Canada’s largest oil and gas producer will be splitting into two. The Calgary-based giant EnCana Corporation is dividing into two separate companies.
The one would be a natural gas company, called GasCo, and the other, called IntegratedOilCo (IOCo) would be a fully integrated oil company.
President and CEO of EnCana Randy Eresman showed his approval for the change and believes that this was the best time to make this decision for the corporation.
“We believe this is the right time to undertake this next step in the evolution of our company,” said Eresman in a press release. “The current market is very robust, supported by underlined strength in commodity prices.”
Ponoka is home to an EnCana site, currently there is no word on how it may be affected.
The division will help distinguish the two distinct businesses, one as an integrated oilsands business and one as a natural gas company.
The split will increase shareholder value because shareholders will receive one share in each of GasCo and IOCo for every EnCana share they have.
The split will send Eresman to take on the position as chief executive officer for GasCo. GasCo will become the second-largest gas producer in North America.
EnCana’s CFO Brian Ferguson will be president and CEO of IOCo, and will focus attention on the development of EnCana’s Canadian Oilsands.
If the court approves this move, the change will come into effect next year.
Of the 5,500 people employed at EnCana, 3,500 of them will be working at GasCo and 2,000 will be moving to IOCo.
The two companies will both have the same headquarters at the new Bow Building that is presently being built in downtown Calgary.
The new change brings the potential of creating new jobs in Calgary and will continue to have a huge impact on Canada’s western economy.
It is anticipated that both companies would be in Canada’s 20 largest corporations and make the top six energy companies in Canada.
“Individually, these two companies have the potential to shine even brighter...against their industry peer groups,” said Eresman. “I think it’s an extremely smart move for EnCana to make to split the company. It’s very beneficial to shareholders, employees and EnCana. The sum of the parts are worth a lot more than the parts together. It is unique for a company this size.”