EnCana eyes asset sales after spinoff
CALGARY–Now that EnCana Corp. is reviving plans stalled by the credit crunch to split into two, the executives set to head the spinoffs are eyeing ways to further focus their respective companies, including asset sales.
"I believe that having an ongoing divestiture program is a very good capital discipline," Brian Ferguson, EnCana’s current chief financial officer who will be at the helm of a new integrated oil company called Cenovus, said yesterday.
Cenovus aims to shed up to $500 million in non-core assets annually for the first few years following the transaction, Ferguson said.
EnCana CEO Randy Eresman, who will head the pure-play unconventional natural gas company, which will keep the EnCana name, said the company will continue shuffling the conventional gas properties out of its portfolio.
The Calgary-based energy firm said late Thursday its board of directors decided the time was right to go ahead with the split, expected to close at the end of November.
Investors cheered the move, sending the stock up more than 7 per cent to $63.52 in Toronto.
EnCana said the biggest factor in going ahead with the transaction, first announced in May, 2008, but shelved due to the financial meltdown, was the ability to access $5 billion in debt to launch Cenovus.
That was virtually impossible a year ago and too costly as recently as a few months ago, Eresman said. UBS Investment Research analyst Andrew Potter valued the new EnCana at $45 a share, and Cenovus at $20, based on peer group multiples and net asset value estimates.
The Canadian Press
Filed under: online by Specialist