Uncertain Financial Market Conditions Prompts EnCana To Shelf Aside Plans To Split Company Into Two Units

October 15, 2008 12:51 p.m. EST

Calgary, Alberta (AHN) - EnCana Corporation shelved Wednesday its plan to split into two independent energy firms because of the uncertain and volatile global financial markets.

The energy company initially planned in May for shareholders to vote on December the split. EnCana would be spun off into Cenovus, which will deal with oil, and EnCana, which will concentrate on natural gas.

EnCana's management said the voting is indefinitely postponed until there is a clear sign of stability in the financial markets.

Randy Eresman, the chief executive officer of EnCana, said in a statement, "There is currently too much uncertainty in the global debt and equity markets to proceed with external approvals at this time... We cannot predict when the appropriate financial and market conditions will return, but EnCana will be prepared to advance the proposed transaction when it determines that the market conditions are appropriate."

The decision to postpone the split was welcomed by analysts. Philip Skolnick of Genuity Capital Markets told the Globe and Mail, "You've got a management team that is smart... and my guess is they decided it doesn't make sense to get rid of the synergies they have now with the cash flow of the combined company."