Among these is a plan by the company to separate its vast Clearwater position into its own company for which it will conduct an IPO in mid-2014.
Encana also plans to transfer its significant mineral fee title land position and associated royalty interests across southern Alberta – approximately five million net acres where the Company holds the oil and gas rights and can collect royalties on production – into a separate company through an IPO by mid-2014. Encana intends to retain a significant stake in the new company which will manage leasing activities in the area currently known as Encana’s Clearwater play. This gives the Company the opportunity to unlock value from what it believes is an undervalued royalty business in its portfolio while offering the potential for longer term cash flow generation to Encana.
Though the company will initially retain “a significant stake in the new company,” Bloomberg reports that CEO Doug Suttles qualified that on a conference call.
Encana will retain a “significant percent” of the Clearwater business “early on,” Suttles said today on a conference call with analysts. Encana will consider selling more assets depending on market conditions, he said.
The “early on” implies that as soon as practical, Encana will shed its remaining Clearwater stake, either through a sale or a distribution to shareholders.
Disclosure: The author holds no position in any stock mentioned
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