Canada oil and gas giant EnCana splits in two
May 12, 2008 Filed Under: Oil and Gas
Canada’s oil and gas giant EnCana has announced that it is splitting in two separate entities: a natural gas company and “a fully integrated oil company.”
EnCana said on Sunday that one company, tentatively called IntegratedOilCo (IOCo), will focus on the development of EnCana’s Canadian oilsands assets and natural gas and oil production base in Alberta and Saskatchewan, and refinery interests in the United States.
In processing oilsands, natural gas is used to produce vapor which is injected into the ground to release the trapped oil in the sand.
Encana and ConocoPhillips jointly exploit the oilsands sites at Foster Creek and Christina Lake, which hold potential reserves of more than 6.5 billion barrels of oil. The group also controls the Borealis site with a 2.5 million barrel potential.
EnCana’s second company, with a working name of GasCo, will be designed to develop existing high-potential gas resources in western Canada and the United States and is expected to become North America’s second-biggest gas producer, the corporation’s Board of Directors said in a statement.
“This transaction is designed to enhance long-term value for EnCana shareholders by creating two highly sustainable, independent entities, each with an ability to pursue and achieve greater success by employing operational strategies best suited to its unique assets and business plans,” added the Calgary based group.
The split, which met with the board’s unanimous approval, is expected to be completed by early 2009.
IOCo will be headed by EnCana’s Chief Financial Officer, Brian Ferguson, while GasCo will be managed by EnCana President and Chief Executive Officer, Randy Eresman.
EnCana shareholders are to receive one share in each of the two new companies, the board said.
EnCana was created by the merger of the former Canadian Pacific-owned PanCanadian Petroleum and Alberta Energy Co. in 2002.