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EnCana, Cenovus (CVE) Complete Split

http://www.reuters.com/article/marketsNews/idAFN3025130420091130

›Mon Nov 30, 2009 11:59am EST

CALGARY, Alberta, Nov 30 (Reuters) - EnCana Corp (ECA.TO), Canada's largest natural gas producer, said on Monday it has completed the split of the company into separate gas and oil businesses and expects shares in spun-off oil company Cenovus Energy Inc to start trading later this week.

EnCana will distribute shares in Cenovus on Dec. 7, on a one-for-one basis, though Cenovus stock, using the CVE symbol, will begin trading on the Toronto Stock Exchange on Dec. 3 and on Dec. 9 on the New York Stock Exchange. Shareholders last week voted 99 percent in favor of the split.

Cenovus will take control of EnCana's oil sands joint venture with ConocoPhillips (COP), including oil producing properties in northern Alberta and a half share in two Conoco refineries in the United States, as well as some conventional oil and natural gas properties in Western Canada.

"While many may be identifying (Cenovus) as a premier oil sands and downstream producer, it is worth highlighting in the near term that approximately 20 percent of its production and 30 percent of its cash flow... will originate from the company's oil sands assets, with the remainder deriving from a combination of mature, declining natural gas and oil fields," Andrew Potter, an analyst at UBS Securities, wrote in a note to clients.

EnCana will retain its positions in some of the most promising shale-gas regions in North America, including the Haynesville region in the U.S. Southeast and the Horn River region in northern British Columbia.

Due to the impending split of the company and weak natural gas prices, Standard & Poor's on Monday lowered its rating on some unsecured EnCana debt to BBB+ from A-, with a stable outlook.

"However, significant internal growth prospects and its competitive cost structure continue to support the company's credit profile, and we believe EnCana's hedging practices should temper any negative effect on profitability due to low natural gas prices," Jamie Koutsoukis, an analyst at Standard & Poor's, said in a release.‹