Encana to split into two energy companies

Source: Exec

Date :12/05/2008 04:30:35

Encana Corp., based in Calgary and one of North America’s largest producers of gas, is to be split into two highly focused energy companies.

The split will create a natural gas company with a portfolio of early life, North American, natural gas resource plays, and the other a fully integrated oil company with oilsands properties and refineries.

The transaction is designed to enhance long-term value for Encana shareholders by creating two highly sustainable entities.

Implementation

The oil company, IntegratedOilCo, will focus on the development of Encana’s Canadian oilsands assets and refinery interests in the US. IOCo assets represent about one third of Encana’s current production and proved reserves.

The other major operating division, whose working name is GasCo, will be aimed at growing existing high potential resource plays in Canada and the US.

Randy Eresman, Encana’s President and CEO, said, “With the creation of these two companies, each management team will focus more directly on the critical success factors in its respective businesses.”

He added, “We have assembled an outstanding portfolio of unconventional natural gas, oil and in-situ oilsands assets. Our strong operational and financial performance has shown that our resource play model is working extremely well and we are ideally positioned for the future.”

The transaction is expected to be completed by 2009; under the proposal Encana shareholders will receive one share in each of GasCo and IOCo in exchange for each Encana share held.

May 12, 2008