cenovus energy

ENCANA CORP., $63.52, Toronto symbol ECA, rose 7% on Friday after the company announced that it will split itself into two separate companies. One will keep the EnCana name, and will focus on unconventional natural gas. The other will operate as Cenovus Energy Inc., and will specialize in oil-sands projects, oil refineries and conventional natural gas. The new EnCana will account for about two-thirds of the company’s current production and reserves. Cenovus will account for the remaining third. EnCana had hoped to complete the split in early 2009, but the stock-market decline and tight credit markets would have made it difficult for the two new, smaller companies to raise capital to fund new projects. Now that conditions have improved, EnCana has decided to go ahead with the split....

ENCANA CORP. $52 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.2 million; Market cap: $39.0 billion; SI Rating; Average) plans to let shareholders vote on its plan to split itself into two companies — one focusing on natural gas, the other on oil sands and oil refineries. The gas company will keep the EnCana name, while the oil company will take the name Cenovus Energy Inc. Shareholders will receive one new share in each new company for every EnCana share they hold. Break-ups like this generally work out well for investors, as the total value of the two new stocks usually exceeds the value of the former parent company over time. EnCana got as high as $98 in May, 2008, but has moved down to its current price, mostly due to falling natural gas prices. Natural gas accounts for about 80% of EnCana’s total production. However, the company’s break-up plan and growing reserves enhance its long-term prospects....