and operations towards building value by tailoring practices and execution to fit the unique nature of their assets," Eresman added.
Eresman will become GasCo's president and CEO, as well as a designated director of IOCo, the release said. EnCana expects GasCo to be the second-largest gas producer in North America.
EnCana's chief financial officer, Brian Ferguson, has been tapped to lead IOCo as president and CEO. David O'Brien will be designated as the company's chairman of the board.
Ferguson said he expects IOCo's integrated oilsands assets to achieve double-digit growth by 2016.
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