spinoff

Topics: Petroleum, Stock, Stock market Pages: 2 (379 words) Published: March 31, 2014
Spinoff
In 2009, Canada’s largest natural gas producer, Encana, split into two highly focused energy company: Cenovus Energy Inc., an integrated oil company and EnCana Corporation, a pure play natural gas company. There are two main business reasons for Encana to spin off part of its business. Enhanced business focus. A spin-off will allow each business to focus on its own strategic and operational plans without diverting human and financial resources from the other business. Post Spinoff, Cenovus will not be overshadowed by Encana's operations - creating two leading and focused businesses. EnCana is a leading North American natural gas producer that is focused on growing its strong portfolio of prolific shale and other unconventional natural gas developments, called resource plays, in key basins from northeast British Columbia to east Texas and Louisiana. Cenovus Energy is a leading integrated oil company that is focused on its growing enhanced oil projects and its established natural gas and crude oil production in Alberta and Saskatchewan. (Encana, 2009) Distinct investment identity. A spin-off will create distinct and targeted investment opportunities in each business. Encana will benefit from the investors’ clearer recognition of its impressive production growth, the re-rating of the stock and its attractive resource base. As for Cenovus, the Spinoff will allow investors to equally recognize and acknowledge its high cash flow generating capacity and strong refining capability, together with the fact that it's a low cost producer. (business wire, 2009) The main stakeholders affected in a spinoff are stockholders, management and employees of both companies. Under the proposed transaction, EnCana common shareholders will retain their EnCana shares and receive one Cenovus common share for each EnCana share held. And the change in the stock price will have a direct effect on them. Encana will also need to decide whether members of its board will be moved to (or...

Bibliography: business wire. (2009, November 23). $39bn Encana to Gain From Cenovus Spinoff, Says The Spinoff Report. Retrieved Feburary 16, 2014, from business wire: http://www.businesswire.com/news/home/20091123006111/en/39bn-Encana-Gain-Cenovus-Spinoff-Spinoff-Report#.UwDPr_ldX84
Encana. (2009, November 30). Encana closes transaction. Retrieved Feburary 16, 2014, from encana.com: http://www.encana.com/news-stories/news-releases/details.html?release=609226
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